First Time Buyers  Last updated: 04/19/2008 09:10:05 PM

Understanding the home buying process

1. Answer the question: Why am I considering buying at this time?

a)      Tired of renting?

b)      Want to move to a different neighborhood?

c)      Need a larger home?

d)      Want to start growing wealth?

e)      Want to get a tax break through home ownership?

2. Make a wish list of what you want and what you need in your new home:

a)      What are your minimum requirements that you absolutely can’t live without?

b)      What would you like if you could have it?

c)      What trade-offs are you willing to make?

d)      How long do you realistically expect to live in this home?

3. Determine how much home you can afford: Contact 2 or 3 lenders (Banks, Loan Brokers, Loan Agents)

a)      Explain that you’re a First Time Buyer and ask what special programs are available.

b)      Ask about their loan programs, explore the options:

1)     Down payment

                                                              i.      Programs are available with little or no down payment.

                                                            ii.      If you are getting a “gift” from parents, have them put those funds in your bank account at the beginning; not after you’ve selected a property and need their OK before going forward.

2)     Loan Term

3)     Interest Rates (Fixed or Adjustable)

4)     Fees.

c)      Ask what information you’ll need to apply for a mortgage loan.

d)  Ask if they are available to attend your document signing at escrow to answer any questions and correct any errors. (Very Important)

e)      Obtain a Pre-Approval or at least a Pre-Qualification Certificate/Letter.

4. Start searching for homes and neighborhoods using the Internet: Realtor.com, HiCentral.com. This is part of the “Get Educated” process.

a)      Start with the neighborhoods you are interested in.

b)      Compare prices, features.

c)      Drive the neighborhoods that interest you and note For Sale signs.

d)      Visit Open Houses but don’t commit to work with the on-site agent.

e)      Narrow down your desired neighborhoods.

5. Select and interview 2-3 agents that will represent you in the purchase. Let's face it, you want a home, not an agent but a good agent will help you get the home you want!

a)      Ask family, friend and co-workers for a Buyer’s agent referral.

b)      Contact an agent you might have met at an Open House that impressed you.

c)      Search the Internet for a Buyer’s Broker/Agent

d)      Meet with the agents and select one that you feel comfortable having represent you.

                                                              i.      Make sure the agent you select can explain the home purchase process and is patient and experienced in working with first-time buyers.

                                                            ii.      Ask the agent if he/she will be working with you personally or handing you off to an assistant to show you homes.

                                                          iii.      Ask the agent to explain the purchase contract that will be used when you find a home you want to buy.

                                                          iv.      Ask the agent if they’ll be present at the home inspections.

                                                            v.      Ask the agent if they’ll be present when you sign your documents.

                                                          vi.     Ask the agent for referrals to other first-time buyers they’ve represented.

                                                        vii.      Ask the agent if they’re a Realtor®! Realtors® must abide by a code of ethics.

5. Look at homes that you and your agent have selected based on your wants/needs.

a)   Evaluate the homes. If there are others (parents) that will participate in the decision process, have them see ALL the homes you see along with you so they can become educated along with you; NOT after you’ve looked at everything and narrowed it down to a couple. Trust us on this!

b)     Choose one you’d like to buy.

c)   Review the comparable sales data for the neighborhood.

d)   Have your agent write a purchase offer and explain it to you so you understand what your responsibilities are and what the seller’s responsibilities are.

e)   Have your lender provide your agent with a pre-approval letter based on your offered price. (Even if you qualify for more, don’t tempt the seller to counter-offer because of the pre-approval letter!)

f)   Give your agent a “Good Faith” deposit check and instruct them to submit the offer to the seller.

g)   Review any Counter-Offer you receive.

