The Buying Process
Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment. As your Exclusive Real Estate Agent, I will guide you every step of the way by:
- Helping you get pre-approved and establishing your purchasing power
- Helping you determine your Home preferences
- Helping you determine your offer
- Negotiating the offer and contract
- Facilitating the financing process
- Initiating the property evaluation and inspection process
- Preparing you for the close of escrow and associated costs
- Explaining the title Search process
Decide To Buy
Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully. Before we begin the search, ask yourself these questions:
Why Do You Want To Buy?
Are you tired of paying rent? Have you decided to pay your own mortgage and not your landlord’s? Have you outgrown your current home? Are you looking for an investment portfolio? Are you looking for a rental property? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Having a clear sense of your reasons for buying will help you choose the right property.
Has Your Income Grown?
Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment. Before you start shopping for your property, it is a good idea to make some preparations.
Create A Green File
A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:
• Financial statements
• Bank accounts
• Credit cards
• Auto loans
• Recent pay stubs
• Tax returns for two years
• Copies of leases for investment properties
• 401K statements, life insurance, stocks, bonds, and mutual account information
Check Your Credit Rating
Your credit score will have a huge impact on what type of property you can buy, and at what price. It is first recommended to check your credit rating with an experienced lending institution so that we can determine what you can afford. The lender will research your credit ratings from the three credit reporting agencies Equifax, Experian and Trans Union. I will be happy to recommend experienced, knowledgeable lenders who will help you in this process
Be Careful With Your Finances
Now is not a good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability.
The Importance & Power Of Pre-Approval
In today’s real estate market, it’s essential to get pre-approved before starting your home search as it allows you to:
• Understand your financial condition
• Understand how much Home you can afford before you begin your home search
• Strengthen your purchasing power when making an offer
• Getting pre-approved helps put you in a better negotiating position by letting the seller know you are committed and the financing is not in question
• In cases where there are multiple offers, buyers who are pre-approved have a better chance of an accepted offer on the house they wish to buy–versus those who are not pre-approved
Beginning the Pre-Approval Process
Here are some of the current documents you’ll provide your lender to your pre-approval started:
• Current paystubs, usually for last two months
• W-2s or 1099s, usually for last two years
• Tax returns, usually for the last two years
• Bank statements
• Investments/brokerage firm statements
• Net worth of business owned (if applicable)
• Credit card statements
• Loan statements
• Alimony/child support payments (if applicable)
If you have not yet been approved and are looking for a lender visit my preferred partner, Axiom Mortgage, a full service mortgage company with a proven and trusted track record. The company will show you a variety of financing types (FHA, Conventional, jumbo, super jumbo, etc.) and will determine how much you qualify for with each type. Based on your desired payment level and the funds available to you, Axiom Mortgage can determine your purchasing power and design a loan that will work for you.
Choose A Real Estate Agent
Buying a property requires making many important financial decisions, understanding complex issues and completing a lot of paperwork. It helps to have an expert in your corner when undertaking such a large purchase. I can guide you through this process, and also provide you with access to property listings before they hit the general market.
Here are some factors to consider when choosing your real estate professional:
• Look for a full-time agent – one who has experience completing transactions similar to yours.
• Interview a few agents: Are they familiar with the area in which you are interested?
• Ask how much time the agent will have for you, and if they are available at night and on weekends.
• Ask about their credentials and education: A good agent will continually strive to improve and gain knowledge of the latest real estate trends and hold the highest designations in their respective fields of expertise.
• Does the agent return your calls promptly? Time is money when attempting to buy a property.
• Ask for a list of properties they have sold or a list of references.
Choose an agent who listens attentively to your needs and concerns. Pick an agent, with whom you feel comfortable.
Here Are Some Of The Reasons You should Choose Me As Your Agent
Backed By Coldwell Banker
Coldwell Banker is the leading real estate company in Colorado producing over 172 billion in sales. Their vast resources allows me to find the best properties and empowers me to negotiate the best terms for you.
I stay up to date with the local market trends to know first hand what properties are on the market and what they are selling for. This allows me to find you your home in little time.
I will guide you through the buying process, finisng the best home and neighborhood for you and your family. I will advise you on the best terms and offer when we find the one you want.
Determine Your Home Preferences
Begin by creating a list of your home preferences. Determine what features you need and which ones you want and can live without. Decide on the number of bedrooms and baths, the square footage, and neighborhood. When considering the neighborhood, ask yourself what kind of school you’d like your children to attend (if you have any) and also if you want to be near certain amenities such as public transportation, shopping, trails and so forth.
Take A Drive:
Get to know the neighborhoods, complexes or subdivisions which interest you. Drive around and get a feel for what it would be like to own a home in that area. Start getting a sense of the properties avaialble in those areas.
Submitting an Offer
Once we find the perfect home for you, I will draft a purchase offer to let the seller know that you are interested in the property; the price you are willing to pay and the terms you request.
Elements of the offer:
Although the seller has decided what price they are willing to accept on their home, you can decide to counter that with a price you feel the house is worth. I will perform an analysis of the houses that have sold and are active in the neighborhood to get an idea of what homes are selling for, this will determine the offer we put in.
