The 3 Step Home Buyer Process
Analysis, Tour, Contract
Step 1: Analysis
Mortgage Approval. Your first step begins with qualifying. A mortgage approval gives you the confidence to shop as qualified home buyer to move quickly and responsibly once you find a home that is right for you. I can recommend a mortgage representative to you, who will obtain your approval free of charge.
Buying Power. Your decisions will be made within the limits of your buying power. Your buying power is determined by a loan officer who will determine how much of a mortgage a lender will give you based on your financial status. You may even qualify for a loan that is larger then you are looking to afford on a monthly basis. As a responsible agent, I suggest you evaluate your income and expenses and take on a mortgage that is within your budget. If you need help to determine a level of comfort in your finances I can do a financial review with you to help.
Choosing a Community. Choosing a community that is right for you is a very personal choice. Proximity to work, houses of worship, to schools and lifestyle are just a small fraction of the reasons why you may choose one community over another. Your friends, family and I are just some of your resources for making an informed decision. You're buying power may limit where you can purchase a home and you may have to choose between the right house and right community. These are part of the tough choices you will have to make along the way.
Hiring Me as Your Buyer’s Agent. The process of buying a home requires a professional to guide you through the process from approval, to contract and to closing. The Vincent Costa Real Estate Team has represented over 1,000 clients since 2001. Our skills and knowledge are the most qualified in the industry. We are highly skilled negotiators and dedicated professionals with a passion for details, a loyalty to protect our clients and a desire to see our clients succeed. Our commitment to you is in writing. Our Exclusive Right to Represent Buyers Agent Agreement declares that you have chosen to have one of the industry’s most talented real estate professionals be your agent. We will guide you to make an offer that fits your budget and positions you to purchase a property at the lowest possible price. We will make sure you avoid any pitfalls, by making sure every no detail is overlooked.
Real Estate 101 – Buying a Home
First we must agree on 3 basic assumptions
The same home will have a different market value depending on the town it is located in.
The same home will have a range of market value within the town in which it is located.
The more you pay for a home, the more you get.
Different Towns, Different Values - Examples:
Town 1 – The average 3 bedroom home sold for $292,000 in the past 6 months.
Town 2 – The average 3 bedroom home sold for $400,000 in the past 6 months.
Town 3 – The average 3 bedroom home sold for $537,000 in the past 6 months.
Range of Values In the Same Town - Examples:
Town 1 – The range for 3 bedroom homes was from $332,700 to $495,000.
Town 2 – The range for 3 bedroom homes was from $515,000 to $715,000.
Town 3 – The range for 3 bedroom homes was from $769,000 to $925,000.
Pay More, Get More - Examples:
Low End of the Range – Not move in condition. May need extensive cosmetic or structural repairs. Not ideally located. Smaller home with smaller property size. Older home.
Middle Range – Move in condition. May need some cosmetic updates but structurally sound. Good location. Average size home and lot. Older home but updated.
High End of the Range – Move in condition – Needs only improvements to suite your personal tastes. Best location. Large home on large property. Fully updated or newer home.
Step 2: Tour
Tag Team Property Search with SearchNJ.Properties. Gone are the days of buyer's meeting with agents in offices and reviewing books of properties provided by the multiple listing service. Searching for the property is a TEAM effort (You and Me) where we both work together to find a home that is right for you. Utilize Vincent Costa Real Estate Team’s buyers portal to search for properties. Log onto SearchNJ.Properties, to set up your profile and begin your search. When you find properties you are interested in, simply click the heart icon to favorite the properties you like. I can view your favorites and set up appointments accordingly.
Building Your Buyer Profile. Communication is the most important part of our business relationship. Share with us your thoughts as we tour homes. It is important to the process to allow me to discover what your likes and dislikes are. We will take notes to begin a buyer profile of your needs and wants so I may set up future tours that are closer to what you are looking for.
Initial tour. Finding out what you don’t know is an important part of the process in finding a home. It is sensible to view many different types of homes before you settle on a style in which you prefer. You may discover that you like things about one home that you didn’t think you would like prior to visiting a particular style of home and vice versa. Keeping an open mind will allow you to make your own decisions without pretense.
Choosing a Style of Home. You have narrowed down the number of minimum bedroom and bathrooms you wish to have in a home. Choosing a style such as a ranch, split level or colonial will further narrow down your choices and allow us to be more pinpoint in your search.
Subsequent tours. We may go on several home tours before we find the home that is right for you. During this time you will be narrowing your choices and refining your decisions. At this point you are ready to make an offer and move forward with purchasing a home.
What do you do at open houses? I encourage you to attend open houses, but with caution. Remember, the agent hosting the open house works for the seller and any information you provide to them may be used to your disadvantage. Feel free to ask them as many questions as you want but never reveal your intentions to the seller’s agent. Provide them with my card and let them know you have already hired a professional buyer’s agent.