6.  Congratulations! You’ve had your offer or counter-offer accepted, now what?

a)    Your agent submits a copy of the purchase agreement and counter-offers to escrow along with your deposit check.

b)    Submit a copy of the purchase agreement and counter-offers to lender and pay for appraisal.

c)      Provide the lender with any paperwork/documentation needed.

d)      Review the Seller’s Disclosure Forms.

e)      Review the Preliminary Title Report.

f)       If a condo/PUD, review the Homeowner’s Association Documents including minutes for the last year’s HOA meetings.

g)      Review the Termite Inspection Report.

h)      Order and attend the Property Inspection.

i)        Determine if you want any additional inspections (within the inspection period).

j)       Submit a repair request and/or remove property condition contingency.

k)     Remove other contingencies as appropriate.

l)     Approximately 5 days before settlement, conduct a “final walk-through” with your agent to verify seller-made repairs are completed and verify property condition is as it was when you made your offer.

m)    Sign your loan documents at the escrow company.

n)      The loan funds, the transaction “records” and your agent delivers your keys!

o)      Arrange for utilities to be transferred into your name.

p)      Take possession, change the locks and start enjoying your new home.

Questions:  

What’s the difference between a Broker and an Agent?

Brokers in general have more experience and have passed the state Broker license examination. Brokers can own their own companies, if they desire to. Agents must work under the supervision of a Broker. Some Brokers choose to work as Associate-Brokers with existing companies.

Why work with a Buyer’s Broker/Agent?

Keep in mind that agents you meet at Open Houses or if you call on a For Sale sign are the Seller’s Agents. They have a duty to the Seller to get the highest price for the Seller! You want a Buyer’s Agent, one that works on your behalf. Can a Seller’s Agent work for you? Legally, yes, but only with the full knowledge and permission of both you and the Seller. Realistically, not very well. How can the agent be loyal to both you and the Seller?

How can you find a Buyer’s Broker/Agent?

Ask family, friends and co-workers. Search the Internet. Agents and Brokers that have taken extra training and passed an extensive course in Buyer representation have been awarded the ABR designation (Accredited Buyer’s Representative). Agents that have earned the ABR designation can be found at the REBAC website: Rebac.com.

How do brokers/agents get paid?

Listing agents negotiate a commission/fee with a property owner and “Lists” the property “For Sale”. The owner has agreed to pay a commission/fee to the listing agent to sell the home. When the listing agent submits the “Listing” to the Multiple Listing Service (MLS) the listing agent agrees to share a portion of the commission/fee with any agent that brings a buyer, willing and able to purchase the property.

Agents get paid when the sale closes escrow, after the sellers gets the proceeds check and the buyer gets the keys and the deed to the home. Agents do not get paid for “showing” property or writing offers or any other task. We only get paid for completing the transaction! So if a buyer uses an agent to show them property and familiarize them with the market and then walks in to an Open House and has the agent hosting the Open House write an offer and submit it and negotiate the purchase, the first agent gets nothing! All the time that agent has spent is for nothing. We recommend you select an agent to take you through the entire home-buying process. If this agent fails to give you the service you want and expect, then get another agent. But by all means, remember, work with one agent at a time after you’ve interviewed them and give them the feedback they need to do a great job for you. 

Other thoughts:

When you embark on your journey to purchase your first home, you’ll discover that EVERYONE you tell will become an EXPERT! Your family, your friends, your co-workers, EVERYONE. It doesn’t matter if they’ve bought a home last week or twenty years ago, they’re all EXPERTS! Although good intentioned, please take much of the advice with “a grain of salt”. Every home purchase is a little different and every real estate market is a little different. Rely on the real expert in the process, your Buyer’s Agent. If you’ve selected the right one, direct any and all questions (and you’ll have many – that’s normal) to your Buyer’s Agent. If they don’t have an immediate answer, they’ll know where to get it.

What are the other letters we see on your business card?

R: Broker (Realtor)

ABR: Accredited Buyer’s Representative

CIPS: Certified International Property Specialist

CRB: Member, Council of Real Estate Brokerage Managers

CRS: Certified Residential Specialist

GRI: Graduate, Realtor’s Institute

SRES: Seniors Real Estate Specialist

AHWD: At Home With Diversity

CHNS: Certified New Home Specialist

e-PRO: Real estate agents and brokers who have earned e-PRO Certification are Internet Professionals who have completed extensive training using the Web. e-PRO Certification means the real estate professional is prepared to employ the latest techniques and services for your benefit.

Quality Service Certified: We will give you a written commitment assuring the delivery of our services!

RCC: Residential Construction Certified

RSPS: Resort & Second-Home Property Specialist

TRC: Transnational Referral Certified

Please call 808-375-8959 to schedule a free one-hour consultation. There is no cost or obligation.

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