It’s happened! You found “THE ONE”! You want to put an offer in!
What happens next?
Disclaimer: This is for Long Island, NY. Other states follow a different series of events but in general all these happen.
If you are new to home buying, read my “First Time Homebuyer’s” post.
1.Building your offer. Here is where your realtor will be a vital asset. He/she will be your guide.
- PRICE : The first and most important part. Your Realtor will be looking at comparable homes sold and on the market and base it off that. There’s a lot of work and knowledge that goes into this. Factors like location, bedrooms, bathrooms, lot size, shape and features, condition of the home, garage, home features like central air, pool, waterfront or view, hardwood floors etc., school district, days on market all play a part.
- TERMS : These include items such as:
- how much money paid on contact, usually a percent of the contract price,
- how much financing (mortgage) vs. how much cash you’ll be using to buy,
- whether you are renting or live with relatives or need to sell a home in order to buy a home.
- Time to closing is important. Does it matter if the seller needs to stay longer or do you need to move in by a certain date?
- Are you doing an inspection? Will you be renegotiating after the inspection or buying it “As Is”?
- THE APPRAISAL : The appraisal is something a lender has done once a home is on contract to make sure that the offer price is worth it and not overpriced. A certified, independent appraiser will come out once you’re in contract to determine a value on the house. Sometimes the appraised value is lower than the contract price. This is called the “Appraisal Gap”. In that case there are 3 ways to resolve that problem.
- Have the seller lower the purchase price. This is an option in a buyer’s market, if the seller really needs to sell or if the house is extremely overpriced.
- The buyers pays the Appraisal Gap. This is a negotiation tactic that can help a buyer win on a house with multiple offers. In a multiple offer situation, this is made part of the offer. This way, the seller is assured of getting the agreed upon price.
- The seller and the buyer can negotiate that each will pay a certain amount (50/50, 60/40, 70/30 etc.).
2. Your offer is accepted : The next step is hiring an inspector. Your Realtor can help you with a referral or you can find one on your own. They should be licensed and insured. The inspector is looking for anything wrong with the house. Items as simple as a little cracked paint or as big as a leaking roof or basement. You should be present if possible to look at in person what the inspector finds and address any concerns with them then. The inspectors will send you a detailed report with photos and recommendations. After reviewing the inspection, you can choose to move forward or try to renegotiate repairs or a credit or back out of the deal.
An important thing to know: Until the contract is signed and the buyer pays the deposit, the property can continued to be shown to other prospective buyers .Another buyer can come in and have their offer accepted instead.
3. Contract signing: Once negotiations have been completed between the buyer’s and seller’s each party will contact their attorney to let them know they are moving forward to contract. The seller’s attorney writes up the contract and sends it to the buyers attorney for review. Once both attorney’s agree about the terms in the contract, both parties sign, either electronically or in person. The buyer’s give their attorney the contract deposit as a check or wire. Remember, the amount was negotiated in the beginning. That money will be placed in the seller attorney’s business account and be held until closing when it goes towards the purchase price. Once the contracts are signed, the buyer’s attorney will order a title report. The property will be officially under contract.
4. Notifying your lender : If you are using a lender, you must let them know ASAP upon contract signing. It will take 30-45 days from the date of contract signing to closing , if all goes smoothly. Your lender will be asking for lots of financial documents. The faster you can provide them, the faster the loan process moves. The lender will order the appraisal and a new survey for the property.
5. The Title Report: This is a history of the property. The title company will be insuring that the property you are buying is free and clear of any liens, like the seller’s mortgage , unpaid red light camera tickets, tax liens, mechanics liens, code violations etc. The title report also is insuring that the size of property is accurate. They base it off the new survey and make sure that the old deed of record matches with what you are buying. This is where issues like fences placed incorrectly comes up or a drive put in over a property line. They also look to make sure that the chain of title is correct. All title issues must be cleared in order to close.
6. Choosing Homeowner’s Insurance : Whether you use financing or pay all cash, you need a Homeowner’s Insurance Policy. Shop around and compare. You will need a policy in order to close with any financing.
7. Know your utility providers : Your Realtor can help you with a list of your available utility providers. These are important companies to know! Water, sewer, trash, electric, oil or gas, internet, cable or satellite TV, landline. You’ll need to contact them all a week or two out to be ready to have the services transferred over to your name or from your old home to your new one. Others that are good to know are alarm company, landscaper, pool company, handyman, cesspool company.
8. Book a mover: As the lending process goes along, you’ll get a mortgage commitment. This is great news because it means the lender is committing to give you a loan and most of the work is done. You should book a mover and start packing! Always choose one who is licensed and insured. Your Realtor knows a couple of good ones! Uhaul, Home Depot and Lowes all sell moving boxes and supplies.
9. Walkthrough : Congratulations! You are clear to close and your closing day has been scheduled. You need to set up the utilities to be transferred and connected that day. As close to possible to the closing is the best time to do the final walkthrough. You’ll make sure any requested repairs were done and that the house is empty of all personal belongings and vacant. “Broom swept” is how is usually read in the contract. The house should look just like it did when you signed the contract, except empty.
10. The closing : All that is left is to sign a stack of documents, including the transfer documents and mortgage. Your attorney will tell you of any certified or bank check that are required. They should have given you a list of costs a few days ago. Once the documents are signed and the check handed over, you’ll get the keys, copies of all the documents your signed and a gift from me! Congratulations! You purchased a home!
Questions or ready to get started? Contact me today to get started.
