Any major purchase requires research, careful analysis, consideration, and thought. Home buying isn't any different! Determining the right location, the number of acres, bedrooms or bathrooms needed, and outdoor space is the easier things. However, there are many other factors to think about in your search. From your initial search to the moment you get the keys to your new home, Chisum will be there, guiding you through the process. We can even help connect you with mortgage professionals to get the best rates.
As area specialists, educating you on the different neighborhoods, schools, and other local community amenities that suit your lifestyle.
7 STEPS – BUYING A HOME
1. MAKE A DECISION: Are you ready to purchase your first home, vacation home, investment property, or recreational property? Or, is it time to trade up or downsize? Some of the most common motives of purchasing Real Estate include:
a. Occupant: Rent Avoidance, Growing Family, School System, Location, Tax Benefits, Equity Appreciation
b. Investor: Cash Flow, Tax Benefits, Equity Appreciation, Retirement Income
For every reason given above, there exists an opposite that should be disclosed and analyzed to the satisfaction of the prospective buyer. Upon request, Chisum agents can assist the prospective buyer to develop a clear focus of the tasks ahead and to act as a valued member of the buyer’s team.
PICK YOUR TEAM: Robert Kiyosaki, renowned real estate investor states, “Real estate investing is a team sport”. This axiom can be applied to all real estate purchases regardless of whether the purchase is for personal enjoyment or if the purchase will be for investment purposes.
a. Accountant: You will need financial statements and tax returns at the very least. You will need a lot more information, i) if you are purchasing an investment property, ii) own your own business and are considered “self-employed”. Your accountant can help you prepare these documents and advise you on any tax, cash-flow, or investment issues throughout the purchase process.
b. Attorney: Your attorney will identify and quantify the risks associated with your real estate transaction. However, it is the buyer’s job to either:
i) eliminate or reduce the risk through negotiation,
ii) accept and mitigate the risk through insurance or otherwise,
iii) avoid the risk by finding a better deal.
c. Insurance Agent: It’s all about risk. Insurance exists to mitigate risk. If you borrow money to purchase a property, your Lender will require property insurance, enough to cover losses that would affect the repayment of the loan. In this regard, property insurance protects both the Buyer and Lender.
d. Banker/ Mortgage Broker: Local Banks and Credit Unions can be the perfect solution to purchasing property. This is usually the first place to visit in search of funding and we suggest visiting with your local banker at the very least before purchasing any type of real estate. Also available, the Mortgage Broker, whose identity comes in many forms, individual loan broker, loan broker company, and internet-based versions of both. Mortgage Brokers are a great tool for ‘shopping for a loan’ but, can come at an increased cost to the buyer.
e. Real Estate Broker/Agent: Chisum agents are trained to diligently to represent each client and to enlist the participation of our support staff to achieve the goals of each client they represent. Many times, a prospective buyer client will find multiple Chisum agents and staff members are working hard to find the property that meets their needs and will satisfy their dream.
PRE-APPROVAL: First, pre-qualified is NOT the same as pre-approved. If you are excited because your Lender has told you that you are pre-qualified to spend $600,000 on a new home, just sit back down and enjoy the view... PRE-QUALIFIED does not equal PRE-APPROVED. In todays marketplace, especially in active or hot markets, PRE-APPROVED may be the only reason a Seller accepts your offer instead of another offer.
Talk with your Banker/Mortgage Broker first. And, if your situation is such that they cannot make the loan at a reasonable rate or purchase price deemed satisfactory by yourself, work out a plan to improve your credit score with the Mortgage Broker and possibly an Accountant. Then repeat the entire process when your FICO score is high enough to obtain financing under more acceptable terms.
FINDING THE PROPERTY: Unfortunately, some agents (on their own) will refuse to show properties to Buyer’s that are unable or unwilling to show financial capability to purchase the properties they want to view. The agent has elected to implement a “No Joy Rides” policy. And, some agents have no choice and are following the seller’s instruction to prohibit the showing of their property to ANY prospective buyer without proof of financial capability. To remove all doubt, get the pre-approval letter and offer a copy to your Real Estate Broker prior to viewing any properties.
Now you are ready to specify what you are looking in your new purchase and, once your agent has this information, they will search through the MLS, online listing sources, For Sale by Owner listing sources, and Other Non-Public sources for properties that meet, exceed, or are close to your established “Search Criteria”. With this list in hand, your Chisum agent will meet with you to determine which properties you would like to visit. Usually, after a few rounds of adjusting the Search Criteria and viewing properties, a possible purchase candidate will be found. Now would be a good time to make an OFFER.
THE OFFER: The Chisum team will i) negotiate the offer to your best interest, ii) will know the estimated value of the property (NOT to be confused with a Zestimate), and iii) will know approximately what value an appraiser may assign to the property. Which is very important since the Lender (if applicable and not a cash purchase) will NOT lend money above the appraised value without “additional collateral”. Once an Offer has been accepted by the Seller, The Purchase Agreement will become effective upon receipt of the Earnest Money and Option Money (if any). The Purchase Agreement and any Amendments agreed to by both parties will govern the process from now until Closing takes place.
DUE DILIGENCE: As your Chisum Agent, we will advise on appropriate timings for the Option Period, Inspections, Survey, Appraisal, Financing Contingency, and any other property interests matters such as farm, pasture, or hunting leases, mineral interests, water and wind rights. Also, the Title Policy / Abstract of Title process must be monitored in case of easements and other defects in the chain of title.
CLOSING: At the appointed time, you will be asked to show up with your Chisum agent at the Title Company or Attorney’s office to “close on the property”. It would be wise for the Buyer to request a final walk-through before Closing Day to inspect the property.
Prior to this meeting you will receive an ALTA Statement or HUD-1 document that will specify the transaction details for each party e.g. the Buyer gets one, and the Seller gets one too. Your Chisum agent will review the document with you for accuracy to make sure that all amounts are correct, and you will be asked for your signature to approve the statement. This process step is where ownership officially transfers from the Seller to the Buyer.
At the Closing table you will be asked to sign a PILE of documents, once both sides are finished, you will OWN the property and the Seller will get paid.
CONGRATULATIONS! – IT’S TIME TO GO EAT BBQ!!!
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