As you know, we are well into 2015 with a phenomenal start to the New Year as far as Real Estate goes. Over the past couple of weeks, we have been focusing on how to be a Smart Seller and the importance of hiring a Professional Realtor to help sell your home. What we haven’t been discussing is how to BUY a home!
We’ve been very fortunate over the past few weeks on being hired to represent buyers throughout the North Texas area – some of them are needing bigger homes, some are investors looking to add to their portfolios, and we’ve even had 1st time homebuyers contact us to help them find their very first home! It doesn’t matter if you’ve bought many homes or you are in the process of finding your first home, there are many questions that come up during the home-buying process and we would like to walk you through what to expect during a typical transaction.
We are going to reiterate the importance of hiring a Professional Realtor® to help you with this important purchase (sometimes the biggest purchase of your life.) Realtors® have access to much more information that the general population and can really oversee the Real Estate transaction to make it as smooth as possible, which is important for the sanity of the Buyer! Not all transactions are smooth, simple and easy. Most of them have unexpected things come up that threaten the transaction, and if you are trying to do it alone, you’ll drive yourself crazy and not enjoy this important time of your life. At AMX Realty – The Meals Group, we pride ourselves in being prepared, knowledgeable, and ready to act to help avoid some of these hiccups.
Some of you already are aware of a document called the Buyer’s Representation Agreement and know that most Realtors® will ask you to sign this document before they begin working with you. This document serves many different purposes – the most important being that you are hiring a specific Realtor® to represent you during the home buying process. They will serve as your representative, help you find the perfect home, negotiate on your behalf to get the absolute best home for the best price, and to guide you and answer questions you may have during this process. When you hire a Realtor® to represent you, they put your interests first. Also, many times when you hire a Realtor®, their commissions are paid by the seller, not by the Buyer. There are exceptions to this; however, in a typical real estate transaction, the seller pays the commission.
Now that you’ve hired a Realtor®, they will begin asking very specific questions to help you find that perfect property. There are many ways to do this, and the most used is the use of the Multiple Listing Services. When you find the perfect house, the agent helps you come up with a competitive offer price and begin negotiating on your behalf. The offer price is based on comparable properties that have recently sold. In this market, having a strong offer price is important because in many instances, sellers are receiving multiple offers and even above ask price.
Once the property is under contract, there are usually two fees that a Buyer must have – the Option Fee and the Earnest Money. The Option Fee allows you, the Buyer, to have an inspection on the property to find out what, if anything, is wrong or needs to be repaired. It also gives you the “option” to walk away from the transaction for any reason during this protected period. As a Buyer, when you receive the Inspection Report back, it’s probably going to be a long report. It is important to stay calm and consult your Realtor®. The reason is because an Inspector is going to find EVERYTHING that is not up to code on a particular property. Many of these things are small items that are easily fixed; others are much larger that require immediate attention. If repairs need to be made, your Realtor® will renegotiate the contract to address these issues. The Option Fee is non-refundable; however, it does count towards the purchase of the home.
The Earnest Money is a deposit made that shows the sellers that you are a serious buyer and are putting this money up as a show of good faith. This money is typically refundable up to a point in time depending upon the terms of your contract. This money is also applied to the sales price of the home.
After the Option Period is over, your lender will order a survey (if one doesn’t already exist) and an appraisal. By this time, the lender has already been in contact with you on a fairly regular basis to help keep the transaction on schedule. The Appraiser will appraise the property, submit that information back to the Lender, and if the appraisal is acceptable to the Lender, they will continue the loan process. It is EXTREMELY IMPORTANT that you DO NOT APPLY FOR or OPEN ANY new lines of credit, and do not charge things to your credit card during this time. If you negatively affect your credit during this time, you run the risk of losing the home because your lender can’t qualify you with the new negative information on your credit report.
While you are waiting on the Lender to complete their portion of the transaction, there are some important things that you should be doing to prepare for the big closing day! You will want to make sure that you have set up the utilities to be turned on, or transferred over to your name for the day of closing. You will also need to schedule movers if needed.
Once the lender has completed the Underwriting Process and has received a Clear To Close status, they forward the file to the Title Company or Attorney that will actually close the transaction and will schedule with you a Closing Date! You will need to be sure to have verifiable funds such as a Cashier’s Check, Money Order, or Wire to cover your portion of the down payment and closing costs. Once you have signed all the paperwork and the funds have been sent to the Title Company, the Title Company will “FUND” the transaction, which is the final step in this process. You will then receive the keys to your new home!
The Home Buying Process can be a very exciting and fun time in your life! Many times it’s the start of a new beginning! Be sure to enjoy this process and not worry. You can cut down on the stress that accompanies this time by teaming up with a Professional who knows the processes, is familiar with potential pitfalls, how to avoid them, and ultimately help you realize your dream of home ownership. At AMX Realty – The Meals Group, we are here to help you! Contact us today for more information about the Home Buying Process!
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