Steps to Buying
Steps to Buying
1. Loan: The first step in the home buying process should be finding a lender you want to work with. Please ask us for a referral, as I know many great local lenders to work with. I highly recommend that you get "pre-approved" for a loan in order to know what loan you qualify for, the terms of the loan and what monthly payment you are comfortable with, which includes your mortgage, taxes and insurance. Then you will be able to determine your maximum purchase price that you are comfortable with. Be sure to ask for estimate of closing costs that you will need to set aside as well.
2. Prioritize your wish list: Now that you have purchase price to work with it is time to make a wish list for your new home. It’s OK to start with you’re the wish list for your “Dream House”. The next step is to take your wish list and break it down to what are your “needs” vs. your “wants”. The needs are the non- negotiable items such as maximum price range, minimum bedrooms, bathrooms, neighborhoods, etc. We will only look at properties that have these minimum requirements. All other items on your wish list will be categorized as “wants”. The last step is to prioritize your wish list. You may want a large lot and to be close to the beach, but should decide what is a higher priority to you.
3. Listing Alert: Now that we have your price range and a good idea of what you are looking for, I will set up an automated search that will send you a daily email with any properties that are available within your parameters. If a property catches your interest or you want to view it, all you need to do is click a button and I will receive a text message and call you to set an appointment. You will also receive a username and log-in, so that you can browse the properties and choose your favorites at your convenience 24/7.
4. Reviewing all available “active” listings: It is important to review all listing updates up to your maximum price range. Depending on the range you are in, you may be able to pad your search up by $10k-$50k, hoping to negotiate with a seller. We will send you email updates but it is important for you to check for open house ads in the newspapers and websites. We recommend www.MikeBloch.com or www.mlslistings.com as they seem to most accurately show what is available. Some websites don't update their statuses and often times they will show properties as active that are actually pending (under contract). During your day to day driving, if you pass by a "for sale" sign, call me with the address & brokerage name and I will research it for you. It may be pending or in a different price range but we are happy to do the research for you and see if it might be something you want to view.
5. Open Houses: Feel free to stop by any open houses that look interesting. You can let the host know that you are a client of mine. If you find something interesting let me know. A call to my cell or a text message is the best way to reach me on the weekend.
6. Drive by the listings: If you view a listing that we sent you or via the MLS, or other online source that looks interesting, feel free to drive by the property and familiarize yourself with the exterior & the neighborhood. Often times you can rule in or out certain properties just by looking at the location, neighborhoods, exterior or type of land (severely sloped, shaded, etc).
7. Showing: Once you've found the properties that you are interested in seeing the interiors of, either by viewing the profiles we've sent you on the computer or by driving by, let us know the MLS numbers or the addresses and we will research showing instructions and contact you to set up a showing appointment.
8. Now That You've Selected the Home you Want to Purchase: Once you've decided upon the home you'd like to purchase several things will happen as we have an outlined below. Don't worry we will go over them again in more detail as they occur:
A) Executing a purchase contract & deposit: This is the document that both
you and the seller will enter into an agreement upon. Upon executing the
Purchase contract for the sellers response you will need to be prepared to write a check for the “initial deposit” what is also referred to as “Earnest Money or Good Faith Deposit” or prepare for a bank wire to escrow. The amount of your initial deposit offering will vary depending on the purchase price range you are in. Your deposit check will be held un-cashed in the Lifestyles Real Estate trust account (unless a wire is agreed upon in your contract) until we have acceptance by both you and the Seller. Upon acceptance it is then sent to escrow to be cashed. Your deposit funds go toward your purchase price and closing costs necessary to purchase the home.
B) Inspections: Once we've reached an agreement with the Seller on price and terms (there may be several counter offers before this happens), then the offer becomes "accepted" and our timeframes will begin for you to start your "due diligence" period, also known as your physical inspections (pest inspection/home inspection, etc.). The typical time frame for inspections is 17 days after acceptance, but this can vary between contracts. These costs vary upon inspectors, location of the property and so forth. The amount of inspections you choose to have is up to you and each property will vary. Sometimes a Seller has done some reports in advance for your review, but it is not common. California law puts the obligation on a Buyer to do their own independent inspections which you will read throughout the purchase contract.
