Deciding To Purchase

Purchasing a property is most likely 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 tired of paying rent? Have you decided to pay your mortgage and not your landlord’s? Have you outgrown your current home? Are you looking for an investment portfolio? Are you looking for a rental property? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown?

Property ownership is an excellent investment, whether you are looking for your dream home, a rental property or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.

Preparing To Buy

Before you start shopping for your property, preparing is a good idea.

Build Your Green File

A green file contains all your essential financial documents if you need them to secure your property’s financing. The typical green file should contain the following:

• Financial statements
• Bank accounts
• Investments
• Credit cards
• Auto loans
• Recent pay stubs
• Tax returns for two years
• Copies of leases for investment properties
• 401K statements, life insurance, stocks, bonds, and mutual account information.

Check Your Credit Rating

Your credit score will significantly impact what type of property you can buy and at what price. It is first recommended that you check your credit rating with an experienced lending institution so that we can determine what you can afford. The lender will research your credit ratings from the three credit reporting agencies: Equifax, Experian, and Trans Union. We will happily recommend experienced, knowledgeable residential, construction, commercial, and investment real estate lenders.

Be Careful With Your Finances

Now is no good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability. In other words, do not apply for loans and change jobs or retire.

Do not break any large purchases or move monies to new or “unseasoned” (less than two months) accounts.

Choosing A Real Estate Agent

Buying a property requires making many important financial decisions,  understanding complex issues, and completing a lot of paperwork. It helps to have an expert in your corner when undertaking such a large purchase. We can guide you through this process and provide 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 with experience completing transactions similar to yours.
• Interview a few agents: Are they familiar with the area you are interested in?
• Ask how much time the agent will have for you and if they are available at night and on weekends.
• Ask about their credentials and education: A good agent will continually strive to improve and gain knowledge of the latest real estate trends and hold the highest designation in their respective fields of expertise.
• Does the agent return your calls promptly? Time is money when attempting to buy a property.
• Ask for a list of properties they have sold or a list of references.
• Choose an agent who listens attentively to your needs and concerns. Pick an agent with whom you feel comfortable.

Time To Go Shopping

Once those preparations are out, it is time to find the right property for you.

Take a Drive

Get to know the neighborhoods, compounds, or subdivisions that interest you. Drive around and get a feel for what it would be like to own a  property in the area. Start getting a sense of the properties available in those areas—drive areas of interest at different times of day to see if any factors will affect your enjoyment.

Narrow Your Search

Select a few properties that interest you the most and contact us to make appointments to visit them. Ask your real estate agent about the potential long-term resale value of the properties you are considering.

Time to Buy

Once you have picked out the property you want to purchase, we are here to help you make an offer the seller will accept. A good broker will investigate the potential costs and expenses of the new property. We aim to help you draft your offer to give you an advantage over another offer.

Escrow Inspections and Appraisals: The Process, Step-by-Step

The Initial Agreement and Deposit

An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.

Some essential tips to keep in mind to streamline the process:

Keep written records of everything. For clarity, it will be beneficial to transcribe all verbal agreements, including counter-offers and addendums, and convert them into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and ensure you have copies of everything.

Stick to the schedule. Now that you have chosen your offer, you and the seller will be given a timeline to mark every stage in closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. We will keep you updated during the process so you will always be prepared for the next step.

The Closing Agent: A title company or an attorney will be selected as a closing agent. The closing agent will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions that limit various activities, such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.

How to Hold Title: You may wish to consult an attorney or tax advisor on the best way to hold the title. Different methods of holding titles have different legal, estate, and tax implications, especially when selling or upon the death of the titleholder.

Inspections: Once the seller accepts your offer, you will need a  licensed property inspector to inspect the property within the time frame agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property if you wish to obtain professional opinions from inspectors who specialize in a  specific area, e.g.. roof, HVAC, and structure). If you are purchasing a  commercial property, you will need an environmental audit done on the site for the lending institution. We can recommend several different inspectors.

Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successfully closed, and the contingencies will be removed, bringing you one step closer to the close, or

2. after reviewing the property and the papers, the buyer requests a renegotiation of the contract terms (usually the price).

Appraisal and Lending: You must communicate closely with your lender, who will let you know when additional documents are needed to approve and fund your loan application. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser via a third party to determine the value for the lending institution. 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, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double-check with your lender to be sure the loan will go through smoothly and on time.

Association Approval: If the property you purchase is conditional upon association approval, request the rules, regulations, and other essential documents from the seller as soon as you have an effective agreement to purchase. Ensure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all the information completely and legibly so there is no delay in processing the application. If you must meet with the association for your approval, make an appointment as soon as possible for the interview. Most associations require a certificate of approval before moving in. Your closing agent will request that the original copy of this approval letter be brought to the closing so it can be recorded with the deed in the county public records.

Property Insurance: If you are obtaining a loan, your lender will require you to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the property’s purchase price. Shopping around for insurance may save hundreds of dollars a year on homeowners 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 get a lower premium if your home has safety features such as deadbolt locks, smoke detectors, an alarm system, storm shutters,s or fire-retardant roofing materials. Persons over 55 or long-term customers may also be offered discounts.
• Insure your house, NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.

We will happily recommend experienced, knowledgeable insurance agents for every property type.

Closing Day

If you have come this far, then this means that it is almost time for congratulations, but not yet. Do not forget to tie up these loose ends:

• Final Walk-Through Inspection: This is more of a formality than anything else; the final inspection occurs a day before or during the closing. You will visit the property to verify that everything is in working order; everything is the same as when you last viewed the property, there are no extra items left behind, and everything included in your purchase is still at the property.
• Home Services and Utilities: We will provide a list of valid numbers for activating home services and utilities after closing.
• Be Prepared: We are ready to assist you should an unforeseen glitch pop up, even at this last stage. There is no need to worry if something at the property or some other minor detail breaks down. We have encountered this problem before, so we know how to handle them efficiently and stress-free.
• Closing: The closing agent will furnish all parties involved with a settlement statement, which summarizes and details the financial transaction enacted in the process. You, the seller(s), and the closing agent will sign this statement certifying its accuracy. If you are obtaining financing, you must sign all pertinent documentation the lending institution requires. If you cannot attend the scheduled closing, arrangements can be made depending on the circumstances and the notice we receive. Suppose you are bringing funds to the transaction. In that case, you can either have the funds wired electronically into the closing agent’s escrow account or bring a   certified bank check to the closing in the amount specified on the settlement statement. The seller should arrange to have all property keys and other important information at the closing so you may receive these items now.