Automated page speed optimizations for fast site performance
The home buying process is complex and very strategic. Working with us will make the process smooth and efficient. Lets talk about what we can do for you and how we may serve you.
There are several steps in the real estate buying process, see them below:
Getting a formal pre-approval from a lender of your choice should always be the first step in a buying process. Online pre-qualifications are often tens of thousands of dollars off and sometimes the buyer is not qualified to buy at all. A formal pre-approval, is a thorough look at a buyers financial situation; it can be done at any bank location, at a mortgage company or over the phone with a mortgage professional.
Banks are more strict with qualifications, whereas mortgage companies work with multiple lenders and often are able to qualify a buyer that a bank has denied. Shop around. If one place denies you, call us, we’ll direct you to several contacts. If those loan officers are not able to help, they will recommend what needs to be done to qualify.
Important Note: do not make any changes to your financial situation while getting pre-approved; no large purchases, no cash deposits, no financed purchases of any kind… All of these factors may affect a buyers pre-approval.
Another important reason to get a pre-approval is to determine purchase price range with consideration to property taxes and home insurance. Property taxes vary by city; if looking in Parma, property taxes are very different from Strongsville, Pepper Pike or Solon. A buyer may obtain a lesser loan based on property tax obligations in a particular city. In other words, a buyer is not necessarily qualified for a ‘purchase price’ but rather for ‘monthly payments’ with regard to property taxes and insurance.
It is important to know what type of loan is being applied for. A conventional loan is more lenient with some necessary repairs. FHA and VA loans are very strict with condition of home – no peeling paint, no unfinished projects, no missing floor coverings etc. Some homes will not pass FHA and VA inspections so those homes are not a possibility for that buyer.
Finally, the market is ‘hot’ right now. Some sellers request that their home is only showed to pre-approved buyers. Often a home comes on the market and is in a multiple offer situation within 12 hours. If a buyer does not have a pre-approval, they cannot submit an offer. Sellers do not consider offers from buyers who do not attach a pre-approval letter.
With a pre-approval, we can now begin looking at houses. We will go over what is important to have in a house – what are the “musts”, what are the “wants” and what are the “wishes”. We’ll tour a variety of homes – ranches, split levels, colonials or different variations of condos like a townhome or others. This is the fun part. Soon you will know what you want and what you absolutely don’t want. We’ll find you a home!
The seller is required to fill out Property Disclosures at time of listing their home for sale. They are legally obligated to disclose any issues or concerns that they know of in regards to their home. With few exemptions like an estate sale or a bank owned house, the seller is required to disclose any leaks, foundation issues, problems with roof, heating/cooling elements and any other components inside or outside the home experiencing issues. The buyer reviews these disclosures and if everything looks acceptable, we proceed with making an offer.
Once we find a house you may want to call a home, we will put together offer paperwork. It is a legal document stating intention to purchase a house with specifics on type of loan, closing dates, inspections, items to be left in the house, etc.. We will go over the paperwork in detail and discuss every nuance. Once the buyers sign, the offer is sent to the seller’s agent, who presents it to the sellers. Although it rarely happens, if the sellers sign, we have a legally binding contract. Most of the time, the buyer and the seller go back and forth verbally with counter offers until a mutually agreeable price is reached. Then buyer re-signs offer with newly negotiated details and it is sent to the seller for signatures. Once seller signs, we have a contract and proceed with inspections.
In our contracts we request for earnest money (a safety deposit) to be remitted at inspection time. Earnest money is held in an escrow account and is part of buyers purchase price. It shows intention to buy and is a necessary component of every purchase. The earnest money is treated very fairly – if a buyer is not satisfied with inspection results, the house does not appraise or the buyer does not qualify for a loan due to no fault of that buyer, the deposit is returned to buyer. If the buyer negligently compromises the deal – changes their mind, or buys a car in the middle of obtaining the loan, misses a credit card payment, etc; the seller will pursue the deposit to compensate for marketing time lost while being off the market.
Depending on offer terms, buyers have five to ten days to complete home inspections. Inspections are paid for by the buyer. The inspectors work for the buyer and have the buyers best interest in mind.
In conclusion, home inspection report is not a ‘to-do’ list for the seller. We absolutely will use it as a negotiation tool if there are serious issues like un-safe radon levels or safety concerns or immediate and expensive replacement requirements but we cannot come back with a list of 23 items we would like the seller to fix.
Inspection is for information purposes, so that the buyer knows exactly what he/she is buying. Every home has a pool of problem and issues – big or small. It is a matter of which pool of issues you would like to take on. A home may have some maintenance issues or major concerns like roof/HVAC or foundation.
Depending on the purchase price and market conditions, it may be worth it to buy a home with older roof and budget for replacement. Every buyer is unique in their preferences and every home presents its own matters that need to be addressed.
Once we review what kind of issues we are dealing with, there are three options:
Once the inspections are finished and buyer understands the condition of the house, we sign a ‘contingency removal form’. It states that we release contingencies of inspections; the buyer accepts the condition of the home and chooses to move forward with the purchase.
The next step is to contact buyers chosen lender and make a formal loan application. There is a fee for a loan application and it varies from lender to lender.
If any portion of the purchase is financed through a bank or a mortgage lender, an appraisal will be a requirement. The appraisal cost is part of lender fees and is paid for by the buyer. The lender hires an independent, third party licensed appraiser that performs a detailed market analysis and issues a “value” for the home. If this value is equal to or above the purchase price, the lender will agree to lend money for the home. If the value is below the purchase price, the bank may deny the loan or change the loan’s terms.
A loan commitment, or a full loan approval is issued once the lender thoroughly reviews all necessary paperwork with the buyer – credit report, financial obligations – payments, outstanding debt, etc; income history and any other cash inflows or outflows. In addition to a thorough review of the buyers personal financial situation, the bank will review the title work from the title company making sure there are no ‘clouds’ on the home’s title – no liens, judgments or defects. Once the loan commitment is issued, the loan is guaranteed IF, and only IF the buyers situation stays in that current condition. This is not the time to finance anything or buy a car. The bank WILL run the buyers credit one last time before closing. If there are new financial obligations, missed payments or any changes to the presented information, the bank can and WILL deny the loan. This has happens too often in our business and buyer loses out on the house of their dreams. It is very important to hold off on buying that perfect couch or that fantastic washer and dryer until after title transfer into your name.
As the closing date approaches, we schedule a final walk-through. Typically arranged a day or two before closing date; we come back to the house to make sure everything is in the condition it was at time of inspection. It is a quick 5-10 minute walk-through visually inspecting for leaks, structural issue development, absence of heat or cooling; missing appliances that should have stayed etc. If there were items that seller needed to fix prior to closing, we make sure those have been completed.
Hooray! The closing is typically scheduled several days in advance although if the loan is difficult, can be scheduled less then 24 hours in advance. It is held at either a place of buyers choice or title company’s office. Title company will provide via mail wire transfer instructions with dollar amount and account number. Buyer transfers money prior to coming to sign the documents.
For a financed purchase, plan for an hour to an hour and a half. Cash purchases takes 15-20 minutes.
If documents are signed in the morning, the title will transfer around 3pm – 5pm on the same day. If documents are signed in the evening, title will transfer the following business day.