The Buying Process
Learn the steps involved in buying your dream home.
Step #1 Inital Meeting
Initial Meeting
Let’s get together to see if we are a good fit! When we meet, you’ll have as much time as you need to ask me any questions and I’ll get a good understanding of what you are looking for. We will even write a mock offer. During our initial consultation we will also:
✓ Address questions and concerns regarding the market, neighborhoods, school districts, or commute.
✓ Get a good understanding of your wants and needs.
✓ Discuss financing options and refer you to the appropriate lender if necessary.
✓ Review the purchase contract and write a mock offer, so you have a complete understanding of the offer process before you find your next home.
Step #2 Pre Approval
The first step when buying a home is to get pre-approved for a loan and receive a pre-approval letter from a lender unless you’re writing an all-cash offer. Due to the competitive market, it is important to include the pre-approval letter with your offer package as it shows the seller you are prepared and gives you an advantage over buyers without one.
Questions to ask your lender:
✓ What is the cost/credit of the loan?
✓ What is the lock term?
✓ What is the cost of the appraisal? (+/- $500)
✓ What are the estimated closing costs? (Est. $10,000)
✓ How do HOA payments impact my qualifying limit?
✓ What is my monthly payment including principal, interest, tax, and insurance? (PITI)
Step #3 Finding Your Home
Once you’re pre-approved on a loan, it’s time to start searching for your home! The majority of properties are listed on the MLS (multiple listing service) by Realtors®. To start searching for a property currently on the market, click here, and please provide any feedback here.
I will also begin networking and prospecting to find off-market and coming soon listings that might work for you as well! Some of the things I will do to help you find an off-market home include mailing a personalized letter with a wet signature in a hand-addressed envelope to your desired neighborhood as well as sending a personalized email to each real estate agent who has sold a home recently in your desired neighborhood. Using these methods I have helped many buyers buy homes before they even came on the market!
Step #4 Making an Offer
Disclosures
Once you have identified a property that you are interested in making an offer on, I will obtain the available reports and disclosures provided by the seller for you to review. When you make an offer, it is with the understanding that items disclosed will not be re-negotiated. However, if any new issues are discovered during the physical contingency period, they can and will be negotiated.
Regardless of how the disclosures are provided to me, I will make sure they are delivered in an easy-to-use format with Disclosures.io, which allows you to search for key terms and keeps all the information organized for you.
Offer Package
When you are writing an offer in a competitive market, it is important that you show that you are serious and prepared to buy.
Your offer package should include:
✓ A pre-approval letter from your lender
✓ Acknowledgment of disclosures and reports (If provided)
✓ Proof of downpayment and closings funds
✓ Residential purchase agreement (RPA)
If the seller has assigned a due date for offers, I will submit them on time and in-person, if possible, to give you the best chance of having your offer accepted.
Time Periods & Terms
Here are the typical time periods in a purchase agreement:
✓ Initial Deposit (3% of purchase price suggested):
✓ Proof of funds (if not provided at time of offer):
✓ Physical Contingency: 10 Days
✓ Appraisal Contingency: 17 Days
✓ Loan Contingency: 21 Days
✓ Length of Transaction/Escrow: 30 Days
Terms of the purchase agreement include:
✓ Price
✓ Length of Transaction
✓ Deposit Amount
✓ Loan Amount
✓ Time Periods
✓ Terms (Rent back, etc.)
✓ Escrow and Title Fees (50/50 | Buyer/Seller)
Counteroffers & Acceptance
A counteroffer is the seller’s response accepting the terms of the offer but with additional terms. You can either accept the seller’s counteroffer or respond with a buyer counteroffer. Once you have come to a mutual agreement with the seller, we will secure a fully-ratified contract and send it to the title company, lender, and other parties. This means you are officially in escrow and the countdown to closing begins.
Step #5 Escrow Period
Physical Contingency & Inspections
The physical contingency inspection is one of the most important items to consider through the selling process. During this contingency period, you can have various inspections done, to ensure that the property is in overall good condition. If any issues are discovered, they can and will be negotiated. The cost of property inspections varies based on the square footage of the home.
✓ Termite/Wood Destroying Pest (+/- $250)
✓ Home Inspection ( +/- $500)
✓ Roof Inspection (+/-$300)
✓ Lateral Sewer Line Inspection (+/- $450)
Loan & Appraisal Contingency
The loan and appraisal contingency periods start at the time of acceptance (if applicable). The lender will submit the loan package and contract to the underwriter and they will also order the appraisal. The purpose of the appraisal is to ensure the property is worth the negotiated price. The cost of the appraisal is the buyer’s responsibility and ranges between $500-800.
Insurance
Prior to the transaction closing, the lender will require that you have obtained homeowner’s insurance. Upon going into escrow my team will request an insurance quote from Mike Baxter with Farmers Insurance. Once received my team will provide you with the estimate. Learn more about Mike here.
Removing Contingencies
Upon successful completion of all inspection and the loan and appraisal process, contingencies will be removed. Once all contingencies are removed, you cannot breach the contract without risking your good faith deposit as liquidated damages. If you are currently a tenant, this is when you give your landlord notice.
Step #6 Closing
Walk-Through & Sign-Off
Once all of your contingencies have been removed and your loan has been approved, the next step is to do a final walk-through at the property to verify its condition prior to closing.
After that, I will arrange for you to sign your final loan and title documents at the title company. You will also need to deposit the remainder of your down payment. You can bring your funds via cashier’s check to the title company or do a wire transfer.
Funding & Recording
Once the final loan conditions are met, the loan will “fund.” The following day (sometimes the same day) your name is recorded at the County Recorder Office and escrow is closed!
Congratulations, you did it!
Keys & Move-In
Escrow is closed and you are now a proud homeowner! I will arrange for the keys to be brought to the property or will drop them off to you. Before you move in, be sure to:
✓ Switch over the utility accounts into your name
✓ Complete any planned improvements or repairs
✓ Consider changing the locks
✓ Explore your new neighborhood
✓ Consider estate planning and putting your new home in a trust
View a list of helpful moving tips here.
Other Things To Expect
Loan Payment
Your first payment is due a full month after the close of escrow. The payment is usually made to the bank from which the loan was obtained. Make sure to look out for when the loan is sold to a secondary lender and servicing company. If you have questions about your first loan payment, give me a call or talk to your lender.
Supplemental Tax Bill
Your lender will pay a prorated amount of your property taxes as part of the closing costs based on the seller’s tax bill. If you are paying more than the seller paid for their house, then the difference is due as part of the Supplemental Tax Bill, which arrives 6-12 months after the close of escrow. How this amount is paid depends on the arrangement you have made with your lender and impound account.
Questions?
Always Here For You
Being your trusted advisor is a privilege. That’s why I do business in person from start to finish.
1108 Mission Street, Santa Cruz, CA 95060