Deciding to Buy

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 to build an investment portfolio or purchase a rental property? Would you like a larger yard, a different neighborhood, or a shorter commute?

Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown?

Property ownership can be an excellent investment, whether you are looking for your dream home, a rental property, or an opportunity to expand your investment portfolio. Owning real estate is one way to build equity and pursue a return on your initial investment.

Preparing to Buy

Before you start shopping for your property, it is a good idea to make some preparations.

Build Your Green File

A green file contains your important financial documents. You will need it to secure financing for your property. The typical green file should contain:

Financial statements
Bank account information
Investment information
Credit card information
Auto loan information
Recent pay stubs
Tax returns for the previous two years
Copies of leases for investment properties
401(k) statements, life insurance documents, stocks, bonds, and mutual account information

A couple reviewing financial information on a laptop

Check Your Credit Rating

Your credit score will have a significant impact on what type of property you can buy and at what price. It is recommended that you check your credit rating with an experienced lending institution so that you can determine what you can afford.

The lender will review your credit ratings from the three major credit-reporting agencies: Equifax, Experian, and TransUnion. We will be happy to recommend experienced and knowledgeable lenders in residential, construction, commercial, and investment real estate.

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.

Choose a Real Estate Agent

Buying a property requires making many important financial decisions, understanding complex issues, and completing a significant amount of paperwork. It helps to have an expert in your corner when undertaking such a large purchase.

We can guide you through the process and provide you with access to property listings before they reach the general market.

Factors to Consider When Choosing Your Real Estate Professional

Look for a full-time agent who has experience completing transactions similar to yours.
Interview several agents. Are they familiar with the area in which you are interested?
Ask how much time the agent will have for you and whether they are available at night and on weekends.
Ask about their credentials and education. A good agent continually strives to improve, stays informed about current real estate trends, and develops expertise in their field.
Does the agent return your calls promptly? Time matters 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 and with whom you feel comfortable.

Time to Go Shopping

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 that interest you. Drive around and get a feel for what it would be like to own a property in the area. Begin developing a sense of the types of properties available in those locations.

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 agent about the potential long-term resale value of the properties you are considering.

Time to Buy

Once you have selected the property you want to purchase, your real estate agent can help you prepare an offer that is attractive to the seller.

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 strengthens your position when competing with other buyers.

Escrow Inspections & Appraisals

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 help streamline the process:

Keep written records of everything. Convert verbal agreements, counteroffers, and addendums into written agreements signed by both parties. We will assist with the paperwork and make sure you have copies.
Stick to the schedule. Once your offer is accepted, you and the seller will receive a timeline for each stage of the transaction. Meeting deadlines helps keep negotiations moving smoothly and prevents breaches of the agreement.

A real estate professional reviewing documents with buyers

The Closing Agent

Either a title company or an attorney will be selected as the closing agent. The closing agent will hold the deposit in escrow and research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the closing date and that any new encumbrances are properly added to the title.

Some properties are subject to restrictions that limit activities such as building or parking. Recorded easements and encroachments may also limit your rights to use the property.

How to Hold Title

You may wish to consult an attorney or tax advisor about the best way to hold title. Different methods of holding title have different legal, estate, and tax implications, especially when selling the property or upon the death of a titleholder.

Inspections

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the timeframe established in the purchase contract.

You may elect to have specialists inspect specific areas, such as the roof, HVAC system, or structure. A commercial purchase may also require an environmental audit for the lending institution.

Depending on the outcome of the inspections, one of two things may happen:

Each milestone is completed and the contingencies are removed, bringing you closer to closing.
After reviewing the property and related documents, the buyer requests a renegotiation of the contract terms, usually involving the price.

Appraisal and Lending

Remain in close communication with your lender. Your lender will let you know when additional documents are needed to approve and fund your loan.

When the agreement is conditional upon financing, the property will be appraised by a licensed third-party appraiser. Appraisers consider factors such as square footage, construction costs, recent comparable sales, operating income, and other relevant information.

Within two weeks of closing, double-check with your lender to confirm that the loan is progressing smoothly and on time.

Association Approval

If the purchase is conditional upon association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective purchase agreement. Submit the application documents and fees by the required deadline, and schedule any required interview promptly.

Property Insurance

If you are obtaining a loan, your lender will require you to purchase a certain amount of insurance for the property. The required amount will depend on the lending institution and the purchase price.

Consider a higher deductible, which may lower your premium.
Ask about discounts for safety features such as deadbolt locks, smoke detectors, alarm systems, storm shutters, or fire-resistant roofing.
Insure the house rather than the land beneath it so you do not pay for unnecessary coverage.

Moving In

Closing Day

If you have come this far, it is almost time for congratulations—but not quite yet. Do not forget to tie up the following loose ends.

Final Walk-Through Inspection

More of a formality than anything else, the final inspection usually takes place the day before or on the day of closing.

You will visit the property to verify that everything is in working order, that the property is in the same condition as when you last viewed it, that no unwanted items have been left behind, and that everything included in your purchase remains at the property.

Home Services and Utilities

We will provide a list of useful phone numbers for activating home services and utilities after closing.

Be Prepared

We are ready to assist you if an unforeseen issue arises, even at this final stage. A fixture may break down or another minor problem may occur. We have encountered these situations before and know how to handle them efficiently and calmly.

A family meeting a real estate agent outside their new home

Closing

The closing agent will provide all parties with a settlement statement summarizing the financial transactions completed during the process. You, the seller or sellers, and the closing agent will sign the statement to certify its accuracy.

If you are obtaining financing, you will also sign the documentation required by the lending institution. When bringing funds to the transaction, you may either wire the funds into the closing agent’s escrow account or bring a certified bank check for the amount specified on the settlement statement.

The seller should arrange to have all property keys and other important information available at closing so that you can receive them at that time.