The Buying Process

We'd like to explain the basic process and order of events that generally takes place in our area of expertise (North Texas).

The economy greatly affects the price of a home.  As you know, the real estate market has slowed.  There are many factors that have contibuted to the current market.  But, for you the time could not be any better to buy a home.  Prices are lower than they have been in years.  Mortgage rates are the lowest or near lowest ever.  It is truly a buyer's market.  THE TIME IS NOW!

The Prep Work Begins                         

Do you have savings for an adequate down payment?  Depending on the method of financing that you acquire the amount of cash needed varies.  You can get more information on downpayments and loan programs on the mortgage information page on the left menu bar.

It is usually best to have a minimum 10% of the sales price for down payment and closing costs.  However, we are doing loans with 3.5 % down (FHA) & $0 down (USDA).

Determine the type of home you are looking for, amenities, area, schools, size, acreage, prices.

Determine the amount of house payment you want to make and how much home you can afford.  You may qualify for more home than you can comfortably pay for.  Use the calculators provided on the left menu bar.

Search the internet using the links provided on the left menu bar and see if the home you want is available at the price you can afford.  If the type and size of home you want is available, then look for an agent.

Locate your buyer agent.  You  may have a friend or relative that is a real estate agent. Think twice about using a person close to you for obvious reasons.  Why hasn't my house sold?  What are you doing to market my home?  Why should I lower the price? 

If you can't ask these and other questions without creating personal anxiety, then you have the wrong agent?

Your buyer agent will represent you in the transaction and the really great news is that your agent is provided by the seller.  Your buyer agent's commission has been negotiated by the seller's agent when they listed the property for sale.  Unless, you have an agreement with your buyer agent to compensate him or her more than the commission be offered by the seller, then you will not be responsible for any fees to your agent.

Does your agent have experience in the area you are considering?  This is huge especially if you are looking for acreage in the outlying areas.  Your agent needs to know what a septic inspection is, water testing, pipeline easements, mineral rights, wind rights, water rights, leases, deed restrictions, surveys and more.  To be sure you are using a qualified buyer agent, select an "Accredited Buyer Agent, ABR".

Locate your mortgage loan officer.  Your buyer agent will have a list of mortgage companies that he or she has worked with in the past.  These are professionals that have proven to be successful at getting buyers a loan and in an efficient and timely manner.  The bad loan officers and mortgage companies have been weeded out by your buyer agent through experience.

Provide the necessary information to your loan officer and obtain a pre-qualification or pre-approval letter from your chosen lender.

Your buyer agent will supply you with typical contracts and amendments for you to review.  It is a good idea to become familiar with the terms and language.

PREP is complete, now let's find a home.

OK, you have determined the home price, type, area and amenities that you are looking for. 

Your buyer agent will begin sending you properties that match your search criteria.  Go through these, consider the photos and tours, and create a list of homes that are of interests.  It is a good idea to drive-bys of these homes.  Once you have 5 or 6 homes that you want to see, then call your buyer agent.

Your buyer agent will contact the seller's agent or showing service and schedule showings of the homes.  As you tour the homes. let your buyer agent know your likes and dislikes of each.  Make notes of each home.  Create a yes lists and a no lists. 

When you have determined that your home is on your lists then go back through each home and schedule a second showing to take a closer look at the details and amenities.  Look for positives and negatives.  By now, you may be getting attached to a certain home.  Let your heart guide you but your wallet sell you.  Look for a home that can satisfy both your heart and your wallet.  This is the key to happy homeownership.  It would be better to have a couple of homes in case the seller isn't willing to negotiate or they accept another offer before you submit your offer.  You're not as likely to be motivated to pay too much or too disappointed if you have a second home in mind, just in case.

Selection is complete and Negotiation begins.

Now, you need to determine a negotiating strategy.  You and your buyer agent need to determine what is the ideal price of the home, are there any repairs that need to be made, what are the terms you want or must have?  For instance, do you need additional time to close?  Do you need assistance with closing costs?  Do you have a home to sell?  Is your contract contingent upon financing?  Every requests will costs you something. 

Then, you and your agent will want to review the days on the market, the solds in the area, competitive homes on the market, etc.

Your buyer agent will prepare your offer according to your instructions.

Your buyer agent will deliver the offer to the seller's agent along with any personal instructions you may have supplied. 

Your buyer agent will be in contact with the seller's agent.  Once, he or she receives a response, he or she will immediately convey the response to you.  If the seller did not accept your offer then likely a counter-offer was returned.

Then you and your buyer agent can determine the appropriate response based on the strategy you discussed.  You may choose to accept the seller's counter-offer or counter the counter.  Either way, your buyer agent will advise you of your options and make recommendations based on years of experience. 

