xBuying Tips
How I Can Help You Buy a Home
Whether it’s your first home or if you’re an experienced buyer, purchasing a home is a complex process. By working with me, you’ll find a home in the neighborhood where you want to live, one that fits your budget and meets your goals for features, quality and value. Once you’ve found the home that’s right for you, I will guide you through the process of making an offer; negotiating the terms of the sale; getting your potential purchase inspected, repaired and appraised; and closing the sale.
Home Buying Guide
Initial Buying Consultation
Congratulations on making a BIG decision! To start off, we will get together on the phone, zoom, or over a cup of coffee at a local coffee shop to chat about what it is you are looking for. We’ll talk about the type of home you envision yourself in, the amenities you are looking for, possible locations and time frame for your move. Keep an open mind during this process. You should have two categories of wants; the “must haves” and the “it would be great if…”. You never know what opening up possibilities can lead to. Once we zero in on what you are looking for, I will offer advice about the search and the home buying process and we will make a plan together that best suits your needs.
Mortgage Pre-approval
Unless you’re paying cash for your home, you’ll need to talk to a good local broker about how much you can afford. Please do not rely on an internet “plug in a few numbers” pre-approval! In today’s fast paced buying market, sellers will require a pre-approval letter from a company their agent knows and trusts, ensuring you are able to afford the home. I am more than happy to supply you with a list of brokers that I have worked with and know they are best qualified to get your mortgage completed in a timely manner and you to the closing table with the least amount of hassle.
Home Search
Here we go! I will initiate a home search that looks in the various neighborhoods you are interested in, with your specific needs, and email them over to you. With the current low inventory of homes, I will look not only on the Multiple Listing Service (MLS), searching both active listing and homes listed on the private network, but also on Top Agent Network (TAN). TAN is a membership only association offered only to the top 10% of agents in the Chicagoland area. In it, members offer and market upcoming listings to each other prior to offering them on the MLS, in many cases selling listings before they ever hit the public market. Through this I can also let agents know what my buyers are looking for, sometimes being able to see a property before it even hits the TAN market. As you can imagine, this is a fantastic opportunity for you to get ahead of the rest of the buyers! As we talked about earlier, you will probably look for homes in more than one neighborhood. You should! Chicago is a city made up of 77 different communities, each one of them unique from the other. You may be surprised by a neighborhood you never thought about before. My experience is, choose at least two, then look at 3-4 homes in each. You will often find that what you get for your money is one neighborhood is different than what you get in another. Maybe a slight shift in location will get you that little “extra” you were looking for in a home - at a lesser price! When you select the homes you wish to see, I will make showing appointments with the listing agents and we will go together to take a look. I suggest you keep the number of homes to no more than 6 the first few times out. Any more than that and they start to all meld together! Make some notes when you get back in the car of your likes and dislikes about the home. We will discuss them at length together, which will help me to become even more educated on the type of home you are really looking for, ensuring that I narrow the search to homes that most closely match your needs. There may be weekends when you are out for a stroll and come across an open house. Go on in! That is the whole reason I starting in real estate over 25 years ago – it’s fun. Please, it is important to let the showing agent know you are working with me. If you are interested in the home, give me a call and we can move forward together, such as scheduling a second, private showing.
Making An Offer
You found your dream home! Congratulations! I will go through comparable sales over the past 5-6 months in the area, reviewing the market and helping you to decide what we feel the fair market value of the home is. If there are limited past sales to compare, we can go back up to a year, but appraisers are limited to 5-6 months. In assembling a contract, together we will determine the best possible terms, and review all disclosures the sellers are required to provide us. I will guide you through all the paperwork and answer all of your questions. Once I present the offer to the listing agent, we wait. Every sale is different and every selling agent has their own way of dealing with them. If you are the only offer, the seller may either accept your offer or, more than likely, make a counter offer. After some back and forth, both parties will agree on a price and terms. However, when we find a home you love, don’t be surprised if another buyer also has fallen in love with it. Remember, you aren’t the only one with good taste! This is when you find yourself in a multiple offer situation. In that instance, the seller has more than one buyer making an offer at the same time. There may be 2 offers, there may be 10 or more. In this situation, we need to be prepared to make a decision swiftly and making as strong of an offer as possible. This includes offering the highest price you are willing to pay, as long as you don’t bid above your financial means, and placing as few contingencies as possible in the offer. Some options may be flexibility on a closing date or a short mortgage approval period. If you don’t need to close on a specific date, or within a specific time frame, we can give the seller the option to choose a closing date that works best for them. Maybe you have been really good about getting your mortgage broker all of your paperwork, so the broker knows they can get your loan approved in a very short period of time. A short mortgage approval period is always nice to see in a contract. Should there be more than one buyer making an offer, there are multiple ways a selling agent can structure the negotiation process. Unfortunately, they are in the driver’s seat. They may ask for initial offers from everyone up front, review them all, and then ask for your highest and best price. Or, they may ask for highest and best right out of the gate. Again, this is where being organized and prepared up front with things like pre-approval letters and flexible terms helps the most. It can be an emotional time, but don’t worry. With over 25 years of negotiation experience, I will guide you to make the process as painless as possible.