In addition to how much you’re willing to pay for the home, the offer will also include details about how you’re going to pay. The seller is going to want to know that you have financing in order and that it’s solid. A pre-approval letter, which is often required by sellers, can help give the seller confidence to accept your offer. It will demonstrate that you are working with a lender and that the lender is willing to loan you the money needed to finance the home. The seller doesn’t want to accept your offer, take the house off the market and then discover in three weeks that you can’t get a home loan.
You’ll likely be asked to write a good faith “earnest money” check or money order. If the seller accepts your offer, the check will be placed into an escrow account and used as part of your down payment. Earnest money is essentially a deposit and shows the seller that you are serious. Without it, you could be making offers on several houses at the same time, costing sellers precious days on the market.
You can indicate what your terms are on occupying the property and request some contingencies from the seller. You may also request some items be left with the house such as furniture or appliances.
During certain parts of the process, you will have the ability to back out of the contract and retain your earnest money if you indicate your desire before the expiration dates. I will advise you on these dates and how to proceed.
Accept, Decline, Counter:
The seller will have either accepted your offer as-is, rejected it outright or made a counter-offer. If they accept within the time frame you allotted, you are now legally bound by its terms.
If they reject it, they either accepted another offer or yours was so far from what they want that there’s not much point in continuing the discussion.
The last scenario is a counteroffer. Maybe they want a little more money. Or you asked to include appliances in the purchase and the washer and dryer have sentimental value so they can’t part with them. Or they need a couple more weeks to get into their new place so they want a later closing date. Essentially, unless you nailed everything exactly as they wanted it in your offer, you’ll get a counter. And then the clock starts ticking for you. The counter is technically a rejection of your offer accompanied by their new offer to you. Just as you gave them a time limit, they will outline how long you have to respond. This back-and-forth can go on for a few hours or a few days until you’ve reached an agreement you can both live with.
Navigating the Financial Process
Once your offer is accepted, the financing process continues. While it can take anywhere from 30 to 60 days, it typically runs 45 days. I’ll be involved throughout the process to help it run smoothly. The basic timeline for what will happen is as follows:
• You submit the completed application and any required supporting documentation to the lender (when you are pre-approved, this is already done)
• The lender orders an appraisal of the property, a credit report and begins verifying your employment and assets
• The lender provides a good faith estimate of closing and related costs, plus initial Truth in Lending disclosures
• The lender evaluates the loan package with all of your supporting documents, issues a letter of commitment, loan approval and list of conditions, if any
• You sign the closing loan documents and the loan is funded
• The lender sends its funds to escrow
• All appropriate documents are recorded at the County Recorder’s Office, the seller is paid and the title to the home is yours
Property Inspections & Appraisals
Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). I can recommend several different inspectors.
Depending on the outcome of these inspections, one of two things may happen:
1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
2. You may, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).
Here are some common inspections:
Wood Destroying Pest And Organisms (Termite) Inspection
This inspection identities existing or potential pest, dry rot, fungus and other structure-threatening infestation or conditions. The initial inspection fee covers only those areas which are accessible to the inspector. Inspections of inaccessible areas cost more and are subject to an estimate by the inspector. These inspectors must be licensed and can give estimates to correct noted problems, can make the suggested repairs and/or can certify that the work has been completed.
General Home Inspection
This inspection identities material defects in the essential components of the property based upon
a noninvasive physical inspection. There are no licensing requirements for someone to be a home inspector. These inspectors are not allowed to give estimates to correct noted problems, nor can the inspector perform any of the repairs.
Appraisal and Lending
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
If the property that you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all of the information completely and legibly so there is no delay in processing the application. If you are required to meet with the association for your approval, make an appointment as soon as possible for the interview. Most associations require a certificate of approval before move-in. Your closing agent will request that the original copy of this approval letter be brought to the closing, so that it can be recorded with the deed in the county public records.
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.
Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
I will be happy to recommend experienced knowledgeable insurance agents for every property type.
Close & Move In
Preparing for the Closing Costs
A home purchase is a complex transaction involving many parties and associated fees. In addition to your deposit and down payment, there are a variety of other costs involved in the close of the purchase, including:
• Loan origination fees, appraisals and reports
• Surveys and inspections
• Mortgage insurance
• Hazard insurance
• Title Insurance, notary and escrow fees
• Recording fees and stamps
The lender will provide a good faith estimate of these costs prior to closing, so that you will know in advance what to expect. Some of these costs may be negotiable items with the seller. Naturally, I’ll walk you through each item in your closing to make sure you understand every detail.
Final Walk-Through Inspection
More of a formality than anything else, the final inspection takes place a day before, or the day of the closing. You will visit the property to verify that all is in working order, everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.
Home Services and Utilities
I will provide a list of useful numbers for the activation of home services and utilities after the closing occurs.
I am ready to assist you should an unforeseen glitch pop up, even at this last stage. Something at the property breaks down, or some other minor detail – no need to worry.
The closing agent will furnish all parties involved with a settlement statement, which summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as well as the closing agent, certifying its accuracy. If you are obtaining financing, you will have to sign all pertinent documentation required by the lending institution. If you are unable to attend the scheduled closing, arrangements can be made depending on the circumstances and the notice that I receive. If you are bringing funds to the transaction, you can elect to either have the funds wired electronically into the closing agent’s escrow account, or bring a certified bank check to the closing in the amount specified on the settlement statement. The seller should arrange to have all property keys and any other important information for you at the closing so that you may receive these items at this time.
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