The First Step in the home buying process is to find out how much Home you can afford. This will help you in narrowing your search and help your Realtor in negotiations. Due to the past years of lax lending rules and the subprime mortgage fiasco, NO Seller will consider an offer without a Pre-Approval Letter. If you go to my Financing Page you will find a list of lenders that have done great things for my Past Clients and will help insure you get the best rate, terms, and will get the loan closed!
As a Buyer's Agent in the State of Texas my fees are paid by the Seller as described in the Residential Listing Agreement they have with the Listing Agent. As a Buyer's Agent I work for you, not the Seller or Builder. This is done through a Buyers Representation Agreement and explained in the Information about Brokerage Services from the Texas Real Estate Commission.
Unless you are trying to purchase a home that is For Sale Buy Owner, the Seller has Real Estate Professional representing them. By negotiating directly with the Sellers Agent or Builder Representative, you are putting yourself at a severe disadvantage since the Sellers Agent or Builder Representative is legally bound to share everything you tell them with the Seller/Builder to get the Seller/Builder the best price and terms. You wouldn't go to court without a Lawyer, why would you risk the biggest purchase in your life in buying a home without a professional by your side to advise you and helping you through the entire Home Purchase process.
Finding the Area / Neighborhood For You
You've gotten your Pre-Approval letter, and you've hired your Realtor, ME. Now you have to find the area you want to live in. Discuss your wants and needs with your Buyers Agent, let them know what is important to YOU. Is your commute time to work important? Are the Amenities of the Neighborhood more important? Is the School District and specific school the most important thing? Do you only want to live in a Gated Community or Golf Course Community? Once you've identified the neighborhood you want to live in, then it's just a matter of finding the right Home. For that you will need to be much more specific: How many bedrooms and bathrooms, game room, media room, garage spaces, pool/or no pool, square footage, etc. as well as any specific things you want in your Home.
Armed with that information, it's time for your Realtor to go to work for You!
Offers, Counter offers and Contracts
So, you've found the” Almost” Perfect Home. I say Almost, because there is no such thing as the Perfect Home. Even if you design and build it, after you've lived in it you will have things you would have done differently or that you want to change. Your Realtor will provide you with several documents in preparation for writing the offer: A Comparative Market Analysis for similar homes in in the area; A copy of the Sellers Disclosure; The Tax information for the property; Any other information available from the Sellers Agent or third parties. Armed with this information you are ready to write the offer. Your Buyers Agent will provide you with the options in writing the offer. All Texas Residential Contracts for Re-Sale homes are promulgated by the Texas Real Estate Commission, specifically the One To Four Family Residential Contract (Resale). If you are purchasing a New Home from a Builder, they will use their own Contracts drafted by their lawyers.
Many times price is not the main concern in the transaction; it may be the closing date, repairs, or seller contributions to closing costs. Everything IS Negotiable and Your Buyers Agent will help you structure the offer and terms to give you the best chance of having your offer Accepted by the Seller.
The response from the Seller becomes a Counter offer. Counter Offers can be negotiated back and forth, usually via emails to document the responses and replies, many times before the final terms are agreeable to both parties. Once terms are agreed to, the contract is modified accordingly, signed and executed and delivered to the Title Company along with the earnest money (usually 1% of sale price). At this point only the Seller is under contract.
In Texas we have an Option Period for most residential transactions. In addition to the Earnest Money, the Buyer will pay directly to the Seller an Option Fee. This fee is negotiated and can range from $100 to $1000 depending on the price of the home. The Option Fee is for the purchase of an Option Period. The Option Period is a negotiated number of Days and gives the Buyer the Unrestricted Right to Terminate the Contract during that specific time frame. Most contracts are written that if the Option Period is not used, then the Option Fee is credited back to the Buyer at Closing on the HUD-1 closing statement. However, depending on the situation, Buyers may want to give it to the Seller and not have it credited back at closing if it will make their offer Stand Out in a multiple offer situation.
Inspections and Appraisals
Once the Contract has been executed and the Option Period is underway, the Inspections begin. As an experienced Buyers Agent I have a short list of 10+/- inspectors that are professional, honest, and have worked with myself or my colleagues in the past. In many cases on Re-Sale homes or dirt-build new construction I recommend Licensed Engineers that are also TREC Licensed Structural & Mechanical Inspectors. This provides my clients with a much better understanding of the home, its structure, and gives them peace of mind that everything is working and preforming as the builder intended. Once the Inspector Prepares and Provides the Reports to the Buyer, the Buyer’s Agent goes to work Negotiating for Repairs, or a Reduction in Sale price, or both. However, if the Seller refuses to repair the items, or reduce the sale price, as the Option Period ticks away there comes a point which the Buyer must either Terminate the Contract under the Option Period, or accept the Home As-Is. A good Buyers Agent should be able to negotiate the repairs or reduction in sale price, and complete the Sale.
Now the Option Period is over, the Buyer and Seller have agreed to repairs or a price reduction based on the inspection reports and both parties are now under contract. Now it's time for the Lender to kick the Loan Process into High Gear! First thing is to have an Appraisal done. The Appraisal is an evaluation by a Licenses Appraiser using specific guidelines for placing a Value on the home based on recent sales and/or the cost of replacing the home. The Appraisal is the document that underpins the value of the home for the Mortgage Company. In the Houston Real Estate Market we have seen an increase in the sale prices and values of homes this year. It is not uncommon to receive Multiple-Offers on homes that have only been on the market a few days. Many times this pushes Sale Price beyond what the Appraisal can support. In this situation it is imperative that you have a seasoned professional working to protect your interest and work through the problem. Many deals have been lost to the Appraisal coming in below the contract price; your Realtor should be prepared to act on your behalf to try to save the Deal.
Closing the Deal
You're almost HOME! The Appraisal has come back with a good Value, the Survey is done, the Lender has your file in underwriting (the process of reviewing all your lender required documents, the sale contract, appraisal, survey, and much, much more) and the Title Company has issued a Title Commitment for Title Insurance. The Title Company is the “Third Leg” of the stool, (Lender, and Realtor are the other two) in Texas they are the Escrow Officer that prepares the HUD-1 Closing Statement, Orders Loan Payoff Information, Orders Tax Certificates, Orders Home Owners Association Re-Sale Certificates, Receives the new Lenders Loan Documents and Instructions, prepares the HUD-1 closing statement and finally Prepares and Files the Warranty Deed. They are also the Closing Agent where the actual closing and signing of documents occur. It is imperative that your Agent has a good working relationship with the Title Company and Escrow Officer to insure your transaction goes smoothly and that any issues that come up are addressed and resolved quickly.
The Move In
You Finally closed on your Home! The documents are signed, the Mortgage is executed, and the Deed is being filed with the County Clerk. But you are not done yet! About a week from Closing your agent should have advised you to start preparing for the moving date. This includes having all the Utilities turned on, the Cable/Satellite/ Internet connected and having any pre-move-in Cleaning and Painting done. If you're moving from out of town, or just around the corner you should always give yourself 48 – 72 hours of time between the closing and the arrival of the movers. Movers are expensive, and storing your house goods on a truck due to closing delays is even more expensive, so don't make that mistake. If you go to my Resources Page, I have a list of service providers that my clients, or my colleagues and I have used in the past.
Call ME, I can Help!
All the above may seem rather complicated and overwhelming. This is why you need a Real Estate Professional to represent you and your interests, someone to guide you through the entire process and to help you overcome all the possible pitfalls and obstacles to a successful transaction. Please email, or call me directly if you have any question or would like to discuss any of these matters in further.