Ten Steps to Buying a Home
1. Choose an Agent
2. Get Pre-Approved
3. Find Your Home
6. Inspections
5. Signed PA
4.Make An Offer
7. Appraisal
8. Title Commitment
9. Final Docs to Lender
10. Closing
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you (pg. 2-3)
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget (pg. 5)
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home (pg.7 )
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating (pg. 9-11)
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle (pg. 13)
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value (pg. 15)
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract (pg 15)
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled (pg. 15)
10. Closing - where the the final documents are signed and you get the keys to your new home!
How REALTORS® Help Homeowners
By: Julie Wildhaber | Realtor.com
Whetheryou’rebuying,selling,or rentingahome,aRealtor® isyour partnerintheprocess.Realtors® arelocalexpertswhocanhelp youfindtherighthome,negotiate priceandterms,andnavigatethe reportsandcontractstoclose thedeal. Theseareallstrong reasonstoworkwithaRealtor®, butRealtors® arealsocommitted toaCodeofEthics,professional development,andconsumer advocacythatprotectsrightsand savesmoneyforhomeowners.
What’s the Difference Between a Realtor and a Real Estate Agent?
Every state, as well as the District of Columbia and Puerto Rico, requires real estate brokers and agents to hold a real estate license. That typically requires a test and preparatory coursework, but the requirements vary. Agents who want to go beyond basic licensing join the 1
million professionals in the National Association of Realtors® (NAR) and earn the right to call themselves a Realtor®. NAR requires members to train in –and adhere to – a strict Code of Ethics to better represent the interests of customers, the public, and the industry. NAR offers continuing education and certifications for Realtors®, and also lobbies for the interests of home owners.
Code of Ethics and Standards of Practice
Buying or selling a home is a legal transaction, a big financial investment, and a major life decision, that affects everything from your children’s quality of education to your family’s happiness in the community. Homeowners need to know they can trust the agent to guide them through that complex decision and treat them fairly and honestly – even if the customer is a buyer and the Realtor® represents the seller.
That’s why the National Association of Realtors® instituted its Code of Ethics and Standards of Practice. The code goes beyond requirements of the law to detail the ethical responsibilities of Realtors® to
customers, the public, and other real estate professionals. For example, Realtors® cannot hide, exaggerate, or misrepresent any facts about the property or the transaction; they must disclose when they have a financial stake in a property; and they must provide the same level of professional service to everyone, regardless of race, religion, handicap, or sexual orientation.
The Code of Ethics has been in force for 100 years, and it’s updated annually to ensure it reflects current social concerns and evolving business practices, such as the use of social media in marketing. Every member of the NAR receives training on the code.
Continuing Education, Designations, and Certifications
The real estate field changes constantly, so Realtors® freshen their skills and extend their knowledge through continuing education. Realtors® can also train for specialized designations and certifications, such as becoming an Accredited Buyer’s Representative or earning NAR’s Green Designation to understand green building and sustainable business practices.
Continuedontheback
How REALTORS® Help Homeowners
financing, stronger support from the Federal Housing Administration for home loans, and tax relief for people distressed by mortgage debt. Realtor®-supported legislation saves home owners an average of $2,144 for the first year of their loan, or $38,936 over the life of the mortgage.*
Political Advocacy for Home Owners
Realtors® represent the interests of individual home buyers and sellers, while NAR represents the interests of all home owners through political advocacy at the local, regional and national level. The organization advocates for homeownership (get policy updates at Homeownership Matters), as well as for issues like tax benefits, affordable
The Benefits of Working With a REALTOR®
Nothing is more personal than your home. When you work with a Realtor®, you don’t just want someone to process the paperwork and hand over the keys; you want to establish a relationship with someone you trust. That’s why people often choose a Realtor® they already know or one who’s been referred by a friend or relative. If you’re a buyer, it’s
easy to search for homes Online. Once you have a short list of properties, a Realtor® can provide insight — about the neighborhood, the local market, whether the home is correctly priced – as well as expertise to guide you through the legal and financial processes.
If you’re selling a home, a Realtor®can do all those same things, plus help you get a higher price. NAR research shows that in 2012, listings represented by Realtors® sold, on average, for $40,100 more than homes sold by their owners.
*BasedonJune2013NARdata: averagesalepriceof$212,400, 30-yearloanat4.07percent interestrate,andmarginaltax bracketof 25 percent).
Writtenon: Aug13,2013
Ten Steps to Buying a Home
1. Choose an Agent
3. Find Your Home
2. Get Pre-Approved
6. Inspections
5. Signed PA
4.Make An Offer
7. Appraisal
8. Title Commitment
9. Final Docs to Lender
10. Closing
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled
10. Closing - where the the final documents are signed and you get the keys to your new home!
Get Pre-Approved/ What can you Afford
APre-ApprovalLetterisaletterfromamortgagelenderindicating thatabuyerqualifiesforamortageofaspecificamount.
