BECOME THE BEST BUYER TO GET YOUR BEST TERMS
First know what you want.
Use this list and get all decision makers on the same page:
Why are you moving?
When do you want or need to be in your new home?
What price range do you want to stay within?
What areas are you considering?
What kind of home do you want to buy? What is your wish list? Style, age, bedrooms & baths, lot size and features.
What on this list is MOST and LEAST important? Identify any “deal breakers”
Have you seen any homes you liked well enough to buy? List them and describe why.
What would you change about your present home? What do you want to be the same?
Do you need to sell the home you live in now in order to buy your new one? Is it on the market now or ready for marketing? Do you have a realistic idea of your net proceeds?
What are your other concerns in making this move?
Get pre-approved with a good lender. Get in writing that your credit has been run.
If you found you the right house today would you be ready to buy?
Second know what to expect
Finding the house is the fun part. The rest is serious business.
A Pre-Buying Conference will help you understand the entire Home Buying Process. This one hour meeting covers the terms of Sale Contract and your rights, privileges and obligations in it. We’ll discuss earnest money, financing, inspections and agency relationships. This will make you comfortable with all aspects of your transaction. When we finish we only have the fun part left – finding THE RIGHT HOME!
We Build a profile with your preferred architectural style, location, schools, price range and desired features. We will automatically notify you of all the homes that fit your criteria as they enter the market.
You will have an estimate and explanation of all costs including earnest money, down payment, inspections, closing costs and monthly payment so there will be no surprises later. We won’t let you be blind sided.
We will explore a variety of financing options and help you select the one best suited for your needs.
We will provide you with recommendations of lenders, inspectors, title companies and any other professionals you may need along the way. You are ALWAYS free to use any service provider you choose.
Third - What terms do you want included in your offer?
1. AGENCY – If you have any further questions regarding agency relationships please ask us.
2. APPRAISAL RIDER – Do you want to include this requirement as a part of your offer?
3. PERSONAL PROPERTY INCLUSIONS – Any personal property you want to include MUST be written on the contract. Check with your lender first.
4. EARNEST MONEY – You will need to provide a check for earnest money when writing your offer (typically between 1% and 3% of the sale price). It will be deposited in an escrow account promptly upon final acceptance.
5. HOME WARRANTY – Have you made a decision about buying a warranty? Is the seller offering one? If so, write it on your contract offer.
6. HOME SALE CONTINGENCY – Do you need to make your offer contingent on the closing of your present home?
7. FINANCING CLAUSE – It is imperative that you review and understand all aspects of your WRITTEN LOAN COMMITMENT before the deadline date. If there are conditions to be met you could be at risk. Your protection ends on the loan commitment date. We have encountered numerous problems with lenders issuing conditional loan commitments. You are entitled to hire any lender you like, but be aware that you need a firm written commitment on the terms you include in the contract by the date specified. Be cautious with any lender you interview and make certain you understand all of their charges and various fees, which may actually defeat that extra low rate. Out of town and Internet lenders whose funds do not arrive on time for closing have been especially problematic. You, and not the lender, are bound by the terms of the contract and its financing clause.
8. HOMEOWNER’S INSURANCE – The contract gives you 10 days to learn if Homeowner’s Insurance is available on the property. Call your insurance company or ask for a referral to one.
9. SCHOOLS – School district boundaries are subject to change. Check to determine potential changes.
10. SURROUNDING AREA – Have you checked for planned improvements, zoning revisions, new construction and other changes nearby?
11. SELLER’S DISCLOSURE – Have you thoroughly read the seller’s disclosure? Does anything need clarification?
12. INDENTURES / DECLARATIONS – Do you wish to make your offer contingent upon your review and approval?
13. BUILDING CODES – If you expect to make any improvements, additions or changes in the use of the property, you may want to make your offer contingent upon obtaining permission from the appropriate governmental jurisdictions.
14. TITLE COMPANY & INSPECTORS – Select the title company and inspection companies you prefer to use. You are entitled to hire any one you want and your agent can provide a list of qualified vendors if you wish.
