Real Estate 101 - For the Buyer

You Can Help...With your understanding of the purchasing process, your transaction can go much smoother.    

Get A Realtor
A real estate transaction is complicated.   In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds and multi-page government-mandated settlement statements.  A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.    Selling or buying a home is time consuming and real estate has its own language and it is important to work with someone who speaks that language.

Get Pre-Approved
Few people can buy a home for cash.  The real issue with real estate financing is not getting a loan (anyone willing to pay higher interest rates can find a mortgage).   Instead, the idea is to get the loan that is right for you...the mortgage with the lowest cost and the best terms.

Looking For That Special Home
The housing market is complicated because the homes for sale are constantly changing from "For Sale" to "Under Contract" and a list could become obsolete within seconds.  Buyers are looking at a moving target.  It is important to know as much as possible about the choices available and the way to accomplish this is to work closely with your realtor who has  a good "lay of the land".  Good communication with your sales representative is an important key for success.   Feedback is essential in providing maximum service and specific comments about each property will assist in determining exactly what you are seeking.

Making An Offer
Realtor groups, working with legal counsel, have developed forms that are appropriate for realty transaction in specific communities.  Such documents include numerous sale conditions and their wording should be carefully reviewed to assure that they reflect the terms you want to offer.  A proposal to buy includes both the price and terms.   In some cases, terms can represent thousands of dollars in savings for buyers or additional costs.  Terms are extremely important and should be carefully reviewed.   In a typical situation, you will complete the offer that your real estate representative will then present to the owner and the owner’s representative.   The owner will then have the following alternatives:

If a counter is made, you have the same three alternatives...Accept, reject or counter

Contract Acceptance
Once the contract is accepted, you will be notified immediately.  At that time both buyer and seller will have agreed to all terms of the contract and the offer becomes a legal binding contract.  Your earnest money will be then deposited with the title company and held in escrow. 

Get Funding
During the pre-qualification procedure, your loan officer would have briefly described the type of paperwork required to purchase a home.  Now the lending institution will require a written loan application with supporting documentation as well as specific information concerning the property (surveys to determine boundaries, appraisals to determine value for lenders, title reviews, structural & termite inspections).

Time And Place Of Closing
Although a date for closing is specified in the contract, the lending institution as well as many other factors determine the actual closing date.

Prior To Closing
Buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. 

Closing
At the closing itself,  all papers have been prepared by the closing agents, title companies, lenders and lawyers.  This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests.  For instance, buyers get the title to the property, lenders have their loans recorded in public records and state governments collect their transfer taxes.

Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and old service.  You want utility bills to be paid in full by owners as of closing and you also want the services transferred to your name for billing.  Usually such transfers can be done without turning off utilities.   Your realtor can provide contact number and related information.

Whether you’re a first-time buyer or a repeat buyer, the papers you receive at closing are extremely valuable.  In the short-term, they can help establish tax deductions for the year in which the property was purchased.  In the future, they will be important for tax purposes when the property is sold, and in some cases calculating estate taxes.

You’ve done it!
You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours!