Let's see... you want... to buy... a home! Ahh... I should have been a psychic... I can always fall back on that if people stop buying and selling houses... If this is your first or fifteenth home purchase, congratulations!! Home-ownership is a powerful tool for building wealth... last I checked, they're not making new land... to say nothing of the enjoyment and contentment derived from living in your own home. Enough said. Since I can only make the broadest assumptions about what you need from a real estate agent - nay, a real estate consultant - I'll lay it all out here in simple terms. So, here it is - a bit of the Buying Process done in short-hand; enjoy!
Luckily for everyone, there are no absolute first-things that must get done to start looking for a home. However, here are three (3) things I would suggest doing sooner than later:
For most people without the ability to write a check for a home outright, their credit score will play a major role in the home-buying process because this "score" tells a lender what kind of risk you are and how much they should charge you for a loan. If you've done the right things like pay your bills on time and have proven to be a good person to entrust money to in the past (ie. credit cards have extended their trust to you), your credit score should be higher than lower. Combined with a few other key factors, a credit score above a 680 can help you secure a lower interest rate on your home loan. Which means you spend less. Which is good.
You know, of course, that you can buy a home without a real estate agent working with you, right? Just like you can row your own canoe into the Amazon on a day trip scouting for treasure - entirely possible, just not exactly recommended. The good news is, there are so many people out there with real estate licenses that you're bound to run into somebody with one. The bad news is that most of them do this as a side job. Since your money and the place where you lay your head down at night are not "side-job subjects", be sure your agent knows their marketplace, knows the neighborhoods you want to be in - heck, a great agent knows neighborhoods you don't know you want to be in - and will be able to work with your lender or mortgage broker to make sure you are looking at the right homes.
I intentionally said "mortgage broker" instead of "lender" because the terms get mixed up a bit and I feel that one is generally better than the other. A "lender" is one entity - like a bank; Bank of America is a lender, for example - whereas a "mortgage broker" deals with multiple lenders. Since a mortgage broker is able to "shop" your loan to multiple lenders at once, they typically secure you the best current market rate today. Banks and direct lenders have other ways of incentivising the process to get you to use their loan products, but typically don't have the most competitive rates. Just for a little perspective on what small increments in loan rates do to your payment - a 1% difference on a $500,000 loan means $5,000 a year in interest; that's a lot of money to most people and is worth fighting for.
Also, like the proliferation of real estate agents, there are thousands of mortgage brokers who can find you money. The problem again is many have short-term mindsets, want to be paid more now and can steer you into loan programs that are loaded with fees and penalties. You don't want those kinds of loans. Find a mortgage broker who will tell you up front what the loan costs you and if there are any pre-payment penalty fees. If the loan has an adjustable rate, ask them if there is a cap on the rate. Good brokers will tell you this and more before you ask.
You've been such a good person and now you know what your credit score is, you have a great real estate agent and you talked to a mortgage broker who told you what you can afford to buy. Perfect; now off to the fun part - shopping!
This is good for Sunday mornings when your plate is clear and you've got a cup of coffee at hand. This isn't the most effective way of finding active listings, but may introduce you to a new neighborhood you hadn't previously considered.
This site was largely created for people who want to buy real estate in Orange County and want to find it and see it online. Some of the other things the site does is talk about me - Jesse Brossa - and talk about what I do for sellers when I list their properties (Sellers go here and here for more; Buyers stay put!). But, again, what the site is primarily about is finding properties across Orange County and being able to drill down into neighborhoods to find exactly what you want. The search process is our own and has been designed with the savvy internet home-shopper in mind. In theory, property listings should be easy to find, easy to navigate, easy to get to and easy to store for later; I hope we've lived up to the promise. You can run a property search here. If you don't like what I've done with the place, head over to www.realtor.com or www.homeseekers.com; either one of those will do the trick.
This is a no-brainer. Your agent is the most informed person out there and has the greatest access to listings, both on the market and off. I hear about new listings every week that aren't on the market yet and some that will never be since some sellers prefer to do business "off-line". If your agent doesn't know what you're looking for, who will?
We went over this briefly earlier, and I'll assume you have a great mortgage broker by now, or you are working with your bank to get financing. Awesome! If you've got someone you can trust who has your best interests at heart, stick with 'em! If you need, however, an introduction to a few stellar mortgage brokers, who continually deliver A-list services, I've got a couple I use personally again and again for every deal I do; their info is here. What's important now is that you get either pre-approved or pre-qualified for the right loan amount. There's hardly a seller in the world that will seriously consider an offer from a buyer who hasn't been at least pre-qualified by a lender. This absolutely needs to happen before presenting the offer.
