Purchasing a home for most people is the biggest financial commitment they may ever make.
Checking your Credit Report and Score
First off, it’s a smart thing to check your credit report prior to contacting a lender. By law, you can get a free credit report once a year from www.Annualcreditreport.com. The data is compiled from the 3 major credit-reporting agencies: Equifax, TransUnion and Experian.
It’s good to know up front where you stand credit wise before speaking with a lender, and especially before shopping for a home. Maybe you need to dispute reporting errors or fraudulent activity seen on your credit report. Remember, knowledge is power.
You may be ready and willing, but the lender is going to tell you if you are able to purchase a home. How much do you want to spend and how much you can afford are two different things. Just because your lender says you qualify for a larger mortgage does not mean you may want to pay that high mortgage every month. It may be, how much are you willing to pay. Only the buyer knows that, so keep it real.
Find a Lender …or two
Ask friends and family for referrals. You have cleared up any blemishes on your credit report or you are just ready to move forward. Speak with a couple of lenders with that credit report in hand to get pre-qualified. They may not charge you if you have the credit report. Be upfront and let them know you are interviewing a couple of lenders. Your lender is going to issue you a Pre-Qualification Financing Letter stating how much the lender is willing to lend you. The letter supplies some useful information on the Pre-Qualification when you present an offer to a seller. It shows the seller that you have come prepared and is more likely to entertain your offer over another buyer that has not sought out financing.
The Pre-Qualification letter is NOT a guaranteed loan approval. Not just yet.
Select your Real Estate Agent
Start by asking friends and family you trust for referrals. Select an agent that best represent you and your needs. Buying a home is stressful, so find an agent that is patient and not looking for the next commission check. I see it this way, I do not need your business I would like to earn your business. Need and Want are two separate things. Find an agent that takes the time to get to know what your goals and priorities are. Someone that has your best interest at heart and is honest. You don’t have to choose solely on experience, although it’s a good thing to have, but it’s not everything especially if the agent has invaluable amount of resources to find you the correct answer to your questions. Someone you can relate to. Don’t be afraid to move on with another agent if you just aren’t getting that good vibe feeling. Check their licensing status: http://www.re.state.az.us/Lic/Lic.aspx.
As Your Agent, I promise to:
- Be your advocate and guide you through the local and legal requirements to property ownership. Making sure you have the most up to date information to make informed decisions.
- Listen to your needs and focus on serving you with proactive responsive communication in a style that works for you.
- Represent you and negotiate for you to assure you get the price you want and avoid any costly mistakes. Only an agent has easy access to homes for previewing to compare against the subject property in detail, then submit this to a listing agent at time of offer and say, ‘here is why my client is making this offer’.
- Give you competent advice and to understand the legal implications of the documents that I shall be preparing for you.
- Provide you with local market insights and current market conditions.
- Provide you with property taxes, real estate values, utility costs, local zoning ordinances and municipal services.
- Help you determine which neighborhood is right for you and present home choices that will best meet your wants, desires and needs.
- Coordinate, manage and execute all the steps needed to make your home buying process seamless and as stress free as possible.
The Home Hunt:
Depending on the market conditions, buyers often see between 5-35 homes. Working with an experienced agent will save you time by looking at only those homes which meet your criteria financially and those wants and needs.
Have options if homes you see are just not meeting all of your criteria. Decide what you are willing to give up in order to make your home ownership dreams come true.
Experienced agent will ask you questions during a home showing and document your thoughts and feeling of the home. It’s also wise for the buyer to do the same. Both parties can collaborate over what homes were viewed and what should be eliminated in order to move forward.
**A caveat about this home search can lead to confusion when buyers often download 3rd party home search apps. Often these apps can be out of date by as much as a week. I often recommend buyers utilize my personal Mobile App to work productively with clients. You will be able to correspond via email or text and ask me real time questions based on homes you have added to your favorites list. Even schedule home showings! Draw your dream filter using a polygon sketch. Ortho maps available. Calculate commute times for school and work. Augmented reality search using your smart phone’s camera. My app has a direct link to our local Tucson, AZ Multiple Listing Service to assure accuracy.
