Tips for Buyers

Selecting a Realtor®

For some, the search takes a while; others find what they want right away. In either case, your real estate agent can be a huge resource of insight and guidance, working through issues or complications that arise along the way.

Here’s a general outline of what to expect during a home purchase, from the buyer’s perspective.

Buyers make a purchase offer.

This is it! You’ve found the home of your dreams, looked over disclosure documents (if provided), reviewed comparable sales data, talked it over with The Schemke Team and submitted an offer. The sellers may accept your first offer, but more often than not, will return with a counteroffer. In fact, additional negotiations are common, usually taking place after property inspections show damage, fix-it items, etc.  If/when this happens we will advise and help you through this generally stressful stage.

The sellers accept.

Once everyone is happy with the terms, the parties have reached what is known as mutual acceptance and enter into a purchase and sale agreement.  The term we generally use for this is “In Contract.”

Buyers put up earnest money.

To solidify your intent to buy, you’ll place a deposit, or earnest money, on the property. The amount varies, but is generally at least 1 percent of the purchase price.  It is cashed once you and the seller agree on all terms and open escrow. You’ll write the check to the escrow company, not the seller.  This check secures the contract and gives you piece of mind that no one can come along and “bump” you out of first position.  Note: This money counts toward your down payment.

Escrow opens.

The earnest money deposit goes into an escrow account, where all funds will be held until closing, when they are then distributed to the right people (lender, mortgage broker, title insurer, real estate agents, etc.).

Buyers apply for a mortgage.

This step is streamlined if you’ve already been preapproved for a loan (which is a smart thing to do). If not, you’ll begin the loan application process now.  A quick word to the wise – In this ultra-competitive market, we advise our clients to get pre-approved with a lender before they start looking for properties.  There are several reasons for this, including; you will know what purchase price you qualify for before you start looking (this prevents you from looking at homes outside of your price range).  Looking at homes outside of your price range not only sets you up for disappointment, it takes away the time you would have spent looking at homes that you could have afforded but are no longer available.  Lastly, when you do write an offer, you are able to provide the seller with a pre-approval letter at the same time.  This is a great way to get a leg up on your competition.  Offers that are accompanied with pre-approval letters are considered to be stronger than those without.  Let us know if you need some lender referrals – we work with a lot of great people.

The lender inspects title history and orders a property appraisal.

The lender needs key information about the property before granting a loan. This is when potential problems can come to light. For example, the appraisal could show a lower value than the purchase price, or the lender could have trouble finding comparable homes. Also, the title search could turn up liens or other problems.

Various property inspections takes place.

Buyers are able to receive any inspection they desire.  We believe that in every transaction, the buyer should get at least 4 inspections (Total Home, Pest, Roof and Chimney).  There are occasions when more inspections are necessary.  For example, if the home has a pool or spa, we would suggest to our buyer that both be inspected.  The purpose of these inspections is to check the home and point out minor and major problems that should be fixed before closing. At this point, you still have the option of backing out of the deal. Through The Schemke Team, you’ll submit a list of requested work, and the sellers have the option to complete the tasks, do some of them but not others, or reject the request. The sides will negotiate until they reach an agreement.

Removing contingencies.

If the house passes inspection, appraisal and title search, and everything is good to go, then all contingencies can be removed, paving the way to a closing.

Closing time arrives.

Once contingencies are removed and financing is set, all parties sign a seemingly endless stack of documents, and the transaction closes.

Packing begins!

When the final signatures are in place, it’s time to put down the pens, shake hands, exchange smiles and start packing for the move!

Additional Information.

All of this information does not apply to every transaction but most of it does.  In this crazy real estate market, there are several different types of transactions, including but not limited to; Standard Sales, Short Sales,   Foreclosed Properties and Probate Sales.  While the bulk of the information provided above applies to all of these types of Sales, there are some steps that apply to Non-Standard Sales that haven’t been covered.   If it turns out that you wind up purchasing a home that is a Short Sale or Foreclosure (REO), we will happily explain the differences and tell you what to expect.  If you would like to know more about the different types of Sales, feel free to contact us via email or telephone.  We would be happy to hear from you.