Buyer’s Guide
Buying Your Home With
Mary M. Welk, J.D.
Table of Contents What Is Included
Buyer’s Guide
Introduction - Simply Put, It Is All About You
About You - Where We Start - To Better Serve
The Search Begins - the Buying Process
Making an Offer - the Buying Process…
After Your Offer Has Been Accepted - the Buying Process…
Pending to Close - the Buying Process… Time to Move In
Terms to Know
Commitment to You and the Community - Windermere
Sample Purchase and Sale Agreement with highlights
Purchase and Sale Agreement (Specific Terms) - Form 28
Financing Addendum - Form 22A
Optional Clauses Addendum - Form 22D
Title Contingency Addendum - Form T
Inspection Addendum - Form 35
Mary M. Welk
Introduction Simply Put, It Is All About You Business Philosophy — Simply Put It Is All About You
Getting to know you, your family, your goals and objectives;
Going through the buying process;
Establishing the next steps;
Getting to know me, my commitment to you, my ability and experience to meet and exceed your expectations;
Partnering to establish the best strategies to find your next home;
I will implement those strategies in a timely fashion and will clearly communicate through out the process;
At all times please feel free to call me, text me or email. maryw@windermere.com 206.495.1478
Mary M. Welk
About You Where We Start To Better Serve
What is motivating you to buy?
What type of a new Home are you looking for? Size, Style, Bedrooms, and Bathrooms?
What are your three highest priorities for your new home?
Do you have specific areas you prefer?
Who will be involved in your buying process?
What is your time line?
Have you purchased property before?
What did you like and dislike about the process?
How do you prefer communications?
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The Search Begins The buying process... Pre-Approval Letter in Hand Meeting with and obtain your pre-approval letter.
Pre-qualifying for a mortgage generally helps you determine how much house you can afford. Remember, becoming qualified does not necessarily mean that you will be approved for a loan of that amount.
Pre-approval from your lender means that you have provided them with necessary paperwork, and they have approved you for an actual loan. Having pre-approval for a home will put you in a much better negotiating position, because the seller knows you are able to obtain your loan to purchase their home. Determining how much you can afford before you begin your home search will save you valuable time.
Preferred Lenders If you do not already have a lender, I can help you locate a lender who will assist you in finding a financing package that best meets your needs.
Determining Your Wants and Needs We have already started that process today. Input from everyone that is going to live in house is important. Reviewing it as time goes on.
When do you want or need to be in your new house? We will work back from that date to review your time frame. Do you need to sell your home or are there other things you must do before you can move?
Mechanics of the Search Often, I will preview properties that meet your style, size, price, location requirements and choose the most suitable properties. Sometimes we discover new listings together. If you are like most buyers you’ll be searching online and visiting open houses whenever you can.
New Properties on the Market In addition to checking the MLS database at least once a day, I input your information into the MLS, which notifies me via email when new properties are added that meet your criteria. As new properties come available I will tour them with or without you (your choice). Mary M. Welk
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Making an Offer The buying process... Your Determination of the Offering Price Once you have found the right home, you will have a good knowledge basis to know what the offering price should be. We will have reviewed the time it has been on the market, comparable properties, the condition of the house, and you will be in a position to determine your offering price. I am here to help advise, counsel, and provide accurate and current information through out the process so you feel confident in the decision you make.
Down Payment Most lenders require a 3.5 to 20 percent down payment.
Writing the Offer This is where all of your goals and objectives get translated into a contract. The price, the earnest money, your financial options, your review of the property (pre-inspection/regular inspection), review of the Seller Disclosure Form 17, review of the preliminary title, if it is a condo a review of the resale certificate and related documents, determining the closing date (when do you want to be in the property), and any unique considerations that need to be addressed. We will also discuss the strategies to best position your offer.
Presentation of the Offer and Acceptance/Counter It is my responsibility to present your offer and to do so in a convincing and confident manner. The Listing broker will discuss it with the Seller, and there will be an acceptance or counter offer. We will evaluate the possible objections the Seller could have and either pre-empt them or we will be prepared to address them. Our communication will be open and candid as we go through this process. I am your advocate and will do all I can to put you in the best position possible to obtain the home you select.