By calling or visiting a lender to obtain a preapproval letter these are things that will be discussed:
•Verify income
•Verify employment
•Verify assests
•Verify debts
•Verify credit
Use this checklist to prepare all the necessary documents you (and your co-borrower) will need to complete your application. Additional documents may also be needed later on in the process.
All Files:
•Copy of driver’s license or goverment-issues
photo ID (front and back)
•Most recent 30 days of paycheck stubs
•W-2’s (and/or 1099’s) for the past two years
•Federal tax returns, including all schedules, for the past two years
•Most recent two months’ checking and savings account statement (all pages)
•Two most recent retirement statements or quarterly statements (if you will be using for a downpayment
If Applicable:
•Copy of your signed closing disclosure from when you purchased your property
•Most recent mortgage statement
•Copy of current mortgage notes
•Full divorce decree, including child support order
•Most recent social security/pension income award letter
•First time home buyer class confirmation
•College transcripts
•Bankruptcy papers (all pages)
• Landlord name and telephone number
Ten Steps to Buying a Home
1. Choose an Agent
2. Get Pre-Approved
3. Find Your Home
6. Inspections
5. Signed PA
4.Make An Offer
7. Appraisal
8. Title Commitment
9. Final Docs to Lender
10. Closing
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled
10. Closing - where the the final documents are signed and you get the keys to your new home!
Desired Home Features
To receive a printout of homes currently for sale that meet your needs and preferences, please consider the following:
Style: __ Ranch __ Two Story
__ Historic __ Vacation Property
__ Condominium __ Investment Property
# of Bedrooms: ____ (min.) # of Baths: ____ (min.)
Square Footage: ___
Preferred Location:
Preferred School District: __
Age: __ New __ Under 10 Years
Under 20 Years Historic No Preference
Features: ___Family Room ___ Den/Office
___ Formal Dining Room ___ Main Floor Master
___ Main Floor Laundry ___ Fireplace ___ Pool
___ Garage (size) ___ Lake ___ Acreage (minimum)
New Construction? Foreclosure/Short Sale?
When would you like to move in (time frame):
Price Range: $_____________ to $______________
Other Features:
Access to Information
Ten Steps to Buying a Home
1. Choose an Agent
2. Get Pre-Approved
3. Find Your Home
4.Make An Offer
6. Inspections
5. Signed PA
7. Appraisal
8. Title Commitment
9. Final Docs to Lender
10. Closing
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled
10. Closing - where the the final documents are signed and you get the keys to your new home!
Negotiating Strategies
Considerations in Your Purchase
Decide What’s Most Important
Perhaps you have found the perfect house, and don’t want to do anything that might jeopardize acquiring it. Perhaps you have identified a number of suitable homes and want to focus on the best possible price. You may have rigid time constraints that play a significant role in the home selection process. Whatever your situation, be sure to decide what’s most important and discuss it with your agent. The more you know about the seller and their priorities, the better you will be able to work with them to match your own priorities.
Including Personal Property
There may be sound reasons to include items of personal property in your offer to purchase. For example, including appliances will eliminate the need to purchase them separately, thus resolving the question of how to pay for them without incurring additional debt. On the other hand, including personal property raises two potential concerns. First, it may create a
potential problem for the lender, since the appraiser can’t include the value of personal property into the appraised value of the Real Estate. Second, the seller may feel that you are unreasonable when you request items they were not planning to leave. This could impact the seller’s willingness to negotiate other issues that may actually have greater importance.
Earnest Money
The seller often will evaluate the degree of commitment you have in the transaction by the amount of earnest money you are prepared to provide. If the seller feels you’re a serious buyer, they offer you more attractive terms. Since the earnest money is applied to the funds required at closing, the net cost to you for providing a significant earnest money deposit is usually very small.
Contingencies
The careful buyer will want to exercise due diligence in the transaction. Home inspections, a review of Title and many other considerations are wise and would be indicated as contingencies on the Buy/Sell Agreement. Sellers will accept these as normal. However, if you ask the seller for an unusual contingency, such as contingent on the sale of your current home, most sellers would consider your offer unacceptable.
Factors That Affect Price
Your agent can provide lots of information to help you determine how much a home is worth. Recent sales in the neighborhood, the price of similar homes that are also for sale, the length of time the home has been on the market, even the price the seller paid for the home may be available. Sometimes these are extremely useful; other times they are totally irrelevant. Ultimately, the matter boils down to whether you decide that this is the best home for your needs and whether you and the seller can agree on a price.