15. THE INSPECTION PROCESS – The purpose of inspections is to discover conditions that were unknown upon viewing the property. It is important to have realistic expectations of each home’s age and components. Typically, a buyer has a building, termite and radon, sewer lateral inspections and any other environmental inspections you want. Pools get inspected, too. Discuss your wishes with your agent.
16. MUNICIPAL & FIRE DISTRICT CODE COMPLIANCE – Do you wish to require that the seller perform all predication work before closing? The contract allows for these repairs to be negotiated between buyer and seller.
17. SURVEY – You will need to choose which type of survey you want to have. The less expensive one will be sufficient for your lender, but not for making improvements such as a fence or pool. Your agent can explain the difference.
18. CLOSING – You will need to bring a CASHIER’S CHECK for your funds at closing. The title company will give you the exact amount only after your lender has completed the documents. This usually happens the day before closing. If you will be sending funds by wire transfer, you will need to coordinate with the title company for proper routing numbers. Please be aware that wire transfers are not instantaneous and that you remain liable for the funds arriving on the proper date. Allow extra days for this process. You must bring photo identification to closing.
Note: This list is for your guidance; you are encouraged to raise your own questions or issues, which may be of equal or greater importance in your decision-making.
What if you find a For Sale By Owner you want to see?
Most For Sale By Owner sellers will work with and pay a buyer’s agent even though his home is not listed. The seller knows that your agent will make sure the terms of the contract are followed and all contingencies fulfilled. Yet, your Buyer’s Agent represents only you and your best interests.
A homeowner trying to sell his home without Broker representation generally has one or both of two motivations:
The first is price. Often an unrepresented owner has had one or two agents give him a price opinion. Many times he doesn’t like the conclusions of these agents and decides to put his own price on his home and “go it alone” in hopes of finding an uninformed buyer.
The second is commission. At the very least he is trying to save the commission. Coincidentally, one reason a buyer would want to deal directly with a homeowner is to save the very same commission.
Now that you are aware of the benefits your buyer’s agent affords you, let your agent call that owner and arrange to show it to you. It may be the right house; let your agent get you the right price and terms.
Visiting New Construction
Why might you want your Buyer’s Agent to show you new construction? It can’t be that hard and maybe you could save the commission off the price. Well, it’s just human nature. Who wouldn’t want to save that money? Here are a few reasons you might consider:
Builders in our area themselves tell us that over 60% of their sales are brought to them by Realtors®. The best builders spread that cost over 100% of their lots and stop thinking about it. Could you lose 60% of your business source? Builders know they can’t. If a builder hints to you to drop your agent how honest do you think he is?
The agent working for the builder is a Seller’s agent. It is their job to sell each and every lot – even the inferior ones. If you start to like an inferior lot, the agent will be less likely to recommend a better one. The lot is critical for resale.
Your Buyer’s agent is there to help you build your dream home without getting in over your head. Those options add up in a hurry.
Your Buyer’s Agent has a future interest in building your home so that it will resell well. Your agent will advise you on upgrades that will add value and help you avoid buying options that add little or nothing or are so specialized they detract from resale.
The builder is not concerned with your home’s resale. Once you close, the builder is on to other projects. Your Agent is the one who hopes to get your call when it is time to sell and will have to answer to the market for your investment.
When you visit new construction with your agent, your agent represents the possibility of bringing more business to that builder. You are likely to get more for your dollar when you have your agent introduce you to new construction.
Your agent knows what questions to ask. How much longer before the development is finished? Might you need to sell before the project is finished? What is the building time – really? How many lots are sold? How many remain? What is the average sale price? What about special offers – financing, upgrade packages, etc.? Can we trade special financing for options or vice versa?
Good builders welcome agents because they have a greater certainty that the buyer’s existing home will be sold in time. It is always best to share your desire for a new home with your agent and to allow your agent to make your first visit with you.
BEFORE BUILDING A NEW HOME
The agent at new developments represents the builder and must advocate for the builder’s interests. If you wish representation by a buyer’s agent you must have your Buyer’s agent accompany you on your first to any development. Your Buyer’s agent will be compensated by the builder and will work only in your best interest. Below are some of the things that a buyer’s agent helps you with when building a new home.
