The Process, Step-by-Step
MAKING AN OFFER
Once you decide to make an offer on a home, we can provide you with “comps” which are statistics that will assist you in establishing your offer price. Things to consider are:
- How long the listing has been on the market
- What similar homes have sold for recently.
- How much housing inventory is available
- What are the terms of your contract? Cash or Financing? Closing Date? Any Contingencies? Are you asking for Seller’s Concessions?
There is certain information we will need from you in order to write your offer:
- Complete names or name of trust or LLC etc. as you want them to appear on the Deed
- Contact information for Buyers – phone, email, mailing address
- Amount of offer
- Escrow Amount – Usually $1000-$10,000 depending on the price of the home
- Time for Acceptance – How long will you give the sellers to respond?
- Closing Date – Typically 30-45 days if financing your purchase
- Funding – Cash or Finance?
- Cash will require Proof of Funds. This can be in the form of a blacked-out bank statement or a letter from your bank.
- Financing will require a pre-approval letter from your lender.
- Inspection period – How long of an inspection period do you need? Typically 7-15 days.
- Sale of Buyers Home – It’s recommended that your house be listed and under contract.
- FHA/VA Financing – Will you be asking for Seller’s Concessions toward your Closing Costs and Prepaids?
- Insurance – You can cancel the contract if Homeowners/Flood Insurance is not affordable but you must specify what amount is acceptable.
- Appraisal – The Appraisal Contingency allows you to cancel your contract if the home does not appraise at or above contract price without losing your Escrow Deposit.
Once the offer is written and signed, we will present it to the Listing Agent so it can be presented to the Seller(s).
GOING UNDER CONTRACT
Your contract is effective on the day that all parties (Buyers and Sellers) have agreed to the terms of the contract, have signed the contract and have received a copy of the contract. This is your Effective Date.
Either a title company or an attorney will be selected as the closing agent. The closing agent will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.
Your Escrow Deposit is due, usually within 3 days, payable to the Title Company. You can deliver it in person or mail it as long as it is postmarked within the terms of your contract.
If financing your purchase, you must submit your financing application to your lender within the terms of the contract. Most lenders will require the following documentation:
- 2 years of tax returns
- 2 years of W-2’s
- Recent pay stubs – minimum 30 days
- 1099’s and Business License if self employed
- Other Income Sources
- Recent bank statements
- Be prepared to explain purchases and debits over $1,000
- Color copy of front and back of Driver’s license
- Lender will inquire about any issues with your Credit Report
- Information about other properties you own – Mortgage statements, Insurance Declaration page, most recent Tax statements.
- Purchase Contract & Contingencies
- Copy of EMD (escrow deposit receipt)
You will want to schedule your inspections right away so the inspections can be done and you have time to review the reports within the inspection period. We can provide contact information for reputable local Home Inspectors. Even if you are a cash buyer, we recommend having a Home Inspection done. Be sure to check with your insurance agent to see what inspections will be required. You may need a 4-point inspection (plumbing, heating/cooling, roof, electrical) and a wind mitigation (roof) in order to get homeowners insurance. If the home is located in a flood zone, you will also need flood insurance. Depending on the home you are purchasing, you may want to include inspections for wood destroying organisms (WDO), well, septic, pool, roof, mold, seawall/dock. If the Seller agrees to make any repairs based on your request following inspections, it’s advisable to request proof of repairs and have the repairs reinspected.
If you are financing your purchase, an Appraisal will be required. Your lender will order the appraisal once inspections are completed. If the house doesn’t appraise at contract price or higher, you can cancel the contract, move forward and pay the difference between the appraisal amount and contract price yourself or request a reduction in contract price. The seller then can cancel the contract or agree to a reduction in price.
Unless the seller provides a current and usable Survey, one will be needed. If the home is located in a flood zone, you will also need an Elevation Certificate unless a usable one is provided by the Seller.
INSURANCE (Homeowners and Flood)
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. It’s advisable to bind your insurance as soon as inspections and appraisal are complete. Do not wait to bind your insurance because your closing could be delayed. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.
- Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
- Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
HOME OWNERS ASSOCIATIONS
If the property you are purchasing has a mandatory HOA, the Seller should provide you a copy of all HOA documents to include deed restrictions, by-laws, declarations of covenants, and other important documents as well as the association approval application if required. Please read these documents to educate yourself on the community requirements. Be sure to submit the association approval application and fees early in the buying process so there is no delay in your closing. Your Closing Agent will ask that you bring the original copy of the approval letter with you to closing. The Closing Agent will order the Estoppel from the Association. The estoppel is a legal document provided by the Association which lists dues, assessments and other fees of the Association. Association fees will be prorated at Closing.