Property Taxes
There are two factors that impact property taxes:
□ The Assessed Value – The municipal assessor reviews each property annually to establish the assessed value. The assessed value is intended to be 50% of market value, though it is rarely entirely accurate.
□ Municipal Tax Rate In Southwest Michigan, tax rates vary substantially – the tax rates for homeowners range from perhaps 25 mills (1 mill = $1/1000) up to nearly double that. Communities with a greater demand for services tend to have a higher tax rate. Tax rates are 18 mills higher for property that is not the owner’s primary residence.
The annual property tax can be estimated by multiplying the assessed value by the millage rate.
Coordinating the Closing and Possession Dates
The coordination of closing and possession is sometimes the toughest part of the negotiations. Both you and sellers have numerous issues to consider. You must be aware of the deadline for moving out of your current residence, factor in the time required to complete the move and confirm the availability of the moving company, potentially all of which are dependent on first closing the sale of your current home. Sellers have similar variables, plus confirming the availability of their next home. Orchestrating this transition requires careful planning and consistent communication.
Advanced Costs Towards Home Ownership
What should you expect?
EARNEST DEPOSIT
(usually 1% of sale price) when offer is made. This amount is credited back to you at close and is applied towards your closing costs and pre paids.
HOME INSPECTION
PEST INSPECTION
RADON INSPECTION
*If requested, payment is due at the time of service.
A lender does not require these services. Fees are approximates and are not guaranteed by the REALTOR®. Please verify price with vendor.
FIRST YEAR OF HOMEOWNERS INSURANCE
Usually due two weeks prior to closing. Amount will vary depending on the sale price of the home.
Example: $115,000 house approximately $600.
DOWN PAYMENT
Conventional financing requires a 5—20% down payment.
FHA financing is requiring a 3.5% down payment.
Rural Development is a zero down federal loan program. The home must be in a Rural Development qualified area to qualify for the zero down payment. The Buyer will still need to pay for 3% of the sale price towards their closing costs or have their realtor® negotiate that with the Seller.
APPRAISAL FEE
Varies from $400 to $600 & payment may be required at the time of loan application. Please verify with your lender.
CLOSING COSTS
Buyers will also be responsible for closing costs, which is approximately 3-6% of the sale price of the home. In some cases the closing costs can be negotiated so the seller pays for it and/or it is added to the mortgage (if the additional costs can be supported by the appraisal.)
Access to Information
$400—$500* $60* $90* in outlying areas $100-150*
Ten Steps to Buying a Home
1. Choose an Agent
2. Get Pre-Approved
3. Find Your Home
6. Inspections
4.Make An Offer
5. Signed PA
7. Appraisal
8. Title Commitment
9. Final Docs to Lender
10. Closing
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled
10. Closing - where the the final documents are signed and you get the keys to your new home!
Inspections
Ahomeinspectionobservesandreportsontheconditionofareal estateproperty,usuallywhenitisonthemarkettobesold.
Ahomeinspectorassessestheproperty’scondition,includingits heatingandcoolingsystems,plumbing,electricalwork,water, andsewage,aswellassomefireandsafetyissues.Inaddition, the homeinspectorwilllookforevidenceofinsect,water,firedamage, oranyotherissuethatmayaffecttheproperty’svalue.
Addtional Inspections:
•Mechanical
•Structural
•Electrical
•Health
•Deed/Plat
•Mold
•Radon
•Pest
Dependingonthefindingsoftheinspectionsdoneabuyercan gobacktointonegotiationswiththesellersforrepairsorcredit towardsthehomepurchase.
& Safety Assesments
Restrictions
Ten Steps to Buying a Home
1. Choose an Agent 2. Get Pre-Approved 3. Find Your Home
7. Appraisal
6. Inspections
5. Signed PA
4.Make An Offer
9. Final Docs to Lender
10. Closing
8. Title Commitment
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled
10. Closing - where the the final documents are signed and you get the keys to your new home!
Appraisal
Ahomeappraisalisaprocessthroughwhicharealestate appraiserdeterminesthefairmarketvalueofahome.Itcanassure youandyourlenderthatthepriceyou’veagreedtopayfora homeisfair.Appraisalsarealsooftenusedtodetermineproperty taxes,whichmakesthemarequirementinmostcounties.
Title Commitment
Atitlecommitmentinformsthebuyerofanyoutstanding attributesofthebuilding,suchasanexistingheirwhohasaclaim tothepropertyoracommunityassociationthatconstitutesa rulingbody.
