Introduction to Buyers
- SELECT A LICENSED, QUALIFIED REALTOR®
As members of the National Association of REALTORS®, REALTORS® are bound by a strict Code of Ethics. Here are some of the ways how working with a REALTOR® works for you in terms of your needs, interests, convenience, budget, and your peace of mind throughout the entire buying process:
- REALTORS® have the most information in one place regarding what properties are “on the market,” including homes listed by other REALTORS®. This will save time and gas that you would have otherwise spent looking at homes that do not fit your needs or are no longer available.
- REALTORS® help you determine what you can afford based on your desired monthly mortgage payment and/or price range.
- REALTORS® help you find the home best suited to your needs, including size, style, features, location, and accessibility to amenities that are important to you and your family.
- REALTORS® can provide you with information on real estate values, taxes, and other information associated with owning a home.
- REALTORS® will handle all of the negotiations, contracts, and counter offers with the seller, and other parties involved in the transaction, and help you through the escrow and closing process.
- REALTORS® have no emotional ties to a home, so they can be objective and can point out its advantages and disadvantages.
- SECURE FINANCING FOR YOUR HOME PURCHASE
The buying process usually goes smoother if financing has already been secured before you begin searching for your home.
- Cash Buyers – If you are paying all cash for your home purchase, you are ready to go! All you will need is a copy of a bank statement or a letter from your financial institution that verifies Proof of Funds for the total purchase price.
- Financed Buyers – If you are financing your home purchase, contact your mortgage lender and get preapproved, rather than just prequalified.
- A preapproval shows that you have already completed a loan application and submitted the initial required financial documents to your lender for review and verification (i.e., paystubs, bank statements, tax returns, etc.).
- A preapproval will make your offer much stronger than a buyer who has been prequalified based on providing verbal information only. It also prevents delays and possible loan denial later in the financing process.
- After reviewing and verifying your loan application and financial documents, your lender will provide you with a Prequalification Letter, which must accompany your purchase contract when you are ready to submit an offer.
**Helpful Tip: Be sure that you do not make any new credit purchases or have any new credit inquiries until AFTER you close escrow, as this may impact your ability to purchase a home. If there is any change in your finances or employment, contact your lender immediately.
- BEGIN HOUSE HUNTING WITH YOUR REALTOR®
When you are ready to start searching for a home, be sure that you do NOT view any properties without your REALTOR®, including existing homes and new-builds. This may be hard sometimes, especially if you drive by an open house or see a new-build sales office with model homes. If you are not accompanied by your REALTOR® on the first visit/viewing of any property, then your REALTOR® may not be able to represent you if you decide you want to make an offer and you will be left trying to negotiate and understand the contract documents, Addendum’s, purchase process, and time-frames on your own.
- MAKE AN OFFER
When you have found a home that you wish to purchase, we will:
- Provide you with comparable sales information to ascertain the fair market value of the property and help you determine a good offer price and terms.
- Prepare a purchase contract, along with any necessary Addendum’s.
- Review the contract documents with you and answer any questions you may have.
- Present and negotiate the offer to the Seller and/or Listing Agent until an agreement is reached.
- OPEN ESCROW WITH A TITLE/ESCROW COMPANY
Once your offer is accepted, the next step is to open escrow with the Title/Escrow Company. You will need to deposit earnest money in escrow as a “good faith” gesture to bind the contract. The earnest money will be applied towards your closing costs. Your earnest money will be fully refundable as long as you do not default on the contract. If you default on the contract, and the transaction is canceled, then your earnest money may not be refunded to you.
- CONDUCT INSPECTIONS
A.Upon written acceptance of the purchase contract, you will have 10 calendar days to conduct any and all desired inspections of the property, at your (the Buyer’s) expense. While you can conduct your own birds-eye walk through of the property, it is HIGHLY recommended that you hire a qualified, licensed, and bonded Home Inspector to conduct a complete physical inspection of the property. If you are obtaining financing, you will be required to have a termite inspection by a licensed, bonded Termite Inspection Company.
B. The Seller will provide you with a Sellers Property Disclosure Statement (SPDS) and a CLUE (Claims History) Report to disclose any known issues, repairs, or previous claims. This would be a good time to contact your Insurance Agent to obtain a quote for hazard/ homeowners insurance and confirm that the property is insurable.
