Home Buying Guide

Dated: 07/05/2018

Views: 1301

Home Buying Guide

By Ryan Grubbs, Realtor

Providence Realty

(Cell) 405-328-4381

Congratulations on your choice to purchase a new home! While this is an exciting time, it can also be a stressful time for those who are first time homebuyers or haven’t purchased in a while. I’m sure you have questions about how this works, how much money you’re going to have to spend, and exactly what you have to do – after all, it’s not as simple as picking a house and handing over money! 

This blog is designed to walk you through the essentials (and what to expect) when you’re buying a home – from understanding how I (as your Realtor) am going to help you through this process - to signing the papers and moving into your new home! At the end of this write-up, I’ve included the names of several professionals I’ve had the opportunity to work with and trust – just to give you a bit of a head start.

Outline :                 Step 1 – Get Pre-qualified

                                Step 2 – House Hunting

                                Step 3 – Making An Offer

                                Step 4 – Offer Accepted/Counteroffer Received

                                Step 5 – Inspections

                                Step 6 – What You Should Be Doing

                                Step 7 – TRR

                                Step 8 – Negotiations of TRR

                                Step 9 – Appraisal

                                Step 10 – The Home Stretch

                                Step 11 – Closing Day

Step 1 - Get Prequalified

So you’ve made up your mind, it’s time for the next step in your life! Great, but now what? Well, the absolute first thing that needs to happen is pre-qualification, even before you start looking at homes, and let me explain why.

You’re looking at homes in what you believe to be your price range, but is it? There’s more that comes into play than “I have decent credit” and “I can afford it.” Lenders tend to think a bit differently than we do, so we need to get you approved! It’s very important to be upfront and thorough with your lender about every detail – the last thing you want is to be in the final step of the process and have to walk away from the home you love because of small details! A pre-approval is also a “leg up,” if you will. This allows you to have MORE bargaining power when you’re making offers.

During this process, your loan officer will also walk you through down-payments and the amount of money you’ll need to “bring to the table” when it’s time to take ownership of your new home. While you typically aren’t paying any Realtor commissions as a buyer, there are fees that you will have to pay to the mortgage company and title company, also known as “closing costs.” There are different types of loans with different requirements as far as down payment (some with 0%!), so we need to be sure you’re comfortable with the initial cost.

Once you’re pre-approved, then comes the fun part – finding your home!

Step 2 - House Hunting

Now we get to have fun! We know your pre-approved price range, we have an idea of where you’d like to live, and we know the specifics of the home you’re looking for. At this point, I will set up a search for you for all homes that match your criteria! As a Realtor, I use the MLS (Multiple Listing System) to peruse all of the homes available on the market – and send them to you as soon as they’re available. This comes to you in form of an e-mail and is updated as often as you like – we generally set it up so the day a new property that matches your criteria hits the market, you get an email to let you know.

So you’ve sat down, empowered with knowledge of things you must have in a home, and you’ve found a few listings you’d like to see. That’s great! First, narrow the list down to no more than 5 homes that you believe fit you the best. We do this for many reasons, but the big reason is time (what if you miss the house that was PERFECT because you were driving to 10 others that were kind of what you wanted?) and the fact it becomes overwhelming. When you’re looking at the homes side by side on paper, you can start making the decisions about what works best for you. Then, DRIVE BY! Check out the neighborhood, the location, and make sure everything is as you had hoped.

At this point – it’s time to schedule a time to view the homes. We will get together, schedule a time that works best, and we will see these homes. Often, we try to view multiple homes in one day – while your memory is fresh! Once you find the home that fits best, it’s time to move on to the next step…

It is worth noting that, while it’s not very common, sometimes you may encounter a for sale by owner or a seller who is not willing to pay me for my work. Since I’m working for you

Step 3 - Making An Offer

Found it! It’s perfect and you want it – great. You’re already pre-approved, it’s in your price range, and it fits your needs. Time to put in an offer! In real estate, things often move fast. The quicker we can get the offer in, the better chance we have at getting the home you want!

At this point, I will do my due diligence and do a full market analysis of comparable properties to ensure you’re getting a fair deal. This also comes into play later on when the home is appraised for your loan, but we can talk about that later.

When we make an offer, you’ll need to write a personal check from your personal checking account for an earnest money deposit – this is due at the time we make an offer. The earnest money check is generally 1% of the home price, but depending on the situation may be more or less. We can discuss this in more detail when the time comes, but just think of it as a “deposit” that comes off the total price financed for now.

