How do I buy a home? Thank you for asking. The home purchase process can be scary and threatening. So many things to think about and a huge decision to take on the responsibility of home ownership. No fear, Tanya and I are here to guide you through the maze of home purchase. Our years of real estate and lending experience will guide you through the many steps to finding the perfect home, negotiating your offer price, lending choices, explaining the necessary disclosures, property inspections, documents and contracts necessary and finally handing you the keys to your new home. Even if you are an experienced Buyer, the maze can be stressful. The good news is, you have said YES, to begin your journey. Also, you as a Buyer do not pay our salary, (commission) is paid by the Seller. If you want to add some $, we won’t say No. Now that you have said OK, lets do it.
Getting you pre-qualified by a lender of your choice or one we can recommend. The Lender will review all of your financials to determine the price point you can afford. They will request documentation from you to confirm your employment, salary, savings and assets and debts, which determine your ability to repay the loan they provide on the home purchase. Once you have been given the OK by the Loan Officer, you are given a Letter of Pre-Qualification. Now that we know how much you can afford, we go house shopping!
The search begins with forwarded homes listed on the MLS, Multiple Listing Service, which all homes on the market are presented or homes you have found on the Real Estate search sites. Upon review and choice, you notify me or Tanya as to the homes of interest. We schedule an appointment to preview of the homes of choice. We take a look.
Meanwhile the Lender will request from you, 2 months pay stubs, 2 years tax returns, your social security number to determine your credit score and savings and bank statements. The sooner you deliver the requested documents to the Lender, the sooner they can verify your ability to pay the mortgage. If all is cleared you are given “Underwritten Approval”.
Our housing inventory has been limited due to Home Owners staying put and a fast paced selling market. This has created a Seller’s Market with housing prices pushed upward. However, there are still many beautiful homes available and affordable. Just not as many as in the past. Finding the home of choice may take many preview visits, but worth every step of “previewing” to find the home you fall in love with. We can also preview the New Homes on the market. New Home Builders work with the Real Estate community and have their own Lenders that underwrite you for purchase. If you are previewing New Homes, remember to tell them you are working with Mary Katherine or Tanya Olafson with Arizona Pacific Real Estate! We will forward a list of New Homes brochures for your review. Let us know which Builder you wish to preview and we will schedule your visit and register you.
OK, we have found your dream home. Now, will the Seller agree to selling the home at the price you are offering? We prepare a purchase offer with the terms and conditions you want with a commitment of an Earnest Money deposit from $1,000 to $5,000 depending on the price of the home as your Earnest Sincerity to the Seller of your commitment to purchase the home. Your Earnest Money will be included in your final down payment required by the Lender. If the Seller agrees, we have a “MEETING OF THE MINDS”. If not, we negotiate. This is where our years of experience comes in. As your Real Estate Broker, we speak for you with the intent of achieving your dreams, this home. This process may go back and forth many times or agreed upon immediately. Eventually, success, and we are ready to “Open Title Escrow” with the executed purchase contract and your Earnest Money deposit, which is cashed within 3 days of opening escrow.
Title Escrow is a 3rd Independent Party that handles all of the documents and exchange of funds necessary between the Seller and the Lender to close the escrow. The Title Company will deliver to you a Title Commitment, which means they search the prior history on the home of choice as to “Clouds on the Title”, (debts, judgments, or liens) that must be cleared to issue a “Clear Title”.
There will be Home Owners Association reviews of the Covenants and Rules and Restrictions of the home’s community as well. Your Loan Documents will be signed at the Title Company or via a Traveling Notary. The Notary will acknowledge your identity and go over your loan documents with you. This entire buying process takes now a minimum of 45 days, due to the new Dowd Frank Laws enacted by Congress to protect you from being swindled by Lenders and Real Estate people.
Once you have been pre-qualified and we have found a home of choice, the purchase contract allows you 10 days to complete a “physical inspection” of the home to make certain the home is free of major or minor defects and termites and reports from the Seller’s Insurance company on any claims of repairs on the home. The cost of an Inspection is yours, with the fee being determined by the square footage of the home. It is paid at the time of the Inspection review by you and the Inspector. Fees run around $250 and higher. You will also receive a Seller’s Disclosure Statement to inform you of anything the Seller’s have experienced, repaired or know about the home. Your must approve this report as well as the Physical Inspection report and Insurance Claims report. If repairs are found in the Inspection Report, we submit a Buyer’s Inspection and Seller’s Response report asking the Seller to make repairs you request. If the Seller’s refuses, you have the right to cancel escrow or waive the inspection and move forward to closing.
Once this 10 day window passes and completion of the Buyer’s Inspections and Seller’s Report are cleared, your Lender will order an appraisal of the value of the home. The Appraiser determines this value by researching all homes in the neighborhood and within 1 miles radius of the home of choice as to active, pending and closed sales. He/She will take the closed sales totals and based on square footage of the homes, location and added amenties determine the value by comparing your home of choice to closed comparables to determine the true appraised value of your purchase.
If the value is lower than your meeting of minds agreed purchase price between you and the Seller, we go back to the negotiating table and re negotiate with the Seller the accepted price point. This can be done 4 ways,
- The Seller agrees to the value
- You come up with the added funds to match the agreed selling price with the Seller
- We can meet in the middle and agree between you and Seller a price point
- No one moves
In the last case, Escrow is closed, you receive your Earnest Money deposit back, and the house goes back on the market. We go back to previewing homes again. This does not happen very often, since the Seller really wants and needs to sell the home and you really do love this home plus you have invested money for an appraisal $450.00 and Inspections $250.00 + and the disappointment in not getting what you want.
Lets be positive, all goes well with the value, inspections, disclosures and your financial underwriting. At this point we should be within 10 days to closing. The Lender and Title company have been busy clearing the home of choice of document complications and preparing your loan documents for signing. You must sign the initial Good Faith or Closing Document the Lender provided to you initially when you applied for the loan 3 days prior to you signing your loan documents. This completed, you will be called into Escrow to sign your loan documents which will be explained to you by the Notary, you approve, sign and provide the down payment funds. The “loan package” and down payment will be deposited and the loan documents are forwarded to the Lender for final review. If all is OK, the loan is funded by the Lender, notifying Escrow to forward to the Arizona County Recorders Office for recording your name as the new Owner to the property. Once we have news of the record, I will notify you and we meet to hand you the keys to your new home. Welcome Home! Get the truck Honey, we are moving in!
In the purchase of a home, We, Arizona Pacific Real Estate, Lenders, Title, Escrow, Appraisers, Inspectors all work to your happiness and benefit. Without you We would be out of business. The process can move along swiftly and many times close within 30 days if all documents requested by the Lender are in, the physical inspection is clear, Title finds clearance on the Title of the property, the value is as agreed by the purchase, selling price. If you are paying CASH, 10 days to closing. We and you must work together to bring your dream of Home Ownership to reality.
Remember to set a time to call us to get the process started. The longer you wait, the higher homes prices will rise and the chance you will be priced out of the market. Let’s get you started on this Maze of Home Ownership. For some extra information, check out the Buyer’s Advisory from the Arizona Association of Realtors.