Buying A Home: Follow These StepsDate 09-19-2014
By: Khila L. Khani, Esq.
So, you have found the home for you and you’re ready to make an offer. What next?
When you buy a used car, you might research the previous owner and everything about the car using services like “Car Fax”. While there are no “Car Fax” companies for previous home ownership, there are things you can do to research a residential property. Knowing more about a property before you actually present an offer to the Seller will help you get a better deal and avoid wasting everyone’s time. Be sure to understand the overall housing market, local supply and demand of homes in the specific area you are looking to purchase, the physical condition of the house, how long the home has been on the market and what the real motivation for selling might be for the seller .
Just like anything else, the more knowledgeable you are the easier the process will be. While you might have a price in mind to offer, consider obtaining pre-approval from your lender. Going through this process may also give you a better idea of what you can afford and also put the Seller at ease that you have done your homework.
2. PRESENT THE OFFER
We would never recommend that you put an offer in writing, but rather, have verbal discussions during this process. Unless you are experienced in the purchase and sale of real estate, we highly recommend that you have the assistance of a real estate professional during this process, whether it be a Realtor or an Attorney. There are a variety of things to consider before presenting a contract. An experienced professional will know what to look for when presenting the offer. Before presenting the offer, it might also be a good idea to get an understanding of your credit. We actually recommend getting a copy of your credit report before making the offer, to be sure that you can obtain the loan you seek on the property. If you click here, you can find information about obtaining your credit history at no charge.
After the initial presentation of the offer, you will likely receive a counter-offer from the seller that may include modifications or deletions of unsatisfactory terms. Most times, the price will be the sticking point, but as a buyer, you should always be prepared to negotiate. If you are not comfortable doing these things, a real estate professional (agent or lawyer) can assist you with this process.
Always remember, you have a budget and getting into a contract you know you can’t afford is something that transactions can suffer greatly from. The best thing to know is what you are capable of spending and if the deal doesn’t work for you (financially or otherwise), be able to walk away.
Finally, keep in mind that the loan approval process does not happen overnight and that a minimum of 30 days is needed to obtain the loan approval. Knowing that a lender may take that long to provide an approval, don’t set your closing date for 30 days after signing the contract, but maybe something longer. This article gives you a greater understanding of the Mortgage Loan Approval Process. Be prepared for anything! If all points have been agreed upon, all parties sign a contract, the next step is inspection.
4. INSPECT, INSPECT, INSPECT
Every professionally drafted contract for the purchase of residential real estate provides for an inspection of the property prior to closing. The time for the inspection usually kicks into gear immediately after the signing of the contract and lasts for a short period of time. Time is definitely of the essence and before you complete the buying process, it’s imperative that you have the property inspected by a inspection professional. Proper inspections usually focus on structural integrity, plumbing, roof condition, electrical maintenance, the presence of any pests and more. If there are items in addition to those listed, you must bring it to the inspector’s attention. We always recommend that the Buyer, or the Buyer’s agent, supervise the inspection. This completed inspection may reveal nothing or reveal everything. After an inspection, you will get a report outlining the details of the inspection. You may be able to use this information to renegotiate the price, other terms, leave everything the way it is or just walk away from the transaction entirely.
5. SECURE FINANCING AND CLOSE
After all the paperwork has been submitted for the transaction, your mortgage application is next. Remember, it may take up to 30 days to receive final approval from the lender. And, even after submitting the first round of documentation, you may be required to submit additional financial documentation, disclosure of additional assets and debts, provide an explanation of any credit issues, provide home and flood insurance or even obtain an additional appraisal verifying that the home’s value exceeds the mortgage amount. Sometimes, the approvals don’t come until the day of the closing, but once approved, you are free to close on your new home!
Khani & Auerbach is here to assist you in your real estate transactions, but if you follow the steps above, you are more likely to have an uneventful transaction and be the homeowner you had hoped to be!