At this time, you will also receive an estimate of costs – this will give you an approximate idea of how much money you’ll need to bring when signing day comes. It will also let you know an estimated monthly payment, just to make sure you’re comfortable with the payment!

Now, it’s my turn to work some magic. One thing we’ll go over is including a home warranty to protect you against anything that may stop working in your new home. I have plenty of information in regards to this as well as a home warranty professional that would be glad to speak to you about it. The great thing? Often times we can negotiate it into the contractJ.

Once we figure out what we are going to offer, you simply electronically sign (or sign in person, if you prefer) the documents for the offer and I submit it to the listing agent. Once an offer is accepted, I will take your earnest money check and deposit it with the title company that will be walking us through our final stages.

What you probably didn’t know about the title company is that they are the unsung hero during this process. You know you are paying them fees, but what you don’t see is what they’re doing to earn that! During the process, the title company is bringing the title abstract up to date, making sure there are no liens or conflict of ownership, getting a commitment for title insurance, preparing all documents and recording/filing of all documents. All the legal/boring stuff? Yep, that’s what they’re doing.

Step 4 - Offer Accepted

All right – it’s yours! Kind of. We still have a good bit more work to do before you can take ownership. This process generally takes around 30 days from the time an offer is accepted, although some types of loans (VA in particular) may take upwards of 45 days. Keep in mind that we are now on a fairly strict timeline, so we have to be attentive whenever someone needs something from us! Don’t worry, I’ll let you know if you’re slacking!

Once your offer is accepted, your lender is going to be in constant contact with you – they need to get documentation of everything you’ve told them so they can verify everything. It is VERY important that you respond as quickly as possible since the entire process moves fairly quickly. They will be asking for things such as W2’s, tax information from previous years, social security paperwork, bank statements, and pay stubs, just to name a few. This part of the process is changing you from “Pre-approved” to “Approved,” so they need to finalize things.

Step 4 (Part 2) – Counteroffer Received / Offer Not Accepted

Oh no! Don’t freak out, it happens sometimes! Remember I told you the market moves quick? Sometimes we run into a multiple offer situation. If a counteroffer is presented, we continue to negotiate the conditions until we can come to an agreement that works for both us and the seller. We always try to go in with the best offer we can – a multiple offer situation can become not only tiresome, but expensive! These situations is why you hear of houses selling over asking price! Remember, we are looking for a WIN/WIN situation – an offer that makes you happy, but also makes the seller happy.

If your offer was not accepted and no counteroffer was produced, this likely means the offer was too low. At this point, it’s time to regroup and come with a more substantial offer!

Step 5 - Inspections

First thing I will be doing during this process is scheduling a home inspection (this is both visual and performance testing to ensure proper working condition that generally covers electronics, plumbing, electrical, etc.) as well as a termite inspection (got to make sure those pesky guys don’t own the house!) Most loans require these, and I ALWAYS suggest these regardless – it’s an absolute must to have a professional do a full walk through of a home you’re considering. If you like, you can actually be present for the walk through and ask any questions that may come to mind! If you can’t make it or don’t care to – no worries, I’ll be there!

We have a limited number of days to get the inspections done – if you choose to use your own inspector that is perfectly fine. If not, I have preferred inspectors that are licensed through the state that do a phenomenal job. The inspector will provide a detailed report (often with pictures) of every aspect of the home, whether it be good or bad. This is very, very important for our next step, which is where we negotiate with the seller about fixing anything that may be wrong.

About termites – many people hear about termite damage and run for the hills – but it’s really not that bad. If there is extensive termite damage, the report will let us know and we can make a decision accordingly. Often times, it’s very minor and, once treated, will never be an issue. The good news? If the home you’re considering purchasing has termite damage, most of the time I can get the seller to pay to have the situation corrected and you won’t have to worry about it again!

Step 6 - What You Should Be Doing

Your mortgage payment consists of several parts – principle (plus interest), taxes, home insurance, and mortgage insurance (when applicable). It is VERY IMPORTANT that you not take out any new lines of credit during this process – that’s right, no new car for you until this process is done! Your lender should have gone over the basics of this, so for now we are just touching on homeowners insurance.

At this point in the process, you should be calling to get insurance quotes. I ALWAYS suggest multiple quotes, as what works best for one person may be substantially more expensive for another. Don’t worry, I’ve provided people to call!

