What to Expect When Buying A Home on the North Shore – An 11 Point Guide
1. Select a Local Realtor and Decide to Work Exclusively With Them
It is important to find an agent you trust, have rapport with and who is local to your desired area. A local Realtor drives the streets of your new hometown on a daily basis, knows the people in the neighborhood (and often the back story on a home), understands the local terrain (may know if a street is likely to flood), is aware of the local inventory (and has seen many of the homes), has a developed network (and often receives tips that a home will go on the market before it actually does), and has experience with local schools, clubs, churches and recreational activities in order to direct you and your family to the amenities which will make your transition as smooth as possible. This is one of the largest financial transactions you will ever make – ensure you are working with a high quality, locally based agent! I make my home on the North Shore and am raising my three children here, working with me will give you an insider’s edge when looking for a home on the North Shore
2. Identify Your Needs, Preferences and Objectives
Square feet, number of rooms, garages, basements, land, mechanicals and location all matter. Equally important are your preferences in terms of style, decor, layout and amenities. You and your Realtor will discuss the home features most significant to you. Your economic objectives in the transaction must also be considered. How long do you plan to live in the home? How important is resale value? Will you spend money to update an older home? I make it a point to learn my buyers’ needs and preferences and ask the right questions to ensure you feel prepared.
3. Mortgage Pre-Approval.
A mortgage pre-approval is not only essential when home shopping in the 21st century, it is very easy to obtain. Making contact with a lender and answering a few questions over the phone, along with sending a few documents via email or fax, gets the job done and often within 24 hours. (Click here for sample documents that may be required by a lender for pre-approval).
A mortgage pre-approval is important because it guides you in how much house you can afford. It also influences potential sellers during the negotiation process. While you and your Realtor know you are qualified, a seller does not – his decision to work with a buyer can come down to the quality of the buyer’s pre-approval – his only way to ensure you are a qualified and ready buyer. Be sure to use a reputable lender as your choice in lender matters to sellers and their agents. I can recommend several lenders with whom I work. Each is reliable, offers competitive rates and will ensure your deal gets done.
4. Searching For Your Home
The internet makes it easier than ever to search for homes, however, sometimes the online search sites are not as accurate as the actual MLS. As your Realtor, I can set you up to receive auto-searches of all homes in a given range straight from the MLS in real time or I can prescreen for homes that I recommend and send only those to you instead. When a home looks appealing, do not call the list agent on the home – their duty is to their seller and you need someone to look out for you. Homes are often presented beautifully in the marketing materials but only your agent, who is looking out for your best interest, will share with you the good, the bad and the ugly, i.e., proximity to major streets, flooding issues, power lines, railroad tracks or other relevant facts that could affect resale value and/or enjoyment. In the event nothing of interest comes up on the MLS, your Realtor needs access and networks to exempt properties as well. I have many tools with which to find homes before they hit the market and will go to extreme lengths to help my buyers find their perfect home.
5. Visiting Potential Homes
After reviewing pictures and facts about a possible home electronically, when feasible, it is a good idea to take a drive past the home to see what you think about its location. Whether or not a drive-by is possible, you should contact your Realtor to book any showings of the home. Once there, think about how the home makes you feel as you walk through it. Imagine how you would live your life in the home and assess whether it is functional for you or your family. Feel free to make notes and ask questions. You can always schedule a second showing if additional questions come to you at a later time. I am happy to set up showings for my clients so that we can walk through potential homes together and discuss each homes suitability in meeting the buyer’s objectives.
Open houses are a great way to supplement the homes that your Realtor will show you. Please be sure to always let the list agent at the open house know you are working with your own agent as well as your agent’s name otherwise you will receive relentless follow-up from the list agent trying to sell you that home and/or convert you as a client.
6. Make an Offer
Your Realtor will discuss comps, initial offer price and recommend a negotiation strategy for you. While price is often seen as the main event, closing dates, earnest money amounts, contingencies and other miscellaneous terms factor into the equation as well. Your Realtor will prepare the physical offer which will include either your pre-approval letter or your proof of funds (if you are paying in cash). This demonstrates to the seller that you are a serious and qualified buyer whose offer shoujld be taken seriously. Sometimes a personal letter to the homeowners can be part of the offer package and that can be highly effective. Your agent will ensure that all necessary provisions to protect your interests are made as part of your offer. When writing up an offer, I always consider mortgage contingencies, inspection periods, attorney approvals, appraisal contingencies, home sale contingencies, “as is” provisions, pro-rated real estate taxes, special requests, inclusions, home warranty provisions and/or lease back options in an effort to protect my buyers as fully as possible.
7. Offer Accepted
Once your Offer is accepted, both sides will sign the contract and the buyer will deposit initial earnest money into an escrow account, usually handled by the Sellers’s brokerage. At this time, the buyers and sellers have a period of time during which their attorney can review the contract to ensure their interests are protected. In the event the contract is not to the attorneys’ liking and revisions are opposed, either party may cancel the contract for with a full return of earnest money.
After Offer acceptance, an inspection period kicks in during which buyers can bring any type of inspector through the home to ensure there are no major defects or surprises lurking within the walls. After the inspection, any issues arising should be discussed with your Realtor. For major defects, it is customary for your Realtor to go back to the seller and ask them to correct the problem and/or issue a credit for you to fix. If, at any time, you deem the inspection issues or their resolution to be unsatisfactory, you can cancel the contract and receive a full refund of your initial earnest money.
8. Post- inspection/attorney approval
Once the Inspection/attorney approval period ends and both parties are in agreement, it is time for you, as a buyer, to pay the remainder of the earnest money and the deal becomes hard except for any outstanding contingencies. The amount of earnest money varies and is negotiable but total earnest money is often 5% of purchase price.
If financing is involved, your lender will whip everything into high gear at this time. In the post-2008 era, lenders are very cautious and must dot every “i” and cross every “t.” It is extremely important that you respond to any and all requests for paperwork and information from your lender on an ASAP basis. The lender has a bureaucracy to navigate and your responses must pass through many hands which can take time. If at all possible, you do not want to create a delay which could jeopardize the closing date and even the entire deal should the Seller become impatient with delays.
It is also extremely important that you make no major changes in your financial situation between pre-approval and closing. Do not open or close any credit cards, do not pay any bills late, do not make any major purchases (such as furnishings or cars), do not transfer or move large sums of money. Do not quit your job. If you are thinking about any of these activities, run them by your lender first!
9. Mortgage Commitment and/or Contingencies Satisfied
Once your lender has completed their paperwork, they will issue you a mortgage commitment and you can rest assured that the bank has committed to loan you the money for the purchase. The bank will still check all of your financial information one last time about two days before closing (so no major purchases until after closing) but it would be highly unlikely for your loan to fail at this point in time. Any outstanding contingencies such as a home sale or home close contingency must still be satisfied. Once they are satisfied, the attorneys will schedule the closing and make preparations for getting the necessary money to the title company to pay for the property!
10. Final Walk-Through
The day before (or morning of) closing, we will schedule a final walk-through to ensure the home is in similar condition to when you made your offer and to also ensure the sellers have moved everything out of the home and left it in broom clean condition.
Congratulations! You are moments away from holding the keys to your new home. At the closing, the money will transfer, the deed will be signed over to you and your mortgage documents will be executed as well. Please know that my relationship with buyers does not end there! Should you need any vendor recommendations, have questions about the area or your new home, I am here to help!
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