Purchasing a property is one of the most significant financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.
Why Do You Want To Buy?
Are you ready to move up? Are your kids now approaching school age and you want the best public schools? Have you decided to pay your own mortgage and not your landlord’s? Have you outgrown your current home? Are you looking for an investment portfolio? Would you like a larger yard? Having a clear sense of your reasons for buying will help you choose the right property.
PREPARING TO BUY
Before you start home shopping it is important to make the right preparations to be able to buy when the right property comes along.
Build Your Green File.
A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:
- Financial statements
- Bank accounts
- Credit cards
- Auto loans
- Recent pay stubs
- Tax returns for two yearsCopies of leases for investment properties
- 401K statements, life insurance, stocks, bonds, and mutual account information
Establish a Relationship with a Lender and Check Your Credit Rating.
Your credit score will have a huge impact on what type of property you can buy, and a within what price range. We will be happy to suggest a several possible lenders for you to speak with who will pre-qualify you and run your credit score.Your lender will research your credit ratings from the three credit reporting agencies Equifax, Experian and Trans Union. He or she will then quickly be able to tell you the type of loan and amounts for which you qualify. In tight markets it is frequently smart to “pre-underwrite” your loan which means that the loan is already fully approved which makes your offer much stronger in the Sellers eyes.
Be Careful With Your Finances.
Now is not a good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability. Opening a new credit card, buying a new car or other large purchase should be deferred until the home purchase is complete.
CHOOSING A REAL ESTATE AGENT
Buying a property requires making many important financial decisions, understanding complex issues and completing a lot of paperwork. We can guide you through this process, and frequently also provide you with access to property listings before they hit the general market.
Here are some factors to consider when choosing your real estate professional:
- Look for a full-time agent – We do only real estate and are available 24/7 because our clients have busy schedules and the perfect home sometimes wont wait.
- We will spend whatever time you feel is needed to find and buy the perfect property. Sometimes it takes years and we frequently do multiple homes for our clients.
- We are well educated and have extensive continuing education credits. Local knowledge and experience are invaluable when it comes to understanding the best fit for you.
- We have an extensive resume of homes sold in Lamorinda. Our website has many testimonials and show some of the hundreds of homes we have sold.
- Most of all, we will listen carefully to you. What you want is more important than what we think or like and we are committed to listen.
TIME TO GO SHOPPING
Once those preparations are out of the way, it is time to find the right property for you.
Take a Drive.
Get to know the neighborhoods, shopping areas and schools which interest you. Drive around and get a feel for what it would be like to own a property in the area and understand the commute that would result.
Narrow Your Search.
Let us set up a customized search for properties with the characteristics you choose. Select a few properties that interest you the most and let us set up showings for you.
Time to Buy.
Once you have picked out the property you want to purchase, we will put together the most persuasive possible offer that we hope the seller will accept. We know, and have a long working relationship, with most of the local agents and know how to get offers accepted.
ESCROW APPRAISALS AND INSPECTIONS
The Purchase Process, Step-by-Step
The Initial Agreement and Deposit.
A ratified contract is an agreement between Buyer and Seller that gives the Buyer the right to buy the home under the terms of the contract. The initial deposit is usually due into escrow within 3 days of the contract date and will usually be increased to 3% of the purchase price at completion of the inspection period. The title company will order HOA documents, if any, and prepare a preliminary title report showing the condition of the title. You will need to read and approve both of these documents before removing all contingencies.
Once your offer is accepted by the seller, you will need to decide what inspections to do on the property. You will generally have between 5 and 17 days to remove the inspection contingency. We will help recommend the types of inspections to do depending on the property and its condition. We almost always recommend a general home inspection along with, chimney, roof, pool, and sewer inspections. Others may also be advisable as we learn about the property. We can recommend several different inspectors for any type of inspection.
Depending on the outcome of these inspections, you will be satisfied with the condition and proceed or you may have found some unknown, or undisclosed fault that is problematic for you. At this point we can ask for the defect(s) to be repaired before close of escrow or we can attempt to negotiate a credit or price reduction.
Appraisal and Lending.
It is imperative that you keep in close communication with your lender who will let you know when additional documents are needed to approve your loan application. If the purchase is conditional upon financing, the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, and recent sales of comparable properties. It is important for you to make sure that your lender promptly orders the appraisal and informs you when it comes in. The contract may allow for as much as 17 days to remove the appraisal and/or loan contingencies.
If you are obtaining a loan, you will be required by your lender to purchase insurance for the value of the property. 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, or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts. Likewise, combining home, auto, and umbrella liability coverage may reduce your costs.
- You are insuring the value of the improvement on the land, not the land under it. After a disaster, the land is still there. We will be happy to recommend experienced knowledgeable insurance agents for every property type.
- Earthquake Insurance is available.These policies are offered through the State of California. They are high deductible policies, but may be worthwhile on high risk buildings or if close to a faultline.
After all of the above: inspections, appraisal, loan, preliminary title, insurability, and HOA documents have been approved, it is generally quiet time as we wait for loan documents and the signing. About a week before close the title officer will schedule a time for you to come in to sign all the documents. There is a 3 day mandatory waiting period between the time the Closing Disclosure is signed electronically by you and the time you can sign loan documents at the title company. We will attend the signing with you in case there are any questions. This is the time for a final walkthrough to verify that the property is in the same condition as at the time of the offer and to Confirm that any agreed upon repairs are complete. You will also need to transfer liquid good funds for your portion of the down payment to the title company just before close.
Once all of the above is complete and all funds are in escrow, the title company will release the file to record at the County Recorder the following day. Title is transferred at the moment of the recording and you will hear from us as soon as confirmed.
Home Services and Utilities.
We will provide a list of useful numbers for the activation of home services and utilities after the closing occurs.
We are ready to assist you should an unforeseen glitch pop up, even at this last stage. Something at the property breaks down, or some other minor detail – no need to worry. We have encountered these problems before so we know how to handle them efficiently and in a stress-free manor.
This is a complicated process with many important tasks to accomplish. Rest assured that we will be available to you at any time to ease the natural nervousness and confusion that always results. We have done this hundreds of times and will get you successfully through it all.