Step 7 - Treatments, Repairs, Replacements (TRR)

Once the inspections are done, we will go over the report together. Unless it’s a brand new, custom built home – you are ALWAYS going to have little things that aren’t 100% the way you want. It is to be expected. Instead of focusing on small things that are easily fixed(and often personal preference), we need to concentrate on bigger issues – what on this report would cause you not to buy this home if it were not repaired? This is a NEGOTIATION, not a requirement. When we focus on the big things that are absolutely necessary, sellers are more likely to fix them and less likely to run. Don’t forget – just like you (as a buyer) can walk away from the deal during inspections (if there is something gravely wrong), the seller can also choose to walk away – often leaving you out a lot of money for inspections and appraisals!

At this point, we send over the TRR to the seller asking for repairs for the important items. On the TRR, you will often see things such as a non-working HVAC unit, unsafe electrical, water leaks, or perhaps a roof that needs repaired – all things that are important (and generally more expensive) to having a nice, safe home.

Step 8 - Negotiations Of The TRR

Sometimes, the buyer and seller are unable to come to an agreement on repairs to be made. In this situation, you (as a buyer) have two options – you can walk away from the purchase (but you’ll be out of the money you’ve spent on inspections and appraisals) or it’s time for further negotiation. It’s completely a personal choice, and it’s not always an easy one. You have to decide if you love the house enough to invest more time and money, or if it’s better to walk away and continue the search. Fortunately, by concentrating on bigger items and not nitpicking little things, we often stand a much better chance at having these repairs done. After all, whether the seller fixes it now and sells you the home or keeps the home, it will have to be fixed or the price adjusted accordingly.

Step 9 - Appraisal

After the inspections are done, it’s time for an appraisal! This is a huge thing and there are a couple parts to this.

If the home won’t appraise for the value you’re financing, you’re either going to have to walk away, renegotiate price, or come up with more cash to make the deal happen. It’s worth noting that with preparing a market analysis of the home before making an offer, this can be avoided most of the time. However, sometimes homes slip through the cracks and present this challenge. The good news is, most of the time, the seller will work with getting the price down to the appraised value.

The appraiser may also require certain repairs to be made – for certain types of loans (VA and FHA in particular), the home has to be up to certain standards. If the home is not brought up to those standards, it won’t qualify for the loan!

Step 10 - The Home Stretch

Okay, all the negotiating is done and we’re another step closer! It’s almost yours, we’re just waiting on the closing date to get here so that you can move into your new home!

The day before (it is VERY important to do this) closing, we will meet and do a “final” walk-through of the home. It’s not common, but unfortunately sometimes things such as vandalism happen, and we need to know about it before you sign the final papers. This is also our last chance to verify that all of the repairs to the home have been made as promised and to ensure the home was left in a reasonable condition when the seller moved out.

You should also be using this time to finish packing up anything that you’re taking with you – it’s almost time!

Step 11 - Closing Day

It’s finally here! The seller and their agent will meet us at the title company. You MUST bring two forms of ID as well as a cashier’s check for the amount your lender has required at closing. In order to make sure we get in and out on time, you should arrive 15-20 minutes early to make sure we can start right on time. Wear something comfortable and work on your signature before you come, it’s time to make a purchase!

After all the paper work has been signed, a big CONGRATULATIONS is in order – you are now the owner of your new home!

When contacting my preferred professionals, please let them know that I referred you!

Mortgage Lenders

Alex Glover – Movement Mortgage (405) 882-9494

Kyle Crouch – Certainty Home Loans (405) 570-0408

Brittney Traigle – Gateway Mortgage (405) 421-0575

Dina Scheirman – Caliber Home Loans (405) 968-4205

Chris Miller – Lincoln Lending (405) 799-5363

Home Inspectors

Craig Hill – Western Grand Inspection (405) 456-9404

Mark Sharp - Sharp Choice Inspections (405) 213-5146

Zane Grider – Platinum Home Inspections (405) 826-3510

Insurance Agents

Kayla Blount – Liberty Mutual (405) 509-7024

Michael Sohn – MetroOKC Insurance (405) 603-2176

Latest Blog Posts

Home Buying Guide

Home Buying GuideBy Ryan Grubbs, RealtorProvidence Realty(Cell) 405-328-4381Congratulations on your choice to purchase a new home! While this is an exciting time, it can also be a stressful time

Read More

Protecting Your Home

We all know crime is on the rise lately and it doesn't matter what neighborhood you live in. Thieves are keeping an eye out all hours of the day and can target your home at any time. We as neighbors

Read More

Selling A Home

Selling a home can be a difficult task for even the most seasoned of sellers. There is so much that goes into the process of placing a property on the housing market. First, the owner needs to get

Read More