So, we've picked a property, and we've put together a smashing offer. Perfect! Now we just send that ol' offer over to the other agent and hope for the best, right? Wrong. Unfortunately for our readers here, the story gets dull because while negotiating is my strong point, I can't tell you about the process, lest others join in and use my science against me. You'll just have to call me. Oh well! (949) 292-9786. That's me on the other end of the line. Not a front-office person. Me. Lucky you!
They accepted our offer! Of course they did! We're the best! Victory! Ahhh.... savor the success. Time to call your friends, right? Back yard party-time, right? Not a chance. The work is just getting going; in fact, we're going to a hit a frenzied pitch sooner than later. Now is a good time to hang on, cancel what you can and feel good about working with whomever you've picked to get you through this part because the "frenzied pitch" part is where your great agent shines.
Alright. Escrow has been opened. You're meeting people left and right; let's take a second to look at the players in the deal now:
"Escrow is a legal arrangement in which assets (in this case, money and property) are delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract such as payment of a purchase price." 1 That's a nice definition of the escrow process. The escrow company you work with plays a central role in the deal; a good escrow officer is like duck - placid on the surface and paddling like mad under water. Your escrow officer is the neutral party who sites between the lender, the seller, the buyer (you) and the title company and makes sure all involved get each other the right documents on time and in the right order to close escrow on time. A good escrow officer will anticipate needs in the deal and prompt action before its needed rather than after; this can make or break escrows.
"It is of utmost importance that you receive clear title to the property when you purchase real estate. In order to do so, you must first be informed of any existing rights or claims that may, in the future, threaten your title and possession to the property." 2 The title company's role is to provide you with title insurance, information about the existing deed to the property, any liens or "clouds on title", and to facilitate the transfer of ownership in the proper manner. It is, again, paramount that you work with an established title company with experienced title reps who can guide you through this process; though problems with title transfers are not the norm, when problems arise with claims to title, you want to be sure your title officer is in control and has the ability to resolve the matters in a timely fashion.
When you purchase a home, you have the right (and are stongly encouraged) to hire a professional home inpsector to go through the property and evaluate any problems that need amending BEFORE you own the property. There are numerous individuals and companies that perform these services and I have yet to be disappointed by any of the inpsectors I've worked with. I always accompany my buyers at their home inspection so we can talk about the findings with the home inspector while the topic is still immediate. I work with Gregg Traum @ 1st Choice Property Inspections & Mike Okamura of A Thorough Guy Home Inspection Services regularly; they provide immediate feedback at the end of the home inspection and have reports off to everybody's emails before you can get back to your desk.
In a typical transaction, the buyer asks for the seller to have the property inspected for "wood destroying pests" (termites, wood-bring beetles, etc) and to have the infected and damaged areas remedied. If you are buying a condo, most of the time, generally speaking, the condo association will only work with their approved termite company to remedy the problems and will do it in their own time. Usually, the completion of the termite repairs is a condition of the purchase of the property, though the methods used for remediation are many.
Wow! Almost there! Your lender funded the loan, any repairs were made by the sellers, escrow has coordinated all the documents and ensured they are all fully executed and your title company has cleared the way for the reconveyance of the deed! Congratulations! The last thing you'll do is do a "walk-through" of the property and confirm the home is in the condition you expected it to be in. A final sign-off will do the trick; you're only two or three days away now from move in. You can order the champagne now.
At this point, you'll be just about done with anyone relating to the real estate industry; it has been weeks since opening escrow and probably months prior that you had been looking for the right place. You'll still be unpacking... We'll leave you alone for now but won't leave you altogether. If I represented you, I'll make follow-up calls for a few weeks after the deal closes to make sure everything is still going well; after that, I'll send you market updates about your home and neighborhood... I know, I know... you just bought the property... you're not thinking of selling it. Yet. But eventually, we all want to know what our home is worth. So I'll let you know, ok?
This "Buyers' Services" page turned into "How to Buy Real Estate, What to Expect and Who's Involved 101"; hope I didn't bore you to death. Now that we've worked together, all I ask is you refer me to everyone you meet all the time everyday until you move to another country. If that's too much to ask for, you can refer me to a couple of good friends and associates so I can do it all over again for them! The best compliment is a referral! Love you guys!
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