The intent of this page is to provide Buyer Clients with more knowledge and a clear understanding of how things really work in today's Real Estate transaction. What follows is a breakdown of the most important steps in a buyer transaction.

OBTAIN A MORTGAGE PRE-APPROVAL LETTER FROM A MORTGAGE BROKER/LENDER

If the Buyer is planning to obtain a mortgage to finance their purchase, they need to consult with a reputable lender before even looking at properties. It is important for the Buyer to know how much they can afford to help narrow their focus and save them time in the long run. A pre-approval is a "preliminary" approval letter provided from a lender, a thorough analysis of their income and expenses is conducted once the buyer submits a Contract for Purchase and all required documentation. 

The Buyer needs a current (issued within 30 days) pre-approval at the time of offer. This letter is submitted as a part of the offer package to provide assurance to the Seller that they are financially qualified to purchase the home.

SUBMIT AN OFFER TO PURCHASE

The Buyer's Agent prepares the Offer to Purchase, which outlines the main terms the buyer is offering to the seller to purchase their property. This includes price, deposit amounts, performance dates, additional provisions, and contingencies. The offer is submitted electronically from the Buyer's Agent to the Seller's Agent. The Seller will either accept, reject, or counter the offer. Once both parties come to an agreement, the offer is signed. 

Acceptance must be in writing with the execution of the Contract for Purchase by both Buyer and Seller to make it a legally binding and enforceable agreement. Delivery of EMD deposit check is due to the Listing Brokerage immediately at this time.

HOW MUCH SHOULD I OFFER?

Your offer will depend on a number of factors including the interest rates, overall economy, supply and demand, location, inventory levels and consumer confidence.  If the supply of homes is low, a multiple offer situation may occur meaning the seller receives more than one Offer to Purchase on their property simultaneously.  If the Seller expects that several offers are forthcoming, an "offer deadline" is typically set - meaning all offers must be submitted by a particular date and time. Without the Seller's permission, the Seller's Agent is not allowed to disclose the offer price and terms of the other offers to the other bidders. 

Once the Seller has reviewed all offers typically they will: accept the offer with the best price and terms, select one of the offers and negotiate in order to come to an agreement, or ask for a "best and final" from all the bidders to see if any buyer will sweeten their offer. In most cases the Seller accepts one of the offers without negotiation so it is important for a Buyer to make their best offer at the time of the offer deadline.

CONTRACT CONTINGENCIES AND EMD DEPOSIT

The Global MLS contract has 3 main contingencies within it.  Upon fully execution of the contract, the clock starts ticking...Attorney review is the first and typically is the first 3-5 business days. Formal application of the loan will take place within the first 5 days after execution of the contract.  The mortgage contingency date is typically 30 days for the Buyer to obtain formal commitment from the bank.  During this time, the file will go through the underwriting process and the appraisal will be ordered.  Inspections should be scheduled for right after attorney approval and within 10 days of the signed contract.  

OFFER TO PURCHASE ACCEPTED

An offer is considered 'accepted' once the Buyer and Seller come to an agreement, both parties sign the offer and acceptance is conveyed. This creates binding and enforceable obligations of the buyer and seller.

HIRE A REAL ESTATE ATTORNEY

It is critical for the Buyer to hire a Real Estate Attorney when purchasing a property, one whose primary focus is on Real Estate conveyance and will protect the Buyer's best interest every step of the way. A Real Estate Attorney will prepare all legal documents, ensure there aren't any liens, easements or covenants on the property, and make sure the property has clear title. They are well versed in current real estate contract language.

SCHEDULE YOUR HOME INSPECTIONS

The deadline for all home inspections are outlined in the Contract for Purchase and is typically within 7-10 days of offer acceptance. The inspections should be scheduled immediately to have enough time to conduct and review the inspection results.

CONDUCT THE HOME INSPECTIONS

If the home inspection reveals any unknown or undisclosed material problems, the buyer may attempt to renegotiate their offer terms or back out of the sale based on the results of the inspection. If parties are unable to come to an agreement, buyers are entitled to the return of their deposit as long as they provide notice prior to their contingency date and once a release has been signed by both parties. 

A home inspection is an important part of the home-buying process, however, a common misconception is that it is a pass-or-fail type of analysis.  Home Inspectors do not pass or fail a home: instead, they thoroughly inspect the property and provide Buyers with a detailed report of everything they see including potential major items or safety issues.  The report is 30-50 pages long and includes recommendations on maintenance on a home in a perfect world.  After inspections, it is important for a Buyer to not get caught up in 'the little things.'  If there are potential major items found that meet or exceed the threshold in the contract, the buyer will have the opportunity for further review.

Buyers should also remember that it is an inspector's job to find problems so, it is likely that they will find something wrong with every house they inspect. There is probably not a house in the world that doesn't need some attention on something. Therefore, buyers should try their best to not feel overwhelmed or disappointed, as this is all part of homeownership.

UNDERWRITING

During the underwriting process, it is in the Buyer's best interest to provide timely and accurate information to the lender.  The lender will order the appraisal which is an evaluation of a home's value conducted by a licensed Appraiser that is hired by the buyer's mortgage company.  The Appraiser is an unbiased 3rd party and allows the lender to ensure that the home's value is enough to warrant a mortgage in the amount that the buyer is seeking.  The Appraiser has specific guidelines to adhere to, there are options if the appraisal were to come in low.  Keep an eye on your mortgage commitment date, it should never pass without commitment, extension or notice of termination.  You will receive Clear to Close and be issued a CD (closing disclosure) close to the contract target closing date.

SCHEDULE AND CONDUCT FINAL WALK THROUGH

Before the Buyer closes on a property, a final walk through at the property needs to be conducted.  The goal is to ensure that the property's condition has not changed beyond normal wear and tear and the that any agreed upon repairs have been made.  Ideally, the walk through should be conducted the morning of or the evening before the scheduled closing date.

TIME TO CLOSE

The closing date is the date on which the deed is executed and transferred to the buyers and the buyers officially take ownership.  The specific time and location of the closing are determined by the attorneys.  Sometimes mortgage or title delays can cause a closing to be delayed.  The propety does not officially transfer to the Buyer until funds have been dispersed and all paperwork is signed.