Deciding to Buy

Purchasing a property is likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.

Why Do You Want To Buy?

• Are you tired of paying rent?
• Have you decided to pay your own mortgage and not your landlord’s?
• Have you outgrown your current home?
• Are you looking for an investment portfolio?
• Are you looking for a rental property?
• Would you like a larger yard?
• Would you rather live in a different area?
• Do you want to shorten your commute?

Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown?

Property ownership is an excellent investment, whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.

Preparing to Buy

Before you start shopping for your property, it is a good idea to make some preparations.

Build Your Green File

A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:

• Financial statements
• Bank accounts
• Investments
• Credit cards
• Auto loans
• Recent pay stubs
• Tax returns for two years
• Copies of leases for investment properties
• 401K statements, life insurance, stocks, bonds, and mutual account information

Check Your Credit Rating

Your credit score will have a huge impact on what type of property you can buy, and at what price. It is recommended to check your credit rating with an experienced lending institution to determine what you can afford. The lender will research your credit ratings from the three credit reporting agencies: Equifax, Experian, and Trans Union. We will be happy to recommend experienced, knowledgeable lenders in the residential, construction, and commercial and investment real estate fields.

Be Careful With Your Finances

Now is not a good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability.

Choose a Real Estate Agent

Buying a property requires making many important financial decisions, understanding complex issues, and completing a lot of paperwork. It helps to have an expert in your corner when undertaking such a large purchase. We can guide you through this process, and also provide you with access to property listings before they hit the general market.

Here are some factors to consider when choosing your real estate professional:

• Look for a full-time agent – one who has experience completing transactions similar to yours.
• Interview a few agents: Are they familiar with the area in which you are interested?
• Ask how much time the agent will have for you, and if they are available at night and on weekends.
• Ask about their credentials and education: A good agent will continually strive to improve and gain knowledge of the latest real estate trends and hold the highest designations in their respective fields of expertise.
• Does the agent return your calls promptly? Time is money when attempting to buy a property.
• Ask for a list of properties they have sold or a list of references.
• Choose an agent who listens attentively to your needs and concerns. Pick an agent with whom you feel comfortable.

Time to go Shopping

Once those preparations are out of the way, it is time to find the right property for you.

Take a Drive

Get to know the neighborhoods, complexes, or subdivisions, which interest you. Drive around and get a feel for what it would be like to own a property in the area. Start getting a sense of the properties available in those areas.

Narrow Your Search

Select a few properties that interest you the most and have your real estate agent make appointments to visit them. Ask your real estate agent about the potential long-term resale value of the properties you are considering.

Time to Buy

Once you have picked out the property you want to purchase, your real estate agent can help you make an offer that the seller will accept. A good agent will investigate the potential costs and expenses associated with the new property. An agent can also help you draft your offer in a way that gives you the advantage over another offer.

Escrow, Inspections, and Appraisals

The Process, Step-by-Step

The Initial Agreement and Deposit

An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.

Some important tips to keep in mind to streamline the process:

• Keep written records of everything: Transcribe all verbal agreements, including counter-offers and addendums, into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and ensure you have copies of everything.
• Stick to the schedule: You and the seller will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process, we will keep you constantly updated, so you will always be prepared for the next step.

The Closing Agent

Either a title company or an attorney will be selected as a closing agent. The closing agent will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title.

How to Hold Title

You may wish to consult an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate, and tax implications, especially when selling or upon the death of the titleholder.

Inspections

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the agreed timeframe in the effective contract to purchase. You may elect to have different inspectors inspect the property if you wish to obtain professional opinions from inspectors who specialize in a specific area (e.g., roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.

Depending on the outcome of these inspections, one of two things may happen:

• Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
• The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of the contract (usually the price).

Appraisal and Lending

It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution via a third party. This is done so that the lending institution can confirm their investment in your property is accurate.

Association Approval

If the property you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time.

Property Insurance

If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance.

Closing Day

If you have come this far, then this means that it is almost time for congratulations, but not yet. Do not forget to tie up these loose ends:

Final Walk-Through Inspection

More of a formality than anything else, the final inspection takes place a day before or the day of the closing. You will visit the property to verify that all is in working order, everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.

Home Services and Utilities

We will provide a list of useful numbers for the activation of home services and utilities after the closing occurs.

Be Prepared

We are ready to assist you should an unforeseen glitch pop up, even at this last stage. Something at the property breaks down, or some other minor detail – no need to worry. We have encountered these problems before so we know how to handle them efficiently and in a stress-free manner.

Closing

The closing agent will furnish all parties involved with a settlement statement, which summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as well as the closing agent, certifying its accuracy. If you are obtaining financing, you will have to sign all pertinent documentation required by the lending institution. If you are unable to attend the scheduled closing, arrangements can be made depending on the circumstances and the notice that we receive. If you are bringing funds to the transaction, you can elect to either have the funds wired electronically into the closing agent’s escrow account or bring a certified bank check to the closing in the amount specified on the settlement statement. The seller should arrange to have all property keys and any other important information for you at the closing so that you may receive these items at this time.