You and your buyer agent will continue this process until you come to agreement. 

Once everything is agreed upon your buyer agent will deliver your earnest money, the option check, if there is one, the contract and any addendums to the Title Company.  There are several Title Companies listed in the Directory on the left side menu bar.  Click on a link to get more information about the Title Process.

Great, the negotiations are complete and Escrow is started.  We're half way there.

Your buyer agent will provide you a list of inspectors.  You can use this list or contact someone of your own.  The inspectors work for you and are paid by you, usually at the time of inspection.  But, you can arrange payment with the inspector of choice.

Determine the inspectors that you will use and let your buyer agent schedule the inspections.  The buyer agent will have to take in consideration your available times, his times, the inspector's times and accomodate the seller, as well.

Generally, you will want a mechanical inspector to determine all aspects of the home.  A termite inspector is highly recommended and in some cases mandatory by some lenders.  The mechanical inspector may also recommend you hire a structural inspector, mold inspector, septic inspector, roofer, HVAC technician, etc., if needed.  The mechanical inspector will point out areas that have defects but usually will not have knowledge on costs and nature of repairs.  Some issues are beyond the scope of the mechanical inspector.  Don't be too worried, your buyer agent will be able to advise you of which inspections should be done.  But remember, it is your ultimate responsibility and is part of your due diligence to be satisfied with all results.

Usually, inspections take about 1 hour per 1000 square feet of living space.  The larger the home the more time it takes to inspect.  You'll want to arrive at the end of the inspection period to go over the flaws detected.  You need to see with your own eyes what items are in need of repair.  You need to understand the defect and the extent of the repair associated with the defect.  The inspector will provide a detailed list of defects via a written report complete with pictures to remind you of what you saw. 

Once the inspections are complete, then you and your buyer agent will need to determine what repairs, if any, are to be made prior to closing.  How the repairs will be made and what proof (invoices) will be needed to verify completion of the repairs.  You will submit the repairs on an amendment to the contract.  This form will detail your requests. 

Your buyer agent will deliver the amendment to the seller's agent promptly.  Then the process of acceptance and/or counter begins again until finalized or the contract is terminated.

Assuming both parties have agreed on the amendment, your buyer agent or the seller agent will deliver the executed amendment to the Title Company.

The inspection phase is complete with reservations.  The invoices and/or verification of repairs will be needed prior to closing. 

Next, your buyer agent with your loan officer will need to arrange for the survey and appraisal, if needed.  You will need to tell your loan officer that you want a copy of your appraisal.  It is not automatic.

If you have a contingency for financing, it is imperative that your buyer agent be alert for dates connected to the contingency.  You may need to extend your financing contingency if dates are out of alignment.

The Title Company will be gathering documents from various sources.  You will receive a title commitment.  Schedules B & C will describe things that have to be done prior to closing by both the buyer and seller inorder to provide title insurance.  It may also detail any deed restrictions, HOA requirements, etc. 

The Title Company will receive a copy of the survey.  A copy is forwarded to you or your buyer agent for your review. 

The Title Company will have contacted the HOA to determine if there are any dues or fees that are unpaid.  The State of Texas requires the HOA provide notice of any lawsuits or claims pending against the HOA.

The Title Company or your buyer agent will order a home warranty for you, if it was agreed upon in the contract.  If not, you might want to consider it, yourself. 

The Title Company will receive closing instructions from the lender and prepare the necessary closing documents for all parties to sign.

The Title Company will notify all parties when doc's have been received to schedule closing times for each party.

Prior to closing, your buyer agent and you should tour the home one last time to insure everything is as it should be.  You may choose to do a re-inspect by one or more inspectors to verify repairs have been made.  This tour is called a buyer walk-through.  Your buyer agent will have a form to sign that notifies you of your opportunity to do a walk-through and will ask that you sign it.

OK, you're ready to close.

Your buyer agent will attend the closing with you.  You will need to bring a cashier's check for any buyer funds necessary.  You will need to bring your driver's license for the notary public to verify your signature.  You should allow qn hour to sign papers unless it is a cash sale.  A cash sale will take only minutes to complete.

Once you have signed the necessary documents, then the Title Company will fax for funding.  They fax or mail the doc's to the lender, once they receive and confirm everything is signed and complete, they will issue a fnding number.  This number is used by the Title Company to access the wire transfer from the Mortgage Company.  This is called funding.  Once it funds, you can have the keys, garage door openers, etc.

THE HOME IS YOURS!!!!

Now, the great adventure begins, remodeling, updating, maintaining your home.  Keep your home in good condition and you will be happy when it is time to sell and move up to the next home of your dreams.