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Real Estate 101: The Buying Process, Part I

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First Steps

Pre-Qualification

If you are planning to finance all or part of the cost of the home (i.e., get a mortgage), the very first thing you should do is speak with a lender to get prequalified for a mortgage. The lender will ask for information about your income and work history and will pull a credit report. The lender will then compose a letter stating the amount of money you are qualified to borrow for the purchase of a home. This amount can be adjusted lower, if needed, to fit your preference.

Selecting and Utilizing a Realtor as “Buyer’s Agent”

Many home buying guides will state that you should find a Realtor you trust to work within the home search and purchase process. This is absolutely true. I would add to this, once you find that Realtor that you trust and feel comfortable working with as your buyer’s agent, you should plan to stick with them. A Realtor working for you as a buyer’s agent invests time, though, and effort into helping you achieve your homeownership goal. Allow your Realtor to see you through to the end.

If you are keeping an eye out for “FSBOs” (For Sale By Owners), that’s fine. If you decide to swing by a “New Construction Community” (neighborhoods built by Landon homes or DR Horton, for example) and check out some houses, that’s great too. But, the courteous and wise thing to do, is to keep your buyer’s agent well informed. This can actually help you a great deal, as having a buyer’s agent on your side to negotiate for you and represent your best interests in the transaction can save you both time and money!

A word of advice, if you are interested in pursuing a particular property that has been listed For Sale by Owner, please notify your buyer’s agent first so he or she can make the initial contact. This gives you and your Realtor more negotiating power. Also, if you go to visit a “New Construction Community,” be sure to let the salesperson there know that you are already working with a Realtor. They should then ask for your Realtor’s name and keep it on file if you decide to pursue a home in that community.

Making an Offer

Preliminaries

Before you make an offer, be sure that you and your Realtor have done your homework on the property. If there is a Seller’s Disclosure available, you will want to review it. You should have an idea of any “big ticket items” that may need to be repaired or replaced soon. Your Realtor should know, for example, the age of the HVAC system, the age of the roof, the plumbing (has it been updated?), and the electric panel/wiring (is it up to code?). Your Realtor will take this information into consideration, as well as recent comparable sales in the area to help you come up with a competitive but well-reasoned offer.

Preparing the Offer

Your Realtor will ask for your name (and any co-buyers) as you would like for it to appear on the Title statement. Then he or she will prepare the contract and send it to you via e-mail for e-signature. You should be able to sign the document using your phone or computer. Once your Realtor has received the signed contract back from you (via e-mail, isn’t that great?), he or she will present it, along with a copy of your pre-qualification letter to the listing agent (the Realtor who is representing the seller).

The Waiting Game

Now you and your Realtor will wait to hear back from the seller, via the listing agent. Sometimes this happens very fast. Usually, it takes a little while. Your Realtor will have put a deadline for the response on the offer, which is often for the following day. There are three possible responses you will get back: Yes, No, or a Counter-offer. Unless you have made a very strong offer (close to or at asking price), the seller will most often counter. This process can go back and forth a few times, but ideally, the sooner you come to an agreement (or walk away, if it’s not right for you), the better, as the seller CAN accept a different offer while in the negotiation stage with you.

Stay Tuned: The Buying Process, Part II is Coming Soon