Dealing with stress. Buying a home is a large investment and commitment. You have probably already thought about this long and hard and making this decision was not easy. As your agent, I understand. You will be the one who makes all the decisions in this process and I will be there as your consultant and often as your therapist.
Choosing a home and making an offer. As the numerous decisions narrow down your choices for a home you will clearly understand the market value for a home and I will guide you to make an offer that is fair. As your negotiator I will treat your money as if it was mine. And you will purchase a home at the best possible price. Once an offer is accepted I will guide you step by step through the sale process until closing.
Step 3: Contract
ATTORNEY REVIEW. Congratulations. You have an agreement in principle that lays out all the terms and conditions in which you will purchase a home from a seller. Contracts have been signed and attorney review has begun.
Selecting the right attorney. If you had a heart problem you would see a heart specialist doctor. The same goes for an attorney. Hire an attorney that specializes in residential real estate sales. Period.
Attorney Review Defined. Attorney review is a 3 day grace period in which the attorney’s review and make changes to the contract. During this time you can cancel the contract for any or no reason whatsoever without penalty. During this time you also have the right to pursue other properties. Keep in mind the seller also has the right to pursue other buyers to get a higher price or better terms for their homes. The goal is to get the contract in and out of attorney review as quickly as possible.
UNDER CONTRACT. Both attorneys’ have signed off on the changes to the contract, attorney review has concluded and the “under contract” phase has begun. You now have important deadlines and responsibilities to maintain throughout this process.
Documentation. Your lender will require you to provide ample documentation throughout the process. NEVER delay in providing them with the documents they require. Any delay can jeopardize the transaction.
Initial Deposit. As agreed upon in the contract, your up-front deposit must be delivered within 10 days after the conclusion of attorney review.
Home Inspection. The buyer has 10 to 14 days to schedule a home owner’s inspection. I can recommends a licensed home inspector for you to hire. The costs range from $375 to $600 depending on the inspector you hire, size of home and extra inspections. Additional inspections may include a septic inspection, radon testing, pool inspection, tank sweep and chimney inspection. Any issues that arise during inspection will be documented in a report provided by the inspector. We will review these issues together. If you wish to ask the seller to remediate any issues, your attorney will draft a letter stating specifically what you wish to do. I will negotiate with the seller’s agent to resolve these issues a quickly as possible.
Appraisal. The loan officer together with the realtor will schedule an appraisal. The appraisal is a buyer’s expense. The costs are $350 to $450. Depending on the lender, the cost of the appraisal may be rolled into the closing costs.
Mortgage Commitment. The buyer has to obtain a commitment from the lender within by the date specified in the contract. The commitment is final confirmation from the bank that they are giving you the mortgage. It is proof that the money for the loan is available and that the buyer have satisfied all of the major conditions to obtain the loan.
Homeowners Insurance. The buyer has to purchase a home owner insurance policy. You can purchase insurance for your personal property but it is not mandatory.
Property Survey. The buyer’s attorney office with the realtor will schedule a survey. The survey is part of the buyer’s closing cost. The survey is a diagram of the property showing the buyer the exact measurements of the property, also known as “Metes and Bounds”.
Utilities Transferred. You must make arrangements to have the utilities for the home put in your name on or about the day of the closing.
Final Walk Through. The buyer with the realtor will do a “Final Walk Through”. This will allow the buyer to see the home again for the last time before they close. This is normally done a day or two prior to closing.
Closing. The Realtor together with the attorneys will schedule a closing date after the mortgage company has given the clear to close. Normally it is scheduled for 45 days from the initial offer. The closing date is subject to change.
How to think about Buying Power
For Every $100K you borrow in a mortgage at 3% is Equal to $420 per month.
For Every $10K you borrow in a mortgage at 3% is Equal to $42 per month.
For Every $1K you borrow in a mortgage at 3% is Equal to $4.20 per month.
In other words, $210 per month will increase your buying power by $50,000.
Do you have a monthly bill that could be paid off to increase you home purchase power?
Closing costs can vary. Estimate between $8,000 and $15,000 for closing costs.
Title work - A background check to discover any lawsuits or liens on the property.
Title insurance - A one time policy to cover any missed lawsuits or liens.
Attorney Fee - Attorney fees vary from $1,200 to $1,500.
Escrow Deposits - Start-up monies held by the bank to pay for taxes and insurance.
Mortgage Fees - Some mortgage companies charge fees at the time of closing.
Seller Paybacks - Reimbursements to the seller for prepaid items.
After attorney review ends you will give Part or All of the Deposit.
At the Closing you will give the Remainder of the Deposit.
At the Closing the bank will give the remainder of the monies as the Mortgage.
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