First Time Home Buyer?

    First Time Home Buyer?

    Jun 26, 2020

    Are you are first time home buyer? What are some of your biggest fears about the process of home buying? Below are a few tips to help ease some of your fears and make the process an enjoyable one. Being a first time home buyer only happens once!! Below you will find some very important tips on the process but it does not cover any purchase in entirety. Each purchase and situation is as unique as the new owner and each state has it's own process. Feel free to ask me question or give me a call. Happy reading.

    • Finding a Buyer's Rep - Buying a home is a major endeavor and enjoying a successful real estate transaction requires knowledge and experience. It is important to find a Realtor who understand what it takes to work with a first time buyer. An Accredited Buyer’s Representatives understand your perspective and is committed to helping you achieve your goals. I happen to have this course under my belt and know there are special needs that come with working with a first time buyer.

    Once you dig into the actual process of finding and buying a home, you’ll benefit from learning more about several other key issues, including:

    What you should pay - both price and related terms

    Purchasing a Home

    When buying a home, it’s important to think carefully about your offering price—but also your offering terms. Most purchase offers define both. And in some cases, terms and conditions can represent thousands of dollars in additional value for buyers—or additional costs.

    Terms may include inspections, requests for specific property repairs, or timing considerations, such as a conditional purchase clause (if, for example, you must first find a buyer for your current home).

    Determining a price

    Some buyers mistakenly believe there is a predetermined formula for offers—that offering prices should be X percent lower than the seller’s asking price or the amount they are really willing to pay.

    In practice, your offer price actually depends more upon the basic laws of supply and demand. If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order.

    How to make an offer

    The process varies by state. In most cases, you complete an offer that your representative presents on your behalf. The owner, in turn, may accept the offer, reject it, or make a counteroffer.

    Because counteroffers are common (any change in terms can be considered a “counteroffer”), it’s important that you remain in close contact with your representative during the negotiation process so that any proposed changes can be quickly reviewed.

    Inspections

    Inspections are common in residential realty transactions. Depending on your needs and where you live, they may include:

    • mold inspections
    • “green” issues, including energy efficiency and eco-friendliness
    • surveys to determine boundaries
    • appraisals to determine value for lenders
    • title reviews
    • structural inspections

    Structural inspections are particularly important. During these examinations, an inspector evaluates the property for any material physical defects and whether expensive repairs and replacements are likely to be required in the next few years.

    For a single-family home, these inspections often require two or three hours. You should plan to attend too. This is an important opportunity to examine the property’s mechanics (plumbing, wiring, etc.) and structure, ask the inspector questions, and learn far more about the property than is possible with an informal walk-through.

    Evaluating the local public school system

    Comparing Schools

    A good public school system can be an important consideration for home buyers, even if you don’t have school-aged children. That’s because good schools can enhance the resale value of your home and make it more attractive to a broader pool of buyers and tenants.

    To conduct your own comparisons, go to School Match(link is external)

    , which offers school research and data consulting services. Here you’ll find test scores, student-teacher ratios, spending and education levels for residents, and more.

    School Match(link is external)

    provides verified school data, as opposed to self-reported data, which can lead to various misinterpretations. Data that has been independently verified allows you to make better school district comparisons before you move.

    Understanding your closing cost

    Closing Costs

    Closing costs are simply the fees associated with 1) purchasing a home, 2) borrowing money, and 3) preparing paperwork to finalize the sale. Your total closing costs will vary depending on where your new home is located, what type of property you are buying, the price of your home, and the complexity of the transaction.

    It is extremely important that you work closely with your buyer’s representative in the early stages of your home search to estimate what these costs could be, since closing costs can easily represent thousands of dollars.

    The main categories are:

    Discount points to buy down the mortgage

    If you want to reduce the ongoing cost of your mortgage over the life of the loan, you’ll want to consider this optional fee. Amounts can vary significantly, from 0.5 to 3 points on the total mortgage amount. This is a one-time charge that is fully deductible as mortgage interest.

    Costs for originating the mortgage

    This generally includes a variety of fees such as the loan origination fee, the appraisal fee, and the cost of credit reports. Other related closing fees may include hazard and mortgage insurance, and interest accrued on the mortgage between closing date and the end of the month.

    Taxes and other local fees

    Charges will vary according to local government requirements. Some may demand that property taxes be prorated according to when you officially own your home. You may also be required to pay personal property taxes, homeowner’s association dues, and other assessments that are specific to the area that you are moving into.

    Documentation costs

    You will have to pay for any research involving public records and title history for your new property. This insures that the title is unencumbered by other ownership claims or liens and can be delivered to you at closing. Other costs include recording and transfer fees, which cover legally recording the deed to your name.

    Details regarding your purchase contract

    The Purchase Contract

    Most real estate agents use standard pre-printed purchase contract forms, filling in the details specific to your purchase terms. These legally binding documents are used to:

    1. Set forth the terms of the sale.
    2. Establish the rights and obligations of the parties involved.
    3. Specify what actions will be taken in order to close the sale.
    4. Establish time frames for those steps to be completed.

    While most buyers are usually fully aware of terms regarding price, closing date, and financial arrangements, there is a tendency to overlook much of the rest of the contract. However, since all the contract terms will be binding, it is important to understand what you are agreeing to before signing the contract. Not doing so can be a costly mistake, especially if there are problems or difficulties in the transaction.

    When an offer becomes a contract

    A purchase contract is created when there is a “meeting of the minds” on all terms—when you and the seller have come to agreement and signed the offer form along with any counteroffers and addenda. Real estate contracts must be in writing; verbal contracts to purchase real estate cannot be enforced.

    Some of the items that you may be agreeing to may include:

    • What personal property will be included or excluded from the sale.
    • Who will pay for required repairs or retrofits.
    • What the seller’s disclosure obligations will be.
    • What the seller’s obligation to maintain the property will be.
    • What the seller is warranting about the property.
    • What the buyer’s inspection rights will be.
    • What will happen in the event either party does not comply with the contract.
    • Whether or not the buyer can get out of the contract upon an attorney review and/or other contingencies.
    • What will the parties’ legal rights and attorney fee provisions be in the event of a breach of contract.

    Do your homework in advance

    It is highly recommended that you read and review the pre-printed forms with your buyer’s representative before you write and sign a purchase offer. That way, once you are ready to present a bonafide offer, your focus will be on the primary issues of price, terms, and closing date.

    Reviewing and understanding the purchase contract form ahead of time can also help you strengthen your negotiating position, protect yourself from incurring unnecessary costs or problems, and gain a better understanding of what you will need to do to conclude the sale.