Congratulations on your decision to buy a home! Black Dog Real Estate, Inc. wants to be YOUR partner throughout the purchasing process, and you have definitely come to the right place for proper representation. There are many things to consider in purchasing your home, but first you will want to line your ducks in a row by following some simple guidelines to make the process a whole lot smoother. We have narrowed this process to a manageable list that can be followed easily:
Step 1. You have made the right choice by deciding to partner with Black Dog Real Estate, Inc. Finding a qualified real estate professional is critical to helping you during this time. What you want is buyer’s representation. A buyer’s representative advocates for the buyer—NOT THE SELLER—in a real estate transaction. We honor loyalty and confidentiality of the relationship through the entire process as your buyer’s representative. To ensure that this relationship is solidified, you are encouraged to go ahead and make the relationship official through a simple written agreement explicitly stating the duties between the parties. This protects everyone. To better understand different agency relationships and representations, check out the Information About Brokerage Services.
Why should I choose this representation by a written agreement?
- Protection: A vast majority of sellers have representation out of the gate, so you want the same services that are provided to them. Black Dog Real Estate, Inc. professionals can provide you with the expertise and protection that you need throughout the entire transaction.
- Efficiency: Buyers who work WITH a designated representative find their homes quicker, while viewing more homes within their search parameters, than the buyers who do not engage in this type of process (according to NAR).
What SHOULD my buyer’s representative do for me?
- Identify your needs (not just in a home, but lifestyle).
- Suggest sources of financing, professional services of others including, but not limited to, inspectors, exterminators, vendors, subcontractors, etc.
- Provide information on schools, neighborhoods, and the community.
- Arrange property showings after communicating to you the desired properties.
- Evaluate properties together.
- Explain the agreements and forms that are used.
- Suggest contingencies contractually that protect you, rather than the seller.
- Keep all information confidential as to protect your bargaining position.
- Assist in negotiating contracts for a favorable price and terms.
- Monitor the entire purchasing process to ensure that the closing stays on schedule by assisting with issues that arise from the open of escrow to close.
How are we as buyer’s agents compensated?
Typically, buyer’s representatives are compensated from the commission sellers pay their listing agents based on the selling price of the property. It is important to discuss the terms of compensation during your initial meeting because there are a number of ways that compensation can occur. This fee is discussed in the contract that will be signed between you and the agent or real estate professional, and most of the times, the fees are based on services rendered for a negotiated fee.
Step 2. It is very important to assess your credit and finances by knowing what your credit status is prior to viewing property. Even though you think your credit might be stellar or even poor, you would be surprised at what is on your credit report. Many people who think they would not qualify for a home would. Make sure that you don’t have any blemishes on your credit history that might be easily cured, but that might take a little time. There are also professionals that we can refer you to, as well as assist with this. Resolving any credit issues can assure you of the most preferred rates from lenders and home insurers by having as clean a record as possible.
Consumers can obtain one free credit report from each of the three major reporting bureaus every twelve months according to the Fair Credit Reporting Act. You can do this by visiting www.annualcreditreport.com which is the only authorized source for people to access their credit report online for free.
What is the difference between getting prequalified for a loan and pre-approved?
- Pre-qualified is an informal determination by a lender or mortgage broker stating the amount of the mortgage you can afford.
- Pre-approval is a guarantee in writing by a lender to grant you a loan up to a specified amount.
There are many advantages of having a pre-approval. Sellers will find any offer you make more attractive if you are pre-approved and the length of time before closing can be much shorter if you have already taken the time to get preapproval, before negotiating a contract. By being preapproved you SHOULD stand out in a hot market during multiple offer situations. It might allow you to be more aggressive in other areas of the contract that give you as the buyer certain advantages that it wouldn’t allow to others that aren’t as qualified during the offer presentation.
How much can I Afford?
A good rule of thumb in evaluating your finances to determine affordability is:
- Your maximum monthly mortgage payments should not exceed 28 percent of your gross (pre-tax) income.
- Your maximum debt load, including your mortgage payment, should not exceed 30 percent of your gross income.
These ratios and numbers are typical in obtaining conventional loans; however, there are many other options in loans with differing amounts of money to be put down. It is best to discuss this with a professional. To do so, the first step is filling out a short online questionnaire to get pre-qualified to start the conversation.
Step 3. Assessing wants and needs is the next exercise you will have with your Black Dog Real Estate, Inc. professional. You will want to identify what means most to you. We also like to talk about your non-negotiables. If there are things that you cannot live without, we need to know that. We don’t want to waste any time on properties that do not have those features you cannot live without. We have provided a home buying worksheet that can help us help you better. Please print this out and email it back to us.
