Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.
Why Do You Want To Buy?
Are you tired of paying rent? Have you decided to pay your own mortgage and not your landlord’s?
Have you outgrown your current home
Are you looking for an investment portfolio?
Are you looking for a rental property?
Would you rather live in a different area?
Would you like a larger yard?
Do you want to shorten your commute?
Having a clear sense of your reasons for buying will help you choose the right property.
Has Your Income Grown?
Property Ownership is an excellent investment: whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.
Preparing to Buy
Before you start shopping for your property, it is a good idea to make some preparations.
Build Your Green File.
A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:
Recent pay stubs
Tax returns for two years
Copies of leases for investment properties
401K statements, life insurance, stocks, bonds, and mutual account information.
Check Your Credit Rating.
Your credit score will have a huge impact on what type of property you can buy, and at what price. It is first recommended to check your credit rating with an experiences lending institution so that we can determine what you can afford. The lender will research your credit ratings from the three credit reporting agencies Experian, Equifax and Trans Union. We will be happy to recommend experienced, knowledgeable lenders in the residential, construction, and commercial and investment real estate fields.
Be Careful With Your Finances.
Now is not a good time to make sudden changes or large purchases. You want to approach your property purchase from a position of financial stability.
Choose a Real Estate Agent
Buying a property requires making many important financial decisions, understanding complex issues and completing a lot of paperwork. It helps to have an expert in your corner when undertaking such a large purchase. I can guide you through this process, and also provide you with access to property listings before they hit the general market.
Here are some factors to consider when choosing your real estate professional:
Look for a full-time agent – one who has experience completing transaction similar to yours.
Ask how much time the agent will have for you, and if they are available at night and on the weekends.
Does the agent return your calls promptly? Time is money when attempting to buy a property.
Choose an agent who listens attentively to your needs and concerns.
Pick an agent, with whom you feel comfortable.
Time to go Shopping
Once those preparations are out of the way. It is time to find the right property for you.
Take a Drive.
Get to know the neighborhoods, complexes, or subdivisions, which interest you. Drive around and get a feel for what it would be like to own a property in the area. Start getting a sense of the properties available in those areas.
Narrow Your Search.
Select a few properties that interest you the most and have your real estate agent make appointments to visit them. Ask your real estate about the potential long term value the properties you are considering.
Time to Buy.
Once you have picked out the property you want to purchase, your real estate agent can help you make an offer that the seller will accept. A good agent will investigate the potential costs and expenses associated with the new property. An agent can also help you draft your offer in a way that gives you the advantage over another offer.
Escrow Inspections and Appraisals
The Process, Step-by-Step
The Initial Agreement and Deposit.
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.
Some important tips to keep in mind to streamline the process:
Keep written records of everything. For the sake of clarity, it will be extremely
useful to transcribe all verbal agreements including counter-offers and
addendums and to convert them into written agreements to be signed by both the
parties. I will assist you in drafting all the paperwork for your purchase and make
sure that you have copies of everything.
Stick to the schedule. Now that you have chosen your offer, you and your seller
will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smooth flow of negotiations so that each party involved is not in breach of their agreements. During the process I will keep you constantly updates, so you will always be prepared for the next step.
The Closing Agent.
Either a title company or an attorney will be selected as a closing agent by you. The closing
agent will hold the deposit in escrow and will research the complete recorded history of the
property to ensure that the title is free and clear of encumbrances by the date of closing. Some
properties are subject to restrictions for example – Home Owners Association. You will be provided all the relevant documentation to understand all the restrictions. Also there may be
recorded easements and encroachments, which limit the rights to use your property.
How to Hold Title.
You may wish to consult an attorney or tax advisor on the best way to hold title. Different
methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.
Once your offer is accepted by the seller, you will need to licensed property inspector inspect
your property within the time frame that was agreed upon in the effective contract to purchase.
You may elect to have different inspectors inspect the property, for example: roof, HVAC,
structure. If you are purchasing a commercial property, then you will need to have an
environmental audit done on the site for the lending institution. I can recommend several
Depending on the outcome of these inspections, one of the two things may happen:
Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to close.
The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).
Appraisal and Lending.
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by the licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc.
If the property that you are purchasing is conditional upon a home owner/condo association approval, the rules, regulations and other documents are requested. Most associations requires a certificate of approval before move in. Your closing agent will request that the original copy of this approval letter be brought to the closing, so that it can be recorded with the deed in the county public records.
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the purchasing price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips,
Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
Ask your insurance agent about discounts. You may be able to get a lower premium if your home has a safety feature such a dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long term customers may also be offered discounts.
Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much home insurance to buy, you will pay more than you should.
I will be happy to recommend experienced knowledgeable insurance agents for every property type.
If you have come this far, then it means that it is almost time for a congratulations, but not yet. Do not forget to tie up these loose ends:
Final Walk-Through Inspection.
More of a formality than anything else, the final inspection takes place a day before, or the day of the closing. You will visit the property with your Realtor to verify that all is in working order, everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.
Home Services and Utilities.
I will provide a list of useful numbers for the activation of home services and utilities after the closing occurs.
I am ready to assist you should an unforeseen glitch pop up, even at this last stage. I promise to be there with you until the last stage and handle them in a stress free manor.
The closing agent will furnish all parties involved with a settlement statement, which summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as well as the closing agent, certifying its accuracy. If you are obtaining financing, you will have to sign all pertinent documentation required by the lending institution. If you are unable to attend the scheduled closing in person a mail in closing can be arranged. If you are bringing funds to the transaction, you can elect to either have the funds wired electronically into the closing agents escrow account, or bring a certified bank check tot eh closing in the amount specified on the settlement statement. The seller should arrange to have all the property keys and other important information for you at the closing so that you may receive these items at this time.