The Home Buying Process in a Nutshell.
Thinking about buying?
This is a lot of work and home ownership is certainly not for everyone. The good news is, I can help make the process easier for you and drill down into how to prepare yourself for this decision. Whether you are young and tired of renting or a seasoned home buyer who has moved all over here are a few tips that cater to the Jacksonville area.
Finding the right Realtor. Your cousin’s best friend who just got their license may not be the wisest choice. Try to find someone you trust and who will be honest with you as well as steer you down the path to home ownership. A good agent should be able help you in many aspects. If you are planning on using an agent, don’t call the closest real estate office and ask for someone. Ask your friends and family for a referral. That is the best way to find someone you trust. Good agents can help with the following.
They may be able to find homes that aren’t even listed yet.
Show you property you didn’t think to look at, but may be worth taking a peek.
Manage appraisals, repair requests, inspections, etc.
If there is work to be done after the purchase, a good agent will have a hot sheet, a list on preferred contractors who he or she trusts.
Should be able to negotiate a deal that works for both sides and handles any issues that pop up along the way.
Focus on your down payment! Saving away chunks of cash can be very difficult in today’s fast moving world. However, if you want to purchase a home and are committed to doing so, you need to save money for a down payment. Today you can purchase a home with as little as 3 percent down depending on your mortgage type. 3 percent may not sound like a lot but on the average home sales price in First Coast area of $187,300, that is a little north of $5,600. Assuming you go conventional, that downpayment get up to 20 percent, which would be a significant chunk of change. Leading into the next and most important step, once you have your down payment ready to go.
Shop lenders, find what works for you. Assuming that your credit is in order to make a purchase. You need to start talking with different lenders. In my opinion, the best two places to find a good lender are, again referrals from family and friends and the easiest and probably safest bet, ask your real estate agent. More than likely your agent has a relationship with at least a couple different hometown lenders. This can accelerate the process and make everything streamlined. When the lender and the agent have worked with each other before, it helps move things along seamlessly.
Figure out where you want to live. Sounds simple right? Wrong. Many new buyers are having difficulty figuring out where they want to live. There are few reasons for concern, some it based on cost alone, other factors can be schools, commuting time, shopping, healthcare, grocery stores, and the list can go on and on. Every person in the world has needs that are different from your own. So make a list of the top 5 things you think are important and tell your agent, this is what we would like to find. Are you going to find all 5, probably not, but you can get close and sacrifice on one or two. What if 5 isn’t enough? Everyone has dreams and if you have a list of 10 things and your agent finds all of them for you, pay him his commission twice, because he just found your dream home!
Time to buy! Alright, now that you have saved for your down payment, picked a lender, decided on a couple different neighborhoods you want to focus on, you are ready to start looking at homes!
Couple things to avoid during this process. Credit reporting can be very finicky and one change in a person’s credit can ruin a deal very quickly. So, don't purchase a car, have your credit pulled for any reason, and this includes opening new credit cards, yes even store credit cards so you save the extra 15 percent on your purchases. Any change in your credit can alert a lender and ruin a deal.
Make the offer. Once you have found the home of your dreams and you asked your agent to put in a real competitive offer. Sit back and relax. Just kidding, the real estate market moves very quickly and you should hear back about most offers in 24-48 hours. Sometimes it may take longer depending on the situation (get into that later). Once you have made the offer your agent will write everything up and submit it to the listing agent. There may be some countering back and forth until a firm price is agreed upon. Once that price is agreed upon, you need to get everything in writing. The word of someone in today’s world is useless, if it’s not in writing, it never happened. Make sure you sign the deal that you would like and the seller signs their part. Once this is done, the home is all yours! Ok, I’m kidding again, I wish it were that simple.
My offer got accepted! Now what? The first thing we need to do here in Florida is an actual home inspection, then a WDO inspection. Your agent can refer one to you if you don’t know a licensed home inspector. These gentleman will typically check everything from the kitchen sink, to the roof, to flow valve of the toilets. They will let you know if there is anything wrong structurally or with any of the fixtures of the home as well as HVAC, kitchen appliances, hot water systems, electrical issues, etc. They will report back to you with often a list of things that need to be fixed or maybe just noted in the report. A WDO inspection? What does WDO stand for? WDO stands for Wood Destroying Organisms. Also knowns as termites to the common person. Could be termites, carpenter ants, carpenter bees, or any organism that may cause damage to the wood structure of the home.
