Understanding the Buying Process
BEFORE THE SEARCH BEGINS
Know the reasons why you’re buying and make sure it’s the right choice. Reasons to buy vary. Good market conditions, a life change, a desire to invest, a location change can all affect the path you might take in finding the right property for you. Your Agency advisor can help you look deeper into these factors to facilitate the process.
As far as the property itself, it’s a good idea to know all the features you desire in your new home, from the absolute must-haves to the things you would like to have, but could live without if a decision had to be made.
As you begin your search for a new home, keeping track of what makes one different from the other will help you make better decisions in the end. Take notes and photos of the homes you visit and keep your notes organized so you can easily compare information.
- The style of the homes that you will see: Single family homes, multifamily, condominiums, Co-ops.
- The condition of the home you would accept: New home, older home, renovation required.
- The resale value.
- Number of bedrooms and bathrooms.
- The neighborhood.
MAKING THE OFFER
Based on your research, notes, finances and the properties you’ve viewed, you’ve finally found the home that meets your criteria. You’re ready to make an offer. An offer includes the price you would like to pay for the home in question. How much lower than the asking price could depend on finances, comparative prices of other homes in the market, as well as private property and appliances to include in the sale.
The offer also includes a good faith deposit, which is an amount of money that demonstrates your commitment to the property. A good faith deposit is not the same as a down payment, which is considerably more. The amount of the deposit might be between one to three percent and should go to a third party which might be a legal firm, escrow service, title company or brokerage—not to the seller. (A receipt is always recommended.) And if the transaction is not completed for whatever reason, the deposit should be returned.
Also in the offer are items in the house including appliances that would be part of the sale and repairs you would require the seller to make prior to the closing. Dates should also be mentioned in the offer including the closing date and the move-in date. Fees associated with the sale and who, between you and the buyer should are responsible for each. The offer will also declare what the consequences would be as a result of a breach of contract.
Contingencies help offer protection on the way toward finalizing a deal. While a seller could accept a competing offer without contingencies and a speedier process, you should consider certain risks. For example, you can ensure that a contract could be finalized contingent on your receiving written loan approval and that you can financial cover the cost of the purchase. You can also make the deal contingent on successful inspection results and the completion of any major repairs or deductions equal to the value of those repairs. If you own a home and need to sell it prior to purchasing a new home, the purchase can be contingent on the successful sale of your previous home. Deadlines should be assigned to each contingency.
This is the process that takes place during a meeting of the parties involved in which the transaction is completed and the title of the property is passed from seller to new owner. Before the closing, the buyer conducts a final walk-through of the home to make sure that the property is as it was when you viewed it and that all repairs that may have been stipulated in the offer have been completed to satisfaction.
During the closing, paperwork that has been prepared by all parties involved, including the agents, the bank providing the mortgage, lawyers and title companies, are signed.