While buying a home is quite often the single biggest purchase a person will ever make, it doesn’t’ have to be complicated and scary. The following four steps will make the home buying process exciting, reassuring, and profitable for even the most novice of first time buyers, as well as the most veteran movers around: 1) find a realtor you trust; 2) find a mortgage broker you trust; 3) look around at lots of homes to discover what you like and what you don’t; & 4) start making offers on the home of your dreams.
Find a Realtor you Trust
A realtor you can trust is important for several reasons. First, the paperwork and legalities are fairly complex, so you want someone who will explain as much as you really want to know, and just handle everything else. Secondly, because real estate agents get paid through commissions based on a percentage of the sales price, there is a built-in “conflict of interest”: The higher the price, the more agents get paid. This is great for sellers, or course, but not for buyers. Therefore, you want an agent that understands (as most of them do) that a satisfied client will bring in more business in the long run than a marginally higher commission check in the short run. Bottom line – you want an agent who you know will be looking out for your best interest.
Find a Mortgage Broker you Trust
Just as a realtor will help you shop around for the perfect house, a mortgage broker will help you shop around for the perfect financing. A mortgage broker will look at your finances, recommend the best approach to meeting your goals, and then pre-approve you for a loan based on your financial status and credit score. When you go to make offers on a property, then, you will be able to provide a “pre-approval letter,” which makes you look like a stronger buyer and will help your offer look more appealing than offers by other buyers who are not pre-approved. If you know of someone in this business whom you trust, by all means work with them. Otherwise, I have several people that I can highly recommend who do great work with the highest integrity.
Look at Lots of properties
I can start sending you (via e-mail) listings of homes currently on the market so you can get an idea of what prices are running in the different areas of the county. As a general rule, $1,000 of payment each month (principal and interest) will “buy” you $150,000 dollars of loan. For example, a $300,000 loan will cost you about $2,000 per month in a mortgage payment. “Starter” homes in Eureka begin at about $200,000, in McKinleyville at about $250,000, and in Arcata at about $275,000. Fixers can be found for less. As you narrow the type, size, location, and price of the home you want to buy, then we can schedule on-site showings of homes so you can get a closer, more personal look at what is available on the market. Six months before you expect to buy a home is not too early to start looking. As you see more of the market you will be able to identify those real bargains out there. Then it is time to...
Make an Offer
Making an offer on the home of your dreams is both exhilerating and terrifying all at once! In many kinds of purchasing negotiations over terms (price, repairs, down payment, etc.) occur first, and then after agreement is reached a contract is signed. In the purchase of California real estate, negotiations take place in the form of a contract called a Purchase Agreement. The buyer offers to the seller a price and terms that are acceptable to the buyer, subject to many contingencies including satisfactory completion of physical inspections, & approval by a lender of the buyer’s loan. The seller can then accept the offer, reject it, or make a counter offer on some or all of the terms offered by the buyer. The buyer then has the option to accept the counter offer, reject it, or offer a counter to the counter offer. In this way the buyer and seller continue to craft an acceptable agreement to both parties until one is reached or one party or the other simply rejects further negotiations. Once an agreement is reached, the buyer pursues acquisition of loan approval, inspection of the property, and satisfaction of other contingencies agreed to within the purchase contract. I will be with you, the buyer, every step of the way, making the complex simple, keeping track of all the details, and explaining every aspect of the transaction to your complete satisfaction.