On the surface, buying a home may seem like a relatively straightforward process. However,

there are dozens of variables in any transaction that can make home-buying quite complex.

Being prepared and organized makes the process that much easier and more enjoyable. Here

are some steps we will need to take before beginning your search.

The 12 Step Process

Assess Your Financial Situation Obtain a Credit Report Get Pre-Approved / Proof of Funds from a Lender Complete all Disclosure Paperwork Create a Wish List Set up and Search for Homes using your Personal Portal Review Listings / Complete Comparative Market Analysis (CMA) View Properties Complete Offer Paperwork / Collect Earnest Money Submit Offer / Negotiate Offer Acceptance – Now what? Closing

Step 1

Assessing Your Financial Situation

For starters, use an online mortgage calculator to get a sense of your buying power and monthly

mortgage payments.

As a rule, most experts say that your housing expenses should not exceed 28% of your gross

monthly income, but a variety of factors – from your credit score to other debt – can open this ratio up

to a pretty wide range.

Remember that there are other costs involved in buying a home, such as; Earnest Money, Down

Payments, Moving Expenses, and possible Attorney Fee’s for review of contracts.

Step 2

Obtain a Credit Report

FREE Credit Reports. Federal law allows you to:

Get a free copy of your credit report every 12 months from each credit reporting company.

Go to: www.annualcreditreport.com official site. This is the website set up by the three credit reporting agencies – Equifax, TransUnion and Experian – to allow customers to easily request a credit report. This is the only site authorized to issue free credit reports, so be sure to use it and no other “imposter” sites. The Lender will check your credit reports. Months or weeks before applying for a mortgage, check your own credit reports.

Correct any errors, such as:

Accounts listed on your report that don’t belong to you. Often this is mistaken identity; sometimes it’s a sign that you’re a victim of fraud. Notations that say an account is open, when you have paid it off and closed it. Incorrect details regarding credit limits, amounts owed and account opening dates.

It is important to understand that:

The information in your credit report determines your FICO score

Only your creditors and the credit bureaus can make the changes needed to accurately reflect

your credit history. If you find information on your credit report that is not accurate or doesn't

belong to you, please contact the credit bureau which produced the report.

Step 3

Getting Pre-Approved

While shopping for a home may be pleasant, serious buyers need to start the process by obtaining a

mortgage pre-approval. This process, basically an evaluation that determines whether the borrower

qualifies for a loan, is important for several reasons.

First and foremost, in today's real estate market, most sellers expect buyers have one, and may only

negotiate with people who have proof that they can obtain financing. Second, future homeowners

learn the maximum amount they can borrow. They can also have an opportunity to discuss financing

options and budgeting with the lender. Finally, if there is any problem with their credit, they'll get a

heads-up about it.

Pre-qualification Vs. Pre-approval

Although they sound alike, being pre-qualified for a loan is not the same thing as being pre-approved.

Pre-qualification is the initial step in the mortgage process, and it's generally fairly simple. To pre-qualify for a mortgage, you meet with a lender (though the procedure can also be done over the phone or on the internet), and provide information about your assets, income, and liabilities.

Based on that information, the lender will estimate roughly how much money you can borrow. The entire process is informal. It can be useful as an estimate of how much you can afford to spend on a residence, but because it's a quick procedure – and based only on the information you provide to the lender – your pre-qualified amount is not a sure thing; it's just the amount for which you might expect to be approved. For this reason, being a pre-qualified buyer doesn't carry the same weight as being a pre-approved buyer who has been more thoroughly investigated.

Pre-approval, the lender checks your credit and verifies your financial and employment information and documentation; this not only confirms your ability to qualify for a mortgage but approves a specific loan amount (usually for a particular period, such as 90 days).

Step 4

Disclosure Paperwork

Required by law you will receive a pamphlet called “The Law of Real Estate Agency”. This explains

what a Real Estate Brokers Duties are to their clients.

Exclusive Buyers Agency Agreement is an agency agreement used between a Buyer and a broker

allowing the broker to act as a Buyer’s agent in the purchase of property. It also agrees to the

percentage of compensation for such services. The buyer’s agent is ordinarily paid a brokerage fee

by the seller. In some cases, however, sellers offer no commission or discounted commission.

You may also receive an Affiliated Business disclosure for Title Company and Mortgage Brokers that

are part owned by Windermere.

We will review Fair Housing Rights and if the property is of a specific age (built in 1976 or later), the

lead paint pamphlet will be given to you as well.

