The steps of an ideal real estate purchase
1) Find a realtor to represent you. That should be:
a) Someone you trust,
b) who keeps you informed,
c) explains each step,
d) answers your questions
e) and knows the neighborhood.
2) Talk to an experienced mortgage lender/broker to obtain pre-qualification.
a) Loans are available with as little as 3.5% down.
b) Small down payments make loans more expensive.
c) The "cost to borrow" is generally best with 20% down.
d) Consider adjustable loans, like a fixed rate for 10 years.
e) Match the loan to how long you expect to keep the property.
3) Go find a new home!
a) Use your Realtor's experience – ask for advice – that's why we're here.
b) Use your lender's maximum loan amount/purchase price.
c) Look at homes you can afford – avoid disappointment.
d) Remember, you'll probably live there for 10 years.
4) How do Realtors get paid? (As a buyer, it is free to you.)
a) Normally, the listing agent negotiates the commission with the seller up front.
b) The seller pays the commission fee to the listing agent.
c) The listing agent offers one half of the commission to the buyer's agent.
d) Neither of us gets paid until escrow closes and the property is yours.
5) Go over the comparable Market Analysis with your agent.
a) Look at the "Sold" prices on very similar homes.
b)Is it a gorgeous showplace on a busy intersection?
c)Is it a "fixer" on a cul de sac with a perfect view?
d) Use your Realtor's experience – every neighborhood is different.
e) Make a realistic offer – try for immediate acceptance.
f) Be prepared to write a personal check for about 3% of the purchase price as your "good faith" deposit.
6) Price is right! Seller accepts offer: Go to step 7.
a) Seller counteroffers? What is the home worth to you?
b) Remember, market value is: What the buyer will pay, and the seller will accept.
c) Negotiate, or move on. Use your agent's experience!
7) Congratulations! The rest is paperwork! Hopefully.
a) Your agent will open an escrow account.
b) The escrow officer will prepare escrow instructions.
c) The seller's agent will order a "termite inspection."
d) Your agent will order a property inspection.
e) The escrow officer will order a title report.
f) The escrow officer may order a city building report.
g) You will finalize your loan application.
h) You will arrange for homeowner's insurance, if applicable.
i) The escrow officer will order HOA CC&Rs, if applicable.
8) You and the seller must approve & sign escrow instructions.
a) This is nearly a "mirror image" of your accepted offer.
b) It is rewritten as instructions to your escrow officer.
9) You will receive a copy of the "termite report."
a) Almost every home in California has termites.
b) The seller normally pays for the corrective action.
c) You will receive a copy of the inspection report.
d) You will also receive a copy of the "completion report."
10) You only have a few days after accepting a Purchase Agreement to inspect and say "No."
a) You should participate in the property inspection.
b) Discuss questions with the inspector and review the inspection report carefully.
c) Can you live with the problems identified?
d) Will the seller correct the problems?
11) The escrow officer will send the preliminary title report.
a) Review the report carefully, but, it is preliminary.
b) Make sure no one else has a claim to the property.
c) Rest assured, the title company will look even closer.
12) The city may issue a building report (some don't).
a) Many cities require this for consumer protection.
b) All construction on the property should be permitted.
c) You will approve the report prior to close of escrow.
13) You will complete a loan application for that specific home.
a) The lender will order an appraisal of property value.
b) The appraiser's value should equal the purchase price.
c) The "loan committee" will approve the loan.
d) The "loan documents" will be drafted by the lender.
14) You will schedule the utility "turn on" for your new home.
b) natural gas
e) cable service
15) You will read and approve the HOA CC&Rs, if applicable.
a) Definitely read them – they may affect your decision.
b) For example, some HOAs do not allow pets.
c) Often, what looks like your private yard is not.
16) The escrow officer will schedule a meeting with you.
a) You will sign the loan documents.
b) You will approve all the various reports.
17) The escrow officer will order the document recording.
a) The Grant Deed will be recorded with the County.
b) The Trust Deed will be recorded with the County.
18) The escrow officer will disburse the funds.