Final Docs to Lender
Thelenderhasreviewedyoursigneddocuments,re-pulledyour credit,andmadesurenothingchangedsincetheunderwriter’s lastreviewofyourloanfile.Togetherwithyouragent,thetitle companythelenderacleartocloseisintheworksandadatewill besettocloseonyournewhome.
Ten Steps to Buying a Home
1. Choose an Agent 2. Get Pre-Approved 3. Find Your Home
7. Appraisal
6. Inspections
5. Signed PA
4.Make An Offer
10. Closing
8. Title Commitment
9. Final Docs to Lender
1. Choose an agent - check out the article from realtor.com attached on how REALTORS® work for you
2. Get Pre-Approved - speak with a lender on what you can afford and setting a house hunting budget
3. Find your home - utilizing the internet, drive bys, open houses and scheduling private showings to find your perfect home
4. Make an Offer - look at the upfront cost once you and a seller have a final agreement as well seeing a peek into things to consider when negotiating
5. Signed PA - this is when the seller agreed to the terms of your offer and the due diligence period for buyer begin
6. Inpections - knowing what addtional inspection you may need is an important piece to the puzzle
7. Appraisal- A third party placing value on the purchace to assure the bank the price is fair market value
8. Title Commitment - making sure their are no liens or unaware heirs to the property under contract
9. Final Docs to the Lender - the file is under final review and together with the real estate professtionals a closing date will be scheduled
10. Closing - where the the final documents are signed and you get the keys to your new home!
Common Real Estate Terms
Real Estate Glossary
Amortization – Paying off a debt by making regular payments over an agreed upon period of time, resulting in a zero loan balance.
Appraisal – A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.
Assessed Value – The value placed on a home by municipal assessors for the purposes of determining property taxes.
Buy/Sell Agreement – Also known as contract of purchase, purchase agreement or sales agreement according to the location or jurisdiction. A contract in which a seller and buyer agree to transact under certain terms spelled out in writing and signed by both parties.
Closing – The final steps in the transfer of property ownership. On the closing date, as specified by the sales agreement, the buyer reviews and signs all the documents relating to the transaction and the final disbursements are paid. Also referred to as the settlement.
Closing Costs – The costs to complete a real estate transaction, in addition to the price of the home, may include: points, taxes, title insurance, appraisal fees and legal fees.
Contingency – A clause in the purchase contract that describes certain conditions that must be met and agreed upon by both the buyer and seller before the contract is binding.
Conventional Mortgage – Mortgage financing which is not insured or guaranteed by a government agency such as FHA, VA or a private insurer.
Counter-Offer – An offer, made in response to a previous offer, that rejects all or part of it while enabling negotiations to continue towards a mutually-acceptable sales contract.
Debt-to-Income Ratio – Measures total debt. It is calculated by dividing gross monthly debt repayments, including mortgages, by gross monthly income.
Down Payment – The money paid by the buyer to the lender at the time of the closing. The amount is the difference between the sales price and the mortgage loan. Requirements vary by loan type.
Earnest Money – A deposit given by the buyer to bind a purchase offer and is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited.
Common Real Estate Terms
Easements – Legal right of access to use a property by individuals or groups for specific purposes. Easements may affect property values and are sometimes part of the deed.
Equity (Assets) – Ownership interest in a project after liabilities are deducted.
Escrow – A lender-held account where a homeowner pays money toward taxes and insurance on a home.
Fixed-Rate Mortgage – A mortgage in which the interest rate and payments remain the same for the life of the loan.
Home Inspection – Professional inspection of a home, paid by the buyer, to evaluate the quality and safety of its plumbing, heating, wiring, appliances, roof, foundation, etc.
Homeowner’s Insurance – A policy that protects the home owner and the lender from loss due to a fire or storm or liability resulting from injury to a guest.
Lien – A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to the property if you don’t make the mortgage payments.
Market Value – The amount a willing buyer would pay a willing seller for a home. An appraised value is an estimate of the current fair market value.
Mortgage Insurance – Insurance written by a private company protecting the mortgage lender against loss resulting from a mortgage default.
Possession Date – The date, as specified by the sales agreement, that the buyer can move into the property.
Pre-Approval Letter – A letter from a mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount.
Principal – The amount of money borrowed from a lender to buy a home, or the amount of the loan that has not yet been repaid. Does not include the interest paid to borrow.
Purchase Offer – A detailed, written document which makes an offer to purchase a property and which may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the purchase offer becomes a legally-binding buy/sell agreement.
Title – The documented evidence that a person or organization has ownership of real property.
Title Insurance – Insurance that protects lenders and homeowners against legal problems with the title.
Title Search – A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property.
Truth-In-Lending Act (TILA) – Federal law that requires disclosure of a truth-in-lending statement for consumer loans. The statement includes a summary of the total cost of credit.