Step 5

Creating a Wish List

Almost every home purchase involves some degree of compromise, which is why it is important to

prioritize your wants and needs before you begin your search.

There are many variables to think about depending on your lifestyle, budget and future plans, but

some universal considerations include:

• Location - Consider the factors that are important to you, such as schools; transportation; and

neighborhood amenities like restaurants, shops and parks. Here are some ways to research an area

you’re considering.

• Tap local resources like the Chamber of Commerce, which can provide information

about area businesses and community events.

• Seek out neighborhood residents and get their opinion about where they live.

• Drive or walk through the neighborhood at various times of the day and evening

• Leverage your agent’s expertise in the neighborhood.

• Type of home - A great diversity of housing exists: single-family homes, condominiums, town

homes, new-construction, vintage homes, re-sales and fixer-uppers.

You probably prefer a certain style of construction. Weigh the pros and cons to narrow your focus.

• Features and amenities - Garage parking, hardwood floors, a fireplace, outdoor space, etc.

In the end, these are the kinds of details that drive the decision to purchase one home versus

another. In creating this list, some things to consider are resale value, your daily routine, and the cost

of making changes or additions down the road.

I have put together an easy to use wish list which gives me a great sense of what are your priorities

and style.

Step 6

FINDING YOUR HOME

Once you have obtained a mortgage pre-approval or approval and have signed the Exclusive Buyer’s

Agency agreement, you are ready to begin your home search in earnest.

Today, approximately 90% of home searches begin on the Internet, I have an IDX system on my

website that pulls directly from Northwest Multiple Listing Services (NWMLS), which is a listing as

they go live posting. My website is mobile friendly for easy use.

You will also be given a personal portal app called Home Spotter for you to search and save

your favorite homes. This has 20% more homes than any of the other apps including Zillow. It is a

direct link to the MLS. It will give you driving directions as well as open house and new listing

notifications.

I have SMS texting and you can message me right from the app as well. So, we can keep in constant

contact easily and quickly.

I will also be searching for you based on your set criteria. You can love or hate them right as they go

live. Windermere also uses Realtors.com, this is also integrated into the website.

Best of all, you’re in control. Sign into your personal user account to manage and customize your

search, receive e-mail / text updates on new listings as they become available, conduct several

searches at once and save listings, so we can compare properties through our quick CMA process.

With the current Real Estate market: average is a 1 listing per 6 buyer’s ratios, we will have to act fast

and have strong offers. Together, we can do it!

Step 7

REVIEW LISTINGS

Using the guidelines, you set forth, I will present you with available listings. In addition to price and

property attributes, I pay close attention to data - like property taxes, HOA dues, market time and

monthly assessments for condos and town homes.

COMPARE PROPERTIES

We will discuss each home you have saved and I will provide candid feedback.

Your expectations and the marketplace will begin to converge, and I will be able to adjust certain

parameters such as location and features to present you with alternatives.

I will always perform a Comparative Market Analysis or CMA. This report compares the subject

property with other properties that are currently listed and recently sold to help you formulate your

offer. Here is an example of how they look.

Step 8

View Properties

I will schedule showings and accompany you on each appointment. In your questionnaire for your

wish list there is a best times and dates section. I will try and stay within those parameters as much

as possible. However, know that it may need to be adjusted, since it is currently a sellers’ market and

homes as going very fast.

When you walk through a home, some things to consider are:

• how the space functions for your lifestyle;

• what’s included in the total square footage (balcony, basement or garage);

• in new construction, which features are standard and which are upgrades.

Open Houses — Remember, if you are attending an Open Houses without me, be sure to mention

that you are being represented by an agent. This will save you from being bombarded with calls from

other agents trying to represent you. I will supply you with some business cards to make the Open

House sign-in process even easier.

Step 9

MAKING AN OFFER

Chances are, when you find a home you absolutely love, someone else may love it too. So, it’s

important to act quickly and make an educated offer based on a rational approach to pricing and

negotiating that you and I have discussed.

To start the process rolling, I will draw up a contract that includes your offering price and other terms

and contingencies. Buyers often focus on price, but there are other important terms to a real estate

contract.

You can include any terms you like, but the more you add, the more likely the seller is to object.