Visit with two or more current owners in the development and inquire about their level of satisfaction with the builder, the house & their service , especially completion work & call-backs.
Inquire about the builder’s warranties – structural components and systems and appliances. Read them.
What do change orders cost? How are they handled? What advance payments are required?
How will your deposit money be handled? Will it be escrowed or go into the builder’s general
account? Exactly how much is required and at what stages?
Your Purchase Contract:
Do you want to approve the home’s “stakeout” on the lot?
Have the house tested for Radon before closing, include your right to do so and that the builder will remediate at his expense.
Does the contract include a financing clause? Will the builder require you to waive this clause upon issuance of your commitment in order to begin construction?
When will construction begin? Will it begin immediately or upon waiver of financing? Will you have to wait for permits to be issued? Is the builder currently delivering homes on time? Are there any potential labor or materials issues you should be aware of? Will the season of the year have any possible affect on completion?
What are the plans for the land adjoining the development? What is the present zoning of the adjoining property? Verify with outside agencies.
Will the streets be dedicated to the appropriate governmental authority? When?
What written assurances exist concerning completion of the infrastructure of the development?
What common amenities are planned by the builder? Pool, tennis, clubhouse, entrance monuments, common ground, retention pond? What is the expected time of completion? What is the projected cost per home?
Obtain a copy of the subdivision indentures and restrictions and read them. Inquire as to when the homeowners will take over as trustees. What are the projected assessments to homeowners at that time?
Your Building Site or Lot:
Inquire about building lines and set-backs, existing or planned easements for utilities (sewer, gas, phone, cable, water, electric, etc.) and any rights of way for construction or other purposes.
Ascertain that the property is not in a flood plain.
Will the lot accommodate any future improvements that you plan to make (pool, deck, fence?)
Now is the time to add features you want to build into the home such as pre-wire for telephone, cable, computers, alarm, intercom and central vacuum. Do you want extra electric outlets in the floors or walls, recessed lighting in kitchen, great room and baths? Verify in writing exact cost for each and locate on the floor plan precise locations. You and the builder need to sign and initial the drawings.
Verify the allowances for lighting, flooring, etc.. If you increase these allowances now and add them to your contract, you may be able to include the costs in your loan and not pay cash when you make your selections.
Can you make Custom Changes to your plan? What does the builder consider to be a Custom Change? What are the architect’s fees that you would be charged? When are these fees due?
What is the builder’s policy on you visiting the home during construction? We strongly encourage you to visit frequently as you will be able to spot mistakes and arrange for correction while these items can still be fixed. You will also be able to identify places where you want to make a change order.
GET ALL CHANGE ORDERS, UPGRADES AND PROMISES IN WRITING SIGNED BY BOTH YOU AND THE BUILDER. ACCEPT NOTHING THAT IS NOT WRITTEN AND SIGNED BY ALL PARTIES. GET RECEIPTS FOR ALL DEPOSITS & FEES PAID.
What is the builder’s policy regarding closing and your final walk through? Who will conduct the walk through? We recommend doing this several days before closing so that the builder has time to attend to many of the punch list items before you are ready to move in.
When will your home be completed? What happens if they complete your home early? What if the builder is late? Will you be forced to close upon completion? Will the builder compensate you for temporary housing & storage if completion is late? How & when is the completion determined?
Closing, Title & Survey:
Does the builder want you to use his title company? Do you prefer a different one?
What is the title company’s fee for your title insurance?
Make certain that your title insurance coverage includes Mechanic’s Lien Coverage at no additional cost to you.
You have a choice of the type of lot survey you will obtain. The less expensive one will be sufficient for your lender, but is not sufficient for building improvements such as fences or pool.
When you order a Boundary and Improvement Survey (the more expensive one) your lot lines should be insured on your title insurance policy. Ask your agent or the title company to get you a price for each.
How will the property taxes on your home be figured at closing? Ask the title company or the builder.
Note: These considerations are provided for your guidance only. You are encouraged to define your own questions or issues which may be of equal or greater importance in your decision making.