C. The Title/Escrow Company will also provide you with a copy of the HOA Covenants Conditions & Restrictions (CC&Rs) and Preliminary Title Report/Title Commitment to review fees involved with the HOA, as well as the title insurance coverage and details regarding any liens, easements, restrictions, or encumbrances associated with the property.
D. Your REALTOR® should provide you with a Buyer Advisory that will give you links and resources to valuable information about any property and the surrounding area. You should also do your own due diligence to investigate all items of concern or importance to you, including but not limited to, crime statistics, sex offenders, schools, community and environmental concerns, accessibility to freeways, etc. Contact the local police department, drive the neighborhood at night and on weekends, and talk to the neighbors.
Buying a home without having it professionally inspected is very risky and is NOT recommended. **Please note that your REALTOR® is not licensed or qualified to conduct due diligence with respect to inspecting and evaluating the condition of the property or the surrounding area.
- ORDER APPRAISAL
Once you have resolved any inspection items, your lender will order an appraisal to determine the value of the home. Financed buyers are required by their lender to obtain an appraisal to justify the lender’s investment and it protects you from overpaying for a home. Your financing will be contingent upon the property appraising at or above the purchase price. If the property appraises for less than the purchase price, then your REALTOR® will re-negotiate with the Seller to reduce the purchase price to the appraised value or your financing may be declined. Cash buyers are not required to conduct an appraisal and can forgo this option, if they so choose.
- SATISFY ANY FINANCE CONTINGENCIES FOR YOUR LOAN
Contact your lender and make sure that all outstanding financing contingencies have been satisfied. Your lender will pull a current copy of your credit report to confirm that your debt ratio and credit profile has not changed, and will complete a final verification of employment and any required cash reserves. If everything is all good, your lender will send you a Closing Disclosure so you can review your loan interest rate, terms, and all fees/costs involved with your loan and home purchase to make sure that they are as you expected and are the same as what was disclosed to you by your lender. This Closing Disclosure must be acknowledged by you at least 3 calendar days (excluding Sundays) prior to you signing any loan/closing docs or closing on your home purchase.
- ORDER YOUR HOME WARRANTY
You should order your home warranty once the 3-day CD review period has passed and you have a confirmed closing date. The Home Warranty plan covers the repair and/or replacement of major mechanical items and major appliances, such as plumbing, heating and air conditioning units, roofs, swimming pools, refrigerators, washer/dryer, etc. There are a variety of plans available, so you should compare coverage and select the plan that meets your needs and your budget.
- CONDUCT FINAL WALK-THROUGH OF PROPERTY
After your lender has sent your loan docs to the Title and Escrow Company, you should conduct a final walk-through of the property prior to signing your closing docs. This will give you an opportunity to make sure that the condition of the house is the same as it was at the time of contract acceptance and inspections. Additionally, you will be able to ensure that any repairs agreed to by the Seller have been completed.
- SIGN CLOSING DOCS
Now it is time to sign your closing documents, which is a combination of loan docs from your lender and Title and Escrow documents. The Escrow Officer will contact you to schedule your closing appointment and inform you of the funds you need to bring with you. Obtain a cashier’s check for that exact amount, made payable to the Title and Escrow Company. If you are doing a wire transfer, arrange for it in advance with the Escrow Officer and your bank. Be sure to bring your driver’s license or other form of valid identification with your photo. There will be a lot of paperwork for you to sign, but be sure to carefully read over each page to ensure that all information is correct.
**Important Property Tax Dates
Property taxes are always paid in arrears.
- The taxes for the first half of the current year, January 1st through June 30th are: DUE ON October 1st of the current year and DELINQUENT ON November 1st of the current year.
- The taxes for the second half of the current year, July 1st through December 31st are: DUE ON March 1st of the following year and DELINQUENT ON May 1st of the following year.
- RECORD, FUND, AND CLOSE ESCROW
When all closing docs have been signed by you (the Buyer) and the Seller, the documents will be reviewed one last time by your lender to verify no missing signatures or initials (financed buyers), funds will be wired to the Title/Escrow Company, the sale will be recorded with the County Recorder’s Office, the transaction will be officially closed, and you will receive keys to your new home!