Making/Negotiating the Deal
An experienced agent will guide you in your offer making decision. It does come down to you making the final decision on what price you want to offer a seller, but to heed unnecessary delays and rejections, you should take your agent’s advice on what you should offer. They are going to take the time to break down the sales in the area and compare this to the home you are about to make the offer on. You should receive a copy of that Comparable Market Analysis and study it. It’s a well prepared guide towards prepared to assist the buyers in making a sound and fair offer.
Remember negotiations can vary from neighborhood to neighborhood, even within the same city. Desirability and supply in demand all play a role.
You made an offer. It was accepted and you are now under contract! Congratulations! But it ain’t over yet. Both the buyer and seller now have contingencies to meet before the SOLD sign is posted.
Now this is where I shine for you as your REALTOR®. I’m here to keep everything in order and keep you, the buyer on track. Time is of the essence now.
- You will conduct a Home Inspection for a time period agreed upon in the purchase agreement. Generally it is 10 days long and starts the day after contract acceptance. Conduct all the inspections that you wish to complete within the contracted time frame i.e, General Home Inspection, comprehensive inspections such as Electrical, Plumbing, Soil Engineer, Roof etc. **Attention Buyers! Please utilize the Arizona Buyer Advisory. Your agent should provide you with the latest edition. Click for English Buyer Advisory or Spanish Buyer Advisory
- I will assist you in coordinating and scheduling those inspections.
- You will deposit your Earnest Money that was negotiated within the purchase agreement into an Escrow account. Earnest Money shows the buyers good-faith intent to the transaction. Typically that is roughly 1%-3% of the price offer and depending on the region
- Your lender will coordinate with you on any additional documents needed to facilitate your future loan approval and get you locked in to an interest rate. Talk to you about Hazard insurance, Home owners’ insurance.
- Appraisal is ordered usually during inspection period. Hopefully the home will appraise at value. Meaning it will appraise for the agreed upon sales price. If it does not, the lender will not approve the loan. At this point, the buyer and seller need to come to some sort of agreement. Seller and buyer can split the difference by seller lowering the sales price and the buyer adding to the down payment. If this isn’t an option for either party, then the transaction may be over and everyone moves on. **As the buyer, you now may have lost the costs of your Inspection(s) and Appraisal. But you get your Earnest Money back, if you didn’t breach any parts of the purchase agreement.
- Help you review the Seller’s Property Disclosure Statement (SPDS) given to you by the seller. The SPDS discloses facts about the home/property that may be of material importance to the buyer. See my article on What Are SPDS. I will also assist you in reviewing any other disclosure documents provided by the seller.
- The Title/Escrow company will be providing you with a Title Commitment report that is an examination of all historical records of ownership and any liens of record that may encumber the property. This is performed in order to provide the buyers with a clear Title.
- Assist you in making any requests for repairs if so desired. But I will also explain what should be considered a request and what should be considered something you as the-future-home-owner is willing to repair yourself. **Remember requests for excessive repairs can potentially make or break a transaction. Keep it real. Also, most of the time you are not buying a new home. Even new homes have their pitfalls too, believe it or not. I will followup on these repair requests and assure they are completed as agreed upon.
- I will have already given you a list of buyer moving tasks to help facilitate a smooth moving process.
You are almost there!!
Arizona is an escrow state, not an attorney review state, but nothing says you cannot secure the services of a real estate attorney. Escrow is the process wherein the sellers and buyers deposit funds, written instructions to the transaction and documents to this neutral 3rd party employed by both the sellers and buyers. Escrow holds all monies and documents until all the terms and conditions set forth in the purchase agreement have been met. They provide assurance for all parties involved in the real estate transaction that their interests and funds are being protected. All contingencies must be met prior to the exchange of funds and title. These exchanges are through the Title/Escrow company not directly to the sellers. In most cases buyers will never even see the sellers. The buyers will not receive the keys to the home at closing. The last step in the process is when the whole process is recorded in the County Recorder’s office. Once recorded the keys are transferred to the buyers-Congratulations, you are a new home owner!