Once you've obtained your inspections and researched the physical condition of the property to your satisfaction we will remove our "physical contingency" in writing and/or ask the Seller to perform repairs or provide a credit to you if necessary. You always have the right to back out of the escrow and receive your deposit back if you decide not to purchase and are within your contingency period. If you have removed your contingency in writing and then for some reason don't purchase, your deposit will be at stake. When this time comes we will make this very clear so there is no jeopardy of getting into this type of situation. During this inspection period you will also want to secure a commitment for homeowners insurance that will be placed in escrow.
C) Credits: If allowable by your lender and agreeable by the seller, you can sometimes ask for a credit back in escrow to go toward your purchase price or help with down payment/closing costs. This credit is usually referred to as a credit for "non-recurring closing costs" a.k.a. "NRCC's" or closing costs. A lender will usually only allow a certain amount to be received back by the buyer and it can only be used for items that are not recurring, i.e. title/escrow fees, loan origination fees, or a one-time repair, etc. Sometimes a seller will choose to give you a credit rather than repair an item you have requested, and this may be an option to take, depending on the item and your loan. We will need to inquire with your lender to see if that is an option, but only if and when we cross that bridge.
D) Loan Approval: At the same time as we are working on your physical contingency your lender will also be working on getting loan approval.
Usually this timeframe is also 17 days from the time of acceptance, but this can vary. To have full loan approval several things must happen, such as: the property
must appraise at the purchase price (you will also pay your lender the fee for your
appraisal-typically around $500 but varies depending on property and location), the title on the property is clear and insurable for title insurance and the underwriters have approved your purchase contract as well as all aspects to your credit history. Once you have full loan approval, your lender will give us that statement in writing and you will then remove your loan contingency and your loan rate and terms will have been locked in.
E) Increased Deposit: As a heads up, it is possible that the seller will ask us
in the form of a counter offer, during the negotiation process, to increase your deposit to 3% of the purchase price once you have removed your contingencies. You will have the right to agree or disagree to this prior to acceptance but it is a common request. Sellers want to have as much of a deposit in the escrow account as they can subject to liquidated damages. We will go over liquidated damages in the purchase contract, but the long and short of it is that if you breach the contract (don't purchase after you have removed your contingencies) the seller may have a claim to your deposit and 3% is the customary amount.
9. Sign Off: As we are preparing for the close of escrow, your loan documents will arrive at the escrow office. You will then go into the title/escrow office to sign off on your closing documents as well as the loan documents. Warning, be expected to have writer’s cramp! After you've signed the loan documents, they are returned to the lender via express mail, usually for a last review before the lender will wire the loan funds directly to the title/escrow company for closing.
10. Funds Necessary To Close Escrow: Your lender will have given you an Good Faith Estimate entailing your costs before you remove your loan contingency as to the approximate amount needed to complete your purchase. The escrow officer will also provide you with an estimated net sheet, reflecting the dollar amount needed from you in order to purchase the property and close the escrow (reflects your down payment, loan fees and closing costs). It is best to have your funds delivered to escrow via a bank wire at least 1-2 days before your scheduled closing date. Our escrow officer will give us the instructions you'll need to enact a bank wire transfer. Personal checks require additional verification and too much time to clear, so wiring directly from your bank has become the preferred and customary method.
11. Close of Escrow & Recording: Once all funds and paperwork is received by the title/escrow company, as per the purchase contract, they will release the grant deed for recording with the County Recorder’s office on our scheduled close of escrow date. Once they have received confirmation of the recording of the deed, escrow will contact us and confirm that you are 'officially on record as the new homeowner. We are then able to deliver your occupancy to the property and the keys to your new home!