Inspections came back and this home is a wreck! So you got the inspections back, first deep breath. Almost all of the things found on an inspection report are very minor. There obviously are some major issues, such as foundations, HVAC units, water heaters, roofs, and pools that have leaks. Those are going to cost you some money. Light electrical work, some WDO repair on the stucco, or wood rot, these are mostly minor and the seller should repair them if they already had not planned to do so. The job of the home inspector is to let you know that there will be some things wrong with the home. Homes 100 years old and homes 5 years old will have things wrong with them. New homes are great but don’t think just becuase they are only a few years old that nothing will come back on the inspection report. In my time in the real estate business I can guarantee one thing. Homes built 100 years ago, were most definitely built with better quality materials and than homes that are built today. Brick and concrete will certainly outlast wood and drywall. Ask any contractor and he will tell you the same thing.
The owner won’t make the repairs I want! So now we have a good ole fashion mexican standoff. Sellers typically think that their homes are worth more than they actually are. When working with my buyers, depending on the severity of the repairs and cost that they might actually incur during the process, I like to play hardball. If we are arguing over two thousand dollars over some minor repairs, then the deal is probably not worth walking away from for either party. So, you simply come to an agreement, either split the difference or come up with some random number so the seller thinks that you did your homework and calculated the number that you need to make the deal work. I prefer the latter, but sometimes on a small repairs you can make it simple. On large repair items like an HVAC system or roof, this can be handled a couple different ways. If you as the buyer can’t come out of pocket for a large repair, then we try and negotiate the selling price down, pay a contractor for the work at closing (if there is money that the seller will receive at closing), or be prepared to walk away from the deal if its not worth an extra 10k to you. Remember that everything is negotiable in real estate and I mean everything. At the same time, don’t think you can rip people off either, because they have the rest of the market to sell to as well. If you find yourself asking for everything, the seller can turn down the deal and choose to work with someone else. Be fair, and ask your realtor what is fair and honest, they will tell you what they think.
Repairs are in progress? So, you have come to terms with the seller on the repairs. Make sure that everything you guys agree upon is in writing! If it's not in writing and signed by both parties, don’t expect it to get done. Your agent should know this and has the proper forms to get signed by you and the seller. Once the repairs are completed, make sure you get a written receipt for every repair that was completed. These repairs (depending on the scope of work) need to be done by a licensed contractor. If it something as simple as paint or other general maintenance work, just put your own eyes on it and make sure it is up to the standard you were looking for.
Check on the status of your loan and how close they are final approval. This seems to be fairly logical. A good lender will touch base with you at least once per week to keep you updated on the process as well as let you know what information is needed to get the deal complete. If they don’t, make sure and check with them. The lender wants to get the deal done as soon as they can as well, so make sure you and the lender are on the same page.
Loan is approved and it’s closing day! The best thing a lender, realtor, and buyer can hear? We are clear to close. Those words are a great thing to hear because as we get closer to the closing date it is human nature to become nervous when dealing with such a large transaction. The last thing you should do before you attend the closing and “sign your life away” is a quick walkthrough of the property. Get with your agent and walk through the property to make sure all the repairs are done (this should already be known and completed) everything is out of the home, there are no damages from the seller moving out, etc. Once this is done, make sure you have your funds for closing and get to the title company to get your keys!
It’s moving time, do it yourself or hire it done? Once you have completed closing it’s time to move. If you want to do it yourself and save some cash, knock yourself out. Get some friends offer some free pizza and suds and have a day! The other option, pay a mover and relax as they get things moved in and you point to where you want it. Either way can be nerve racking, but know that soon enough you will be settled into your new home and enjoying life as it was meant to be.
I truly hope this gives you a simple crash course in what to expect when you purchasing your first home or a refresher when buying your next home. Always remember that rules and regulations change rather quickly. Having an agent in your corner who is familiar with updated policies can help you avoid a lot of headaches. If you have any further questions you can always call me at 904-574-1958 or send me an email at matthew.miller@era.com.