Mary M. Welk
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After Your Offer Has Been Accepted The buying process... Inspection You have the right to have an inspection of the property prior to closing. You will want to retain a professional inspector for this task. If problems are discovered with the property, you can ask the seller to repair them or compensate you for future repairs or give timely notice per the purchase and sale agreement, terminate the transaction, and receive your earnest money back.
Title Commitment The sellers of the property will provide you with an insurance policy. This policy protects you against loss arising from disputes over ownership of a property. You will have an opportunity to review the policy and determine if there are any exceptions to the policy that you find objectionable. Your lender will require you to purchase a separate policy that covers them.
Appraisal Your lender will hire an appraiser to determine if the property is worth the price you are paying. There are contingencies built into the financing addendum to protect your earnest money if the appraisal is lower than the purchase price.
Home Owners Association - HOA If the property is a part of a Home Owners Association, you will have an opportunity to read and accept the documents pertaining to the association. These documents describe the rules, regulations and finances pertaining to the association. You will want to make sure that everything is in good order and that there are plans to keep it that way.
Plans A through C When you’re buying a home, Plan A is always to buy the home on the terms in the original contract. Plan B is to buy the home after negotiating some of the terms. Plan C is the contingency plan: if there is an irresolvable flaw in the condition of the home, the home doesn't appraise for the purchase price, or your lender refused to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than money you’ve spent on inspections) so long as you have the appropriate contingencies in place, and you followed the terms of the contract and the timelines.
Mary M. Welk
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Pending to Close The buying process... The Details Once we make an offer on a home it is my job to make sure your offer is accepted, carefully executed, that every detail of your transaction is completed, and adheres to the strict time schedules of your contract.
Timeline I will be providing you with a Pending-to-Close timeline once we have mutual acceptance on your home. The timeline below is a visual display of the important dates of your contract. Here is an Example 09/23/14
Mutual Acceptance! Congratulations.
09/26/14
Must have written application for financing.
09/28/14
Must have the inspection contingency removed.
10/12/14
Estimated signing date.
10/15/14
Closing and Possession.
Closing The “closing� is actually comprised of two separate closings. At the real estate closing you will sign closing documents relating to the transfer of the property. The loan closing takes place after you sign the loan documents. Once all documents are signed, the lender disburses the funds to the closing agent, the seller is paid and title to the home is transferred into your name.
Possession The time and date of possession of the property is negotiated on the contract. Upon possession, you can start moving in!
Time to Move In—Congratulations Thank you for letting me be part of the Process!
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Terms to Know Purchase Amount The purchase amount is the amount you are paying for the house. It is inclusive of your earnest money. It is inclusive of your down payment. It is not inclusive of your closing costs.
Earnest Money When you make an offer by signing a contract, you’ll also pay a deposit called earnest money, usually 2- 5% of the purchase amount, to show that your interest in the house is serious. Paid by the buyer, earnest money is a portion of the purchase amount that is held by the escrow company while the transaction is in process. When the transaction closes, the earnest money is transferred to the seller as a portion of the original purchase amount. It is not an additional fee.
Closing Costs Closing costs are not a part of the purchase amount, but rather charges associated with the buyers loan, the transaction itself and prepayment required by the lender such as taxes and hazard insurance. The escrow company collects closing costs at the same time that the down payment is collected.
Down Payment The down payment is a portion of the purchase price that the buyer is paying in cash. Most down payments range between 3.0% and 20% and each buyer, working with their lender, determines the best scenario for their particular purchase.
What Is Escrow? Escrow is a written agreement where property and money is delivered to a third party to be held until the conditions of the agreements are fulfilled. The conditions are set forth within the Purchase and Sale Agreement, Loan Commitment and other written instructions. The costs for the escrow company are generally split between the buyer and the seller equally and are also a part of the “Closing Costs.”
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Terms to Know Title Insurance For a seller, it is important to prove that they own the property and that there are no liens against it, other than the mortgage. This is done by showing clear title to the buyer. The title to the property can be insured as marketable and the buyer is made aware of title issues that might need to be resolved prior to closing.
Who Pays For It? Once an offer is received, all parties involved will want to review the Preliminary Title Commitment. There will be two separate title insurance policies purchase. The seller will buy the purchaser a title insurance policy, and the buyer will purchase one for their lender. This is a one time charge and a policy that last as long as the buyer owns the home.
What Are Closing Costs? Closing costs are an assortment of fees based on the transaction between the seller and the buyer of a home (fees based on the closing of the transaction, hence the name).