Basics of the Contract
Here are some of the most important aspects of the contract
• Price – what you are willing to pay for the home
• Earnest Money – this is good faith money that will be held by the selling agent brokerage. Earnest money is typically given in two installments with the first being due 1 business day after the accepted offer. It can be for a little as $1,000. Once you are through your attorney review and inspection period, (see below), the second
installment of earnest money is due. This is typically a larger payment, up to 5 or 10%. This will be applied toward your down payment. The money is refunded to you should you cancel the contract during the attorney review period or you are unable to obtain a mortgage during your mortgage approval period and alert the sellers.
• Closing Date – when can you actually close on the home. Flexibility in this may help if you are in a multiple offer situation. If a seller needs more time to close, and you are flexible, it may make the difference in getting your offer accepted. A typical closing time is as fast at 30 days, with 60 being on the longer end.
• Mortgage – what percentage are you putting down, how quickly can you get a loan and at what interest rate. In a multiple offer situation, buyers with a larger down payment are considered to be stronger and more favorable
• Home Sale - Do you have a home to sell before you can close on your purchase? If so, we need to disclose that up front and let them know your timeframe.
• Attorney review – Real estate agents are prohibited by law from providing legal advice or modifying contracts. You will hire an attorney to review your contract and make any needed changes to it after it has been accepted. The attorney review period for the contract is typically 5-7 business days after contract acceptance. During this time your attorney will review your contract and make any changes to it they deem necessary, negotiating those changes with the
seller’s attorney. Additionally, they will make sure you receive important condo documents, if necessary, and review and negotiate any major issues that come up in your inspection
• Inspection period - Once you have an accepted contract, you will typically have 5-7 business days to conduct a professional inspection on the home. I can supply you with a list of trusted inspectors I have used over the years that you can hire, insuring you are fully informed on the condition of the home before you move forward. They will typically inspect things like plumbing, electrical, windows, appliances, roof and HVAC. The scope of the inspection differs on a single-family home vs. a condominium. Know that I have NEVER had a home be 100% perfect! There are always issues on any property, but you are hiring them to find the serious ones.
Broken floor tiles don’t count! However, if your inspector discovers something serious that you did not know about when we made the offer, you can negotiate with the seller to repair or replace the item. Additionally, you can ask for a seller to give you a monetary credit at closing to make the replacement yourself.
Loan Application
Once you have a fully signed contract and you are officially moving forward on the purchase, you will need to start the loan process. That loan officer you talked to, long ago for your preapproval? I will take care of getting them a copy of the fully executed contract, but the heavy lifting is going to be up to you. They will give you a list of paperwork they will need to get the process rolling. Don’t waste time. Get them everything they need right from the start and it will absolutely make the transaction go more smoothly.
Appraisal
During your loan process, the bank will order an appraisal. The appraisal is basically the bank doing their due diligence to make sure that the home is actually worth what we offered the seller. Think of it as insurance for both you and the bank. The bank will send out an independent appraiser to look at the home first hand, as well as comparable sales of properties over the past 5 months and make a valuation on the home. Should the home appraise for less than the price both parties agreed on, the bank will only loan on an amount equal to the appraised value. Should this be the case, one of four things can happen.
1) You, as a buyer, can simply let the seller know the home did not appraise, therefor the mortgage was not approved and you are cancelling the contract. Both parties will sign off on the cancellation via their respective attorneys and the earnest money is released back to you.
2) The seller can agree to reduce the sales price to the appraised price.
3) You can agree to bring the difference between the sales price and the appraisal price to the closing in the form of additional down payment money.
4) You can negotiate with the seller for a partial price reduction, with you bringing the difference to the closing table in additional down payment money.
Clear Mortgage Contingencies
Once your application is submitted along with the appraisal, your bank’s underwriter will review it. Nearly always, the underwriting team will request additional information or documentation. They will be following up on your initial application, looking for any changes that may have occurred. The may want a letter of explanation for a large deposit in your savings account, the recent purchase of a car, or the seller’s condo association may need to provide some documents. Expect to get quite familiar with your bank’s website and your company’s scanner before this step is over. You may find it tedious, but it’s a normal part of the process. Ask your loan officer for tips on how to make the paperwork easier.
Final Walk-Through
The day before we close, we will go back to the home for one final look. This is our chance to make sure the sellers have actually vacated, made all the repairs you may have requested, left all the appliances and didn’t accidentally put any holes in the wall moving out. Should there be any last-minute hiccups, we will promptly alert your attorney to work through the issue
Closing
Closings typically are done at the seller’s title company of choice. You will be given final numbers from your lender prior to closing on exactly how much additional down payment and closing cost money you will need to wire or bring in the form of a certified check. Your attorney will sit down with you and go through all of your paperwork, explaining each form fully. When they are done, you will get the keys to your new home!