Step 4. Now for the fun part which is shopping for the home! While completing the worksheet is important, searching for the right home can be a daunting task. It is imperative that you communicate with your Black Dog Real Estate, Inc. real estate professional about the type of community where you would like to live. We will provide you with all of the resources that are available to us.
NOTE: Under Federal Fair Housing Law, it is unlawful for a real estate professional to engage in conduct that is discriminatory on the basis of race, religion, color, national origin, sex, handicap or familial status. A real estate professional should never steer you towards or away from a particular neighborhood if the homes there fit your needs and are within your range of affordability.
Spending time in neighborhoods can give you an idea about it, but not everything! We will need to do some research depending on specific needs and preferences. Some of the things to consider are:
- Neighborhood profiles: Do you want to live in a rural area, small town, big city, suburban lifestyle, urban, condo, etc.? What kind of population density do you want to experience? What level of commercial development and shopping availability do you need?
- Quality of Schools: Communicate with your Black Dog Real Estate, Inc. professional about the type of schooling needs your family will be needing. We can definitely provide those resources to you. Our website also has extensive links under community information for many of the cities and areas you will be considering.
- Household Data: Take into account family type, average household income, and homeowner education level and occupation.
- Crime Rate: While crime isn’t something we think about on a daily basis, it is a reality one must consider when purchasing a home. No neighborhood is insulated from crime; however, by doing research on crime incidence reported in the neighborhoods you are considering, you can make a better educated decision about where you would like to live.
- Amenities: You will want to consider the cost of amenities provided in certain neighborhoods that are associated with the pricing of homes. Decide the kind of lifestyle you would like to live, and we can help you find a home that more suits your needs. We have also provided some community and area information on our website as well, so if certain activities pique your interest, please let us know and we can find an appropriate community.
What are some strategies in looking for a home?
When you are looking at homes with our professionals, inquire as to how hot certain neighborhoods are and if multiple offers are being put on properties. This will change the approach you will take in shopping for properties. In hot markets many homes do not stay on the market long and will end up in a multiple offer situation. Be prepared to discuss this with your real estate professional. If you fancy a particular neighborhood, many times there is a neighborhood that is similar but may be a bit newer or older that can provide the same “feel”. Be sure to communicate your specific preferences when shopping neighborhoods. Be flexible. Remember that there is some give and take if you have a budget to work within! Be realistic in expectations, and the market will speak for the pricing.
USE OUR WEBSITE TO YOUR ADVANTAGE! You have complete access to properties in real time. Help us help you! We have neighborhood information, school information, community activities, economic stats and community stats.
Neighborhood-Evaluation-Tool PDF: You can spend a lot of time looking for a home, but it is best to start narrowing down your choices. Once you choose the general area where you would like to live, you will want to further narrow your search down by comparing neighborhoods. Use this worksheet as a side-by-side comparison so you can choose the most appropriate neighborhood for your family!
CHOOSING A HOME: It is time to view homes. Refer to your home tools prioritizing worksheet to remind yourself of your wants vs. your needs. The following worksheet will help you compare the homes you view!
Once you view and evaluate the homes, you might be ready to make an offer based on what home is right for you. Depending on the market conditions, prepare to move quickly. We all have stories about the buyers who looked FOREVER for the house they wanted, and when they finally found it, their delay of action lost the home! Don’t let this happen to you. Listen to the market and be advised by your real estate professional.
Step 5. Since you have found the perfect home, making an offer and negotiating terms is the next step. Your Black Dog Real Estate, Inc. professional can guide you through this process. Remember in negotiating, it is important to know your “buying power” and whether you are in a strong bargaining position, which the seller should look favorably upon.
Strong Positions are:
- If you are an all-cash buyer.
- If you are pre-approved for a mortgage.
- You do not have a house you need to sell, or other contingencies that must be met before you purchase the home.
- You can close quickly.
In considering your offer, think about what position the seller is in.
- Has the home remained vacant for a while because expenses add up quickly?
- Is the seller divorcing or are they wanting to close quickly?
- Is this an estate sale as it can mean a bargain with a promptly closed transaction?
When making an offer, the starting and ending points of every negotiation are the initial offer and the acceptance of the final offer. Our professionals provide an invaluable resource and service by providing standard forms which have been kept up to date with the changing real estate laws.
We always recommend having a real estate attorney review the contract if there are ever any concerns!
