Purchasing a property is most likely the biggest 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 own
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.
Before you start shopping for your property, it is a good idea to
make some preparations.
Build Your Green File.
A green file contains all your important financial documents. You
will need it to secure financing for your property. The typical
green file should contain:
- 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 have a huge impact on what type of property
you can buy, and at what price. It is first recommended to 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 be happy to recommend
experienced, knowledgeable lenders in the residential,
construction, and commercial and investment real estate fields.
Be Careful With Your Finances.
Now is not a good time to make sudden career changes or large
purchases. You want to approach your property purchase from a
position of financial stability.
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 also provide you with 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 - one who has experience
completing transactions similar to yours.
- Interview a few agents: Are they familiar with the area
in which you are interested?
- 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 designations 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.
Once those preparations are out of the way, it is time to find the
right property for you.
Take a Drive.
Get to know the neighborhoods, complexes, or subdivisions, which
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.
Narrow Your Search.
Select a few properties that interest you the most and have your
real estate agent 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, your
real estate agent can help you make an offer that the seller will
accept. A good agent will investigate the potential costs and
expenses associated with the new property. An agent can also help
you draft your offer in a way that gives you the advantage over
another offer.
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 important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of
clarity, it will be extremely useful to transcribe all verbal
agreements including counter-offers and addendums and to convert
them into written agreements to be signed by both parties. We
will assist you in drafting all the paperwork for your purchase
and make sure that 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 the process of 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.
During the process we will keep you constantly updated, so you
will always be prepared for the next step.
The Closing Agent. Either 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 which 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 title. Different methods of
holding title have different legal, estate and tax implications,
especially when selling or upon death of the title holder.
Inspections. Once your offer is accepted by the seller, you
will need to have a licensed property inspector inspect the
property within the timeframe that was 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 (eg. roof, HVAC, structure). If you are purchasing a
commercial property, then you will need to have 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. The buyer, after reviewing the property and the
papers, requests a renegotiation of the terms of contract (usually
the price).
Appraisal and Lending. It is imperative that you keep
in close communication with your lender, who will let you know when
additional documents are needed to approve your loan application
and fund your loan. If the agreement is conditional upon financing,
then the property will be appraised by a licensed appraiser to
determine the value for the lending institution, via a third party.
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 that you are purchasing is conditional upon an
association approval, request the rules, regulations, and other
important documents from the seller as soon as you have an
effective agreement to purchase. Make sure that the application
documents and processing fees are submitted to the appropriate
person at the association by the required time. Fill out all of the
information completely and legibly so there is no delay in
processing the application. If you are required to 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 move-in. Your closing agent will request that
the original copy of this approval letter be brought to the
closing, so that it can be recorded with the deed in the county
public records.
Property Insurance. If you are obtaining a loan,
you will be required by your lender to purchase a certain amount of
insurance on the property. The value will depend on the lending
institution and the purchase price of the property. You may be able
to save hundreds of dollars a year on homeowners insurance by
shopping around for 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 be able
get a lower premium if your home has safety features such as
dead-bolt locks, smoke detectors, an alarm system, storm shutters
or fire-retardant roofing materials. Persons over 55 years of age
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 be happy to 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 a congratulations, but not
yet. Do not forget to tie up these loose ends: Final Walk-Through
Inspection. More of a formality than anything else, the final
inspection takes place a day before, or the day of the closing. You
will visit the property to verify that all is in working order,
everything is the same as when you last viewed the property, that
there are no extra items left behind, and that everything included
in your purchase is still at the property. Home Services and
Utilities. We will provide a list of useful numbers for the
activation of home services and utilities after the closing occurs.
Be Prepared. We are ready to assist you should an unforeseen glitch
pop up, even at this last stage. Something at the property breaks
down, or some other minor detail - no need to worry. We have
encountered these problems before so we know how to handle them
efficiently and in a stress-free manor. Closing. The closing agent
will furnish all parties involved with a settlement statement,
which summarizes and details the financial transactions enacted in
the process. You and the seller(s) will sign this statement, as
well as the closing agent, certifying its accuracy. If you are
obtaining financing, you will have to sign all pertinent
documentation required by the lending institution. If you are
unable to attend the scheduled closing, arrangements can be made
depending on the circumstances and the notice that we receive. If
you are bringing funds to the transaction, you can elect to 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 any other important
information for you at the closing so that you may receive these
items at this time.