Who Pays Them? Some closing costs, such as excise tax on the sale and real estate commissions, are the responsibility of the seller. Some closing costs, such as the cost of the escrow company, are split between the buyer and seller. Many of the closing costs are related to the buyers mortgage and these are the buyer’s responsibility. One of the largest costs associated with the mortgage is the “loan origination fee” or the fee charged by the lender to provide the loan. This varies between lenders and is something that should be considered when shopping for a lender. Some buyers, at times, will elect to pay a separate fee to “buy down” or lower the interest rate. Lenders can also charge for appraisal, title insurance, courier fees, etc. In addition to closing costs, the escrow company will be instructed by the lender to collect “pre-payment amounts”, also referred to as “pre-paids.” These pre-payments are for such things as real estate taxes, insurance, etc.
How Much Are They? The kind and amount of closing costs you will incur will depend on your loan, your lender and the home you decide to purchase. Upon making your initial loan application, your lender will provide you with a Good Faith Estimate which will give you a better idea of what to expect. Mary M. Welk
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Terms to Know What Is A Good Faith Estimate? The Good Faith Estimate or GFE is a form, which lenders are required to complete and provide to borrowers applying for a mortgage. It is intended to make it easier for borrowers to compare mortgage offers from different lenders and it is required under Real Estate Settlement Procedures Act (RESPA) rules. There are actually two forms to look at. The first is the Good Faith Estimate itself, and must be provided when you apply for the loan. The second is the Settlement Statement, which breaks down and details all final costs, and is provided before the actual closing. The two forms are designed to allow the borrowers to compare the estimated and final costs to ensure they are either unchanged or that the changes are within the limits allowed by law.
Origination Charges On the Good Faith Estimate, the main thing a borrower needs to be concerned with is the section titles “origination charges.” These are all the fees that the lender is charging you for making the loan. All a borrower has to do is compare origination charges to see exactly what different lenders would charge for issuing similar loans. The origination charges section also details any points that are being paid or credited to raise or lower the mortgage interest rate. This enables borrowers to more accurately compare the true cost of offers from different lenders.
Settlement Charges The second main item borrowers need to be concerned about is “settlement charges.” This details all third party costs, such as title insurance and transfer taxes. An optional table that can be filled out by the lender shows how you can raise or lower your interest rate by opting for higher or lower settlement charges, and vise versa. Finally, the form spells out which charges on the GFE cannot increase at the time of settlement (as detailed on the Settlement Statement). There’s also a “shopping chart” that allows borrowers to compare terms on up to four different mortgages. Can Your Rates, Payments, Loan Balance Increase? The Good Faith Estimate also details your initial loan balance, interest rate and monthly payments, and whether any of these can rise during the course of the loan and if so, by how much. It also requires disclosure of any prepayment penalties and whether there is a balloon payment on the loan. Mary M. Welk
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Commitment to You and the Community Windermere & Community To You Windermere’s structure allows offices to operate independently while retaining the benefits of being associated with respected brand benefits such as advertising buying power, broker benefits and powerful technology tools. That allows me to provide you the highest caliber of real estate services tailored to meet your specific goals and objectives. “Windermere has always emphasized professionalism. Our brokers are the primary component to our success and growth. We’ve worked very hard over the years to build our reputation as a company whose representatives are fair, honest, knowledgeable and genuinely care about their communities.” -Geoff Wood, Chief Executive Officer, Windermere Real Estate
Housing is Our Business Supporting programs that provide housing and related services to help homeless and low-income families is a natural extension of our business. We assist homeless families by giving funds to a variety of nonprofit social service programs for emergency and transitional shelter projects, temporary rent assistance and daycare for families in need. Other activities include underwriting the cost of summer camp, and basic necessities such as new school shoes, socks and underwear.
Every Transaction Makes a Difference What makes the Windermere Foundation unique is the way that it is funded. Every time a Windermere broker sells a home, a portion of the commission goes to the Windermere Foundation. Salaried employees and managers, as well as the public, make contributions. Since its inception, the Foundation has contributed millions of dollars to non-profit organizations dedicated to fighting homelessness, with less than one percent going to administrative costs.
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Mary M. Welk, J.D. 206-495-1478 maryw@windermere.com
Windermere Real Estate/Wall Street Inc.
2420 2nd Ave Seattle, WA 98121