Step 6. Once your offer is accepted, you will need to obtain a mortgage that is favorable to your situation. Hopefully you are fully preapproved at this point because you wanted to show a strong buying position, making this step much easier. Two of the biggest choices you will need to make in regards to the mortgage are duration of the mortgage and the interest rate and are the greatest factors effecting the monthly payment. You will need to discuss the different rates and durations, fixed rates, adjustable rates, ARMs, etc. with your lender. The most common source of lending comes from mortgage companies, savings and loan associations, banks, and credit unions. We can definitely recommend some lenders if you have not already arranged financing.
Step 7. Once your offer is accepted you will need to arrange for your property to be inspected during your option period. This is the only unilateral portion of the contract that can be executed by the buyer. This period for a consideration of money gives you the unrestricted right to terminate the contract for any reason. This is the time in which you need to have the property inspected, scrutinize the property closely, check issues with septic tanks, water wells, termites, check for slab issues, or anything you could possibly be concerned about the property. Your Black Dog Real Estate, Inc. professional can walk you through this process. We have several inspectors that our buyers have worked with in the past that we can direct you to or you can certainly search for one on your own.
We highly recommend that even if the property is brand new that you obtain a separate, private inspection of your own.
The inspector will provide you with a detailed report detailing any flaws found in the home, including the severity of his/her findings.
LIST OF INSPECTORS
Step 8. The property has been inspected, the financing is in order, so now you need to prepare for the close! Your financial institution will require that the home you are purchasing has insurance on it. You need to obtain insurance prior to closing and show proof of the policy. Allow plenty of time to shop for this insurance. Ask your Black Dog Real Estate, Inc. professional if you don’t already have a provider in mind, and we can definitely make recommendations. Costs and coverages will vary so our recommendation is get several quotes and be sure and compare apples to apples in regards to coverage.
Things to consider with insurance:
- What is covered?
- What is not covered?
- How much is the policy?
- Are discounts available for such things as smoke detectors, outdoor lights, fire alarms, burglar alarms, non-smoking owners, or if you have combined auto/home policies etc.
- What is the deductible?
- Ask about separate things such as jewelry or valuables within the coverage.
- Do you need to consider flood insurance?
- Is the home in a flood zone where separate flood insurance is required?
Step 9. Now it is time to prepare for the closing!
The closing can be a confusing time. Be sure to know what to expect as far as closing costs. The fees and costs associated with your mortgage are detailed in a federally-mandated document called the good faith estimate which is provided to you by your lender and the actual mortgage documents. The variations in the fees at the time of quoting from the lender to the closing are regulated so that you know a very close ball park as to what to expect.
Be aware of any transfer fees, homeowner’s association fees, tax proration, up front escrow fees, etc. It is a good idea to have an open dialogue with your lender to know exactly what to expect in regards to the fees associated with the loan. You should review the HUD-1 closing statement with your lender AND your real estate professional. They can help answer any questions you may have.
Don’t forget to make arrangements to have the water, electricity, garbage service, gas, cable, etc., transferred to your name and your account set up with whatever providers you are using so there is no delay of services to your home once the property is closed!
Step 10. The move can be a daunting task. Having a plan is key to making a smooth transition. The costs can be surprising to the first time mover so making arrangements is key. Our professionals have companies that we can recommend. If your move is job related, you might consult your tax advisor, as many of these expenses can be tax deductible. You also will want to consider purchasing special moving insurance as well. Our suggestion is consulting your new provider of your homeowner’s policy to see if they offer anything or can recommend a temporary insurance. See what the moving companies cover and decide what additional coverage you might want to obtain.
Over time you can collect a lot of “stuff”. Black Dog Real Estate, Inc. recommends that you assess your possessions and dispose of the things you no longer need such as clothes, furniture, and many possessions that you no longer use. There are a lot of non-profit companies that can come pick that stuff up for free. Also, consider having a garage sale as the less you have to move, the less expensive it will be! TAKE SPECIAL NOTE OF ALL OF THE MISCELLANEOUS ITEMS YOU HAVE LIKE GYM EQUIPMENT ETC. as this will greatly increase the cost of your move. Be sure that the companies you get quotes from fully understand the quantity of “stuff” you have. Don’t forget to tell them about the two-car garage you have full of things that need to be taken too.
CONGRATULATIONS ON YOUR NEW HOME!
BLACK DOG REAL ESTATE, INC. LOOKS FORWARD TO BEING YOUR PARTNER THROUGHOUT THE PURCHASING PROCESS!