Buying a Home Basics
There many decisions and variables that impact your home purchase. Whether you are a first time home buyer, experienced home buyer or active investor, I have extensive experience with numerous clients in similar positions and with similar needs. From the selection of your home, negotiations all the way to closing, you have a Realtor that will be beside you and have your best interests at heart throughout the entire process. From start to finish and from A – Z, I will guide you through every step of your home purchase. You will never be left in the dark and you will fill confident in my ability to represent your best interests.
First, we begin with a simple interview. I want you to feel comfortable working me with and trust in my knowledge of the home buying process and local markets. I want you to know you selected the best Realtor and know without a doubt that you have selected a Realtor that will guide you through the entire process. I want you walking away from our interview knowing you made the correct decision. I will be providing state required document at our first meeting titled, “Information About Broker’s Services”. This document does not obligate you to anything and is simply required of all Realtors at our substantive dialogue.
The Buyers Agreement
Once you feel comfortable and are ready to proceed with the home buying process, we will sign the “Buyer’s Representation Agreement” which will provide me the legal right to represent you in your real estate transaction. I will explain the agreement in extensive detail if needed and paragraph by paragraph if necessary so there is no confusion or misunderstandings. I want you to feel comfortable throughout the entire process. In addition, it is important to note that commissions paid to the buyer’s Realtor and seller’s Realtor is normally decided by seller and seller’s Realtor prior to listing the home on the market. With this being noted, if you are a buyer, the buyer’s Realtor has a legal obligation to represent the buyer, but in the majority of circumstance is paid by the funds set aside by the seller.
During the analysis phase I ask numerous questions and listen to your wants, wishes and needs. I want to understand exactly what the perfect home looks like to you so that I can actively take part in defining the search criteria as well as the search. While most Realtors place their clients on an automatic emails that blast out hundreds of homes to their clients; I understand this process can be overwhelming. I prefer to take the proactive approach and perform the search for you in an effort to keep your inbox clean and to keep your evenings stress free. In my opinion the Realtor should play a proactive part in the search and make everything as simple as possible for their clients. Of course if my client wishes to be added to automatic emails I will gratefully oblige with their requests, but I have yet received a request to date.
The Home Search
Once I have a clear picture of what your idle home looks like and understand your needs my search begins in full force. I take a proactive approach to helping my clients find their home. Many of my clients are CEOs and top executives with busy schedules and do not have ample time to search though every home in an automated email listing. It is for this purpose, every client I accept is given a platinum service. Rather than just letting you find your home I take ownership in the process and can take a proactive approach in your search.
Home Search Misconception
Many home buyers may search for home and find a wide array of listing agents. Regardless of which agent lists the home for sale, any realtor can represent you in the transaction in most instances. If a buyer hires a realtor that is also the listing agent for the home the agent is prohibited from providing opinions and advice to either side. This type of transaction where a realtor represents both a buyer and a seller is known as an intermediary transaction and in this situation the realtor cannot provide advice and/or opinions to either party. Before you decide to contact and hire the listing agent with their sign in the yard, first determine if you may want some advice in the process.
In the real estate business we meet numerous professionals ranging from lenders, home inspectors, title companies, credit repair professionals, foundation repair companies to handymen. While you are welcome choose any professional from any industry you wish; we often utilize those that have demonstrated a successful proven track record. If you are in the home buying process, our network of business professionals can be a immense asset and help expedite the purchase of your home.
Depending on the market conditions and the needs, and wishes of my buyers, offers differ on a case by case basis. The Dallas Fort Worth Metroplex is booming and according to numerous sources the DFW Area is seeing one of the top three fastest growing areas in the United States. With this being noted the supply is not enough to keep up with the immense demand, therefore, structuring a competitive offer is paramount in the home purchasing process.
The Offer – Pre-Qualification/Pre-Approval Letter
When you are in the market and ready to start searching for your home, the most vital first step is the pre-approval process. There is a difference that many realtors often overlook when evaluating offers and this is the difference resides between a pre-qualification and pre-approval. My preferred method when I have a buyer/client is to have them obtain a pre-approval letter from their lender. The pre-approval is initially a bit more strenuous at first as the lender will evaluate tax filings, credit scores and income vs just verbal verification and a quick credit check before drafting a quick per-approval. Why go through the pre-approval process vs a pre-qualification? Well if I have a client that is selling their home and I have two buyers with similar offers, I will hold a pre-approval in higher regard as I know the lender and the buyer have done their due diligence. Since the pre-approval process is more extensive, buyers with a pre-qualification are more likely to obtain financing approval and have less likelihood of pulling out due to some unseen issue during the third party financing approval period.
The Offer – Price
Offering a competitive price is one way to acquire your home in a competitive sellers’ market, but it is not the only method. Anyone can offer any price on a home, but if a home does not appraise the buyer many not receive approval from their lender.
The Offer – Earnest Money
Think of earnest money as a good faith down payment that is paid by a buyer and held by the title company. While the standard amount of earnest money is generally 1% of the purchase price, in a competitive sellers market like in Flower Mound and throughout much of the DFW area, higher amounts of earnest money can help buyers acquire their home.
Note: In the 1-4 Family Contract earnest money can be credited back to the buyer at closing if the realtor and the buyer select this option in the contract. One other important note is that earnest money can be lost if a buyer does not acquire proper financing within the designated time and does not fulfill their end of the obligations. If a contract is structured correctly and buyer backs out during their option period (typically 7-10 days) they can retain their earnest money. If a contract is structured correctly, if a buyer can no longer obtain third party financing and pulls out within the designed time to acquire third party financing, the buyer can retain their earnest money. The three keys to earnest money is being competitive, drafting the contract intelligently and doing your due diligence to make sure your lender has all of the proper documentation so they can move forward with the loan in a timely manner. The earnest money is often wired to the title company and if it is paid by check the earnest money should be made payable to the title company.
The Offer – Option Money
The option money also known as a termination option is a very important part of the contract and allows a buyer to pull out of a loan typically within 7 – 10 days for any reason for a fee. During the option period buyers are advised to hire a home inspector to determine what problems might reside within the property so the buyer can determine whether or not they wish to rescind their offer, negotiate repairs or make an amendment to the purchase price of the home. When the contract is structured the buyer can opt to have the option fee credited back at closing. Important note, higher option and earnest fee display a more motivated buyer and can help influence a sellers choice of offers. Option fee/termination fee is made payable to the seller and begins starting on the date the contract was executed. The buyer typically has 72 hours to pay the option fee and earnest money.
Third Party Financing Period
The buyer will have a specified number of days to acquire third party financing from a lender if they are not paying cash for their home. Often during this process the lender will determine eligibility, terms, order the appraisal and submit the home to underwriting. Knowing a good mortgage lender that has everything done in house can play a huge asset and expedite the home buying process. Not all lenders are created equal and many of the large banks often move at a much slower pace based on my experience.
Typically 1-3 days prior to closing the realtor and buyer will arrange a walk-though the home and inspect the property. It is extremely important especially if the home was owner occupied to make sure the home is in the condition the buyer expects it to be before finalizing the paperwork and acquiring the home.
Closing and Funding
Congratulations you have reached this far unless you need a sale leaseback. In the 1-4 Family Contract home ownership typically occurs at closing and funding process. Here are the keys to your new home!
Scott Hunt REALTOR®, ABR – Minerva Realty
Residential and Commercial Real Estate
Realtors Flower Mound
Real Estate Agents
Real Estate Agents Flower Mound