“HOW TO” FOR BUYERS
STEP 1: SELECT A LENDER
If, like most people, you are not able to pay cash for your new home, you need to consult a lender. You need to be aware of the loan programs available to you, how much you can qualify for, and how it all fits into your budget. The lender you select is very important. I can help. When you submit an offer on a home and it is accepted, it becomes a binding contract. You need to know before you write that offer if you are able to perform. You need a lender who works hard to get your loan approved and funded within the time frames allowed. Some local government or first time homebuyer programs require you to chose a lender from their list. When you are using an FHA or VA program, you need a lender who knows those programs well. I can recommend some lenders that I have worked with in the past and respect, or if you prefer to work with your own credit union or bank, I can suggest some questions for you to ask during your lender screening process.
STEP 2 – LEARN ABOUT THE MARKET
The 2013 real estate market consists primarily of 5 kinds of transactions:
First is the standard sale, where buyers are buying directly from seller who have enough equity in their home to pay off all of their liens. These transactions can be completed in 45 days or sooner, depending on the buyer’s financing.
Second is a short sale. The buyers are still buying directly from the sellers, but the amount the buyer is willing to pay will not pay off the existing liens, so the lien holders must agree to take a lesser amount. This requires approval from all lien holders. A lien holder can be an entity that holds a 1st or 2nd trust deed, a homeowners association, a government taxing entity, or someone who has sued the seller and received a judgement. These transactions can take many months depending on how many lien holders there are, whether the loans are refinance loans or purchase money loans, what the seller’s hardship is, and how well the short sale package has been prepared. Short sales can take 90 – 120 days or more.
Third is an REO, or real estate owned, property. This is a home that has been foreclosed on and sold at auction, usually to the primarily lien holder, on the steps of the courthouse. The bank generally wants as quick a transaction as possible, and the properties are usually vacant. These transactions can be completed in 45 days or sooner, depending on the buyer’s lender.
Fourth is a “flip” property. The listing will read “investor owned”, “flip”, or “corporate owned”. These investors buy foreclosed properties and then renovate the properties. Then they try to sell them at a profit.
Fifth is new construction. I take you to model homes, and then refer you to the builder’s sales agent to complete the sale. I am, of course, always available if you have any questions about your transaction.
I can also assist you with other transactions such as probate sales and 1031 exchanges, but the majority of sales fall into the 5 categories listed above.
STEP 3: NARROW YOUR SEARCH
Once you know how much you can afford and you have your financing in place, it’s time to find a home that excites you. In many cases your search criteria will point you to a specific neighborhood you want to live in, and other times the search is wider. I can help you narrow it down.
First I can set up a “Portal”, your personal link to listings as they become available. Properties matching your criteria (price, city, number of bedrooms and bathrooms, square footage, condo vs. single family home, pool, parking–whatever is important to you) will be sent to your Portal as they hit the market, and you will be notified of new listings by email. It will have property details and photos, and you will be able to sort the listings into favorites, possibilities, and rejects. You and I can adjust the criteris as the search progresses and your preferences become more clear. This process allows you to become familiar with the market, and if you see something you like online, you and I will go take a look. As I become more familiar with what you want, I will preview the homes for you and show you just the best. In competitive areas of the market where opportunities come and go fast, we will be carefully monitoring your chosen neighborhoods daily and you will be poised to act quickly and aggressively when that great home hits the market.
Second, you and I can tour neighborhoods or complexes to familiarize you with them and I can get a feel for exactly what your needs are. The better I know you, the easier it is for me to connect you to a property when I am out viewing the inventory to stay familiar with what’s available.
STEP 4 MAKE AN OFFER
You’ve found the home, now it’s time to write the offer. I am very familiar with the standard California Association of Realtors contract. I will write the offer to best protect your good faith deposit, and explain the major clauses on each page. Keep in mind that you will need to deliver a cashiers check for your good faith deposit to the escrow company within 3 days of opening escrow. After escrow is opened, you will receive a packet of paperwork from the escrow company to complete that will include escrow instructions, a statement of information to verify your identity, and forms to inform escrow about vesting and who you want to carry your insurance. I will receive a copy of the forms and review them for errors. I will also assist you in completing the forms by answering any questions you might have.
STEP 5: INSPECT THE PROPERTY
The real estate contract requires sellers to disclose what they know about the property and any deficiencies it may have. It also gives the buyer a duty to inspect the property and carefully read the disclosures and any other pertinent documents such as homeowner association documents. This is very important. The contract gives you 17 days to complete this step and remove the contractual contingency, and 21 days to have your financing fully approved. It’s important to know what you are buying.
STEP 6: CLOSING
Closing requires the buyers to sign loan documents and bring or wire the balance due into escrow. After your loan funds, the title insurance company will record the deed. If the property is vacant, it’s time to move or start your renovations. If the seller still needs to move out, they are typically given 3 days to vacate. Don’t forget to call the utility companies and notify the post office!