Here are the most common elements of a real estate contract:

Price — The market will determine the final price, but I will help you formulate an offer based on

comparable listings and sales, and current market conditions. A form called the Purchase and Sale

Agreement / Form 21 will be used to create the offer. Additional forms will be included based on the

offer. Most common forms are:

• Financing Addendum Form - 22A

• Optional Clauses Addendum to Purchase and Sale Agreement - Form 22D

• Evidence of Funds Addendum – Form 22EF

• Title Contingency Addendum – Form 22T

• Homeowner Insurance Addendum – Form 22VV

• Earnest Money Promissory Note – Form 31

• Inspection Addendum – Form 35

Additional Forms may be used and if there are additional contingencies or no contingencies,

depending on the offer being presented.

Most common contingencies:

*Financing Contingency — A financing contingency stipulates that you will buy the home subject to

obtaining a mortgage. If you cannot obtain a mortgage, and the seller will not agree to finance the

sale, then the contract will be void. The terms of the mortgage must be stated in the contract, and you

will also need to establish a timeframe for securing financing.

*Home Inspection Contingency — A thorough inspection of the property by a licensed home

inspector protects you against structural or material problems that are not detectable in a casual walk-

through.

Home inspections are just as important in new construction as they are in resale. Obviously,

buyers can’t inspect a home that isn’t built yet, but they can request an inspection prior to closing. In

new construction, an inspector will make sure that all mechanical systems are working properly.

They may also spot repairs that need to be added to the builder’s punch list (a list of items that need

to be completed before the home is delivered to the buyer).

The buyer, not the seller, is responsible for hiring and paying the inspector. Many current sellers are

already providing an inspection report. You can accept the report or have your own inspection done.

Additional inspections you may want to consider are for pest and fireplaces. These are not included in

the scope of items an inspector looks for, since it is a specialized field.

Attorney Approval

Attorney approval is generally a one-week period, in which your attorney can review the contract and

suggest alterations. Alterations will usually focus on the language of the contract to protect you from

any undue obligations. Your attorney will also add language to address points that were agreed to as

part of the negotiation but that is not a part of a standard contract.

Even if you are using a standard-form real estate contract, an attorney’s review is always highly

recommended. It is also recommended that you use an attorney that specializes in real estate

transactions. Upon attorney review, if the contract is not acceptable to either party, both have the

option to cancel. If the contract is acceptable, then the transaction moves forward.

Still on Step 9 – it’s the big one!

Earnest Money

Earnest money is a deposit, given by the buyer to the seller, which secures the contract until the

closing. This must be deposited within two days of mutual acceptance.

An initial deposit, usually in the form of a check, must be given to the seller or seller’s agent along

with the contract and the balance of the earnest money is usually due upon attorney approval.

Earnest money is typically held in an escrow account until the closing, when it may be applied to the

down payment and/or closing costs. If the sale does not go through due to contingencies covered

within the contract, then the earnest money may be returned to the buyer.

However, if a buyer is in breach of contract, then a seller may be entitled to keep all or a portion of the

earnest money.

Step 10

SUBMIT OFFER / NEGOTIATE

Closing Date — One of the most important terms of a real estate contract is the closing date; the

date when ownership changes hands.

This is usually, but not always, the date that the seller must vacate and the buyer may occupy the

property.

Flexibility on the closing date can give a buyer a big advantage over other potential buyers.

Occasionally, it can also allow you to negotiate a lower price or other, more favorable terms.

Counter Offers

In many transactions, there is a fair amount of negotiation – offers and counteroffers – before both

parties are satisfied.

This is one aspect of a real estate transaction in which an agent is invaluable. Not only can I draw

upon experience and market knowledge to offer sound advice during a negotiation, but I can also

serve as a buffer between you as the buyer and the seller/seller’s agent.

Negotiating for a home can be a highly charged and emotional process, but in the end, you usually

wind up with what’s important to you.

Step 11

OFFER ACCEPTANCE – NOW WHAT?

So, we have now completed the offer, negotiated terms and had the offer accepted!

Go ahead, pour the chilled champagne, go out to dinner to celebrate, do whatever things you like to do when you get good news and feel like your life is finally on the right path. Come the following day, nobody wants to burst this bubble of excitement, much less me, but the fact is you're not quite there yet. The reality is getting your offer accepted is only the beginning.

*Your home buying process is just getting started. You may have a home inspection to complete, perhaps you will conduct other types of inspections, and your lender will order an appraisal and start processing your loan.

These things could morph into some form of a renegotiation or adjustments to your transaction, including not buying the home at all by canceling the sale.

You might think that you need a broker solely to help with the initial negotiations, but there are often challenges that can crop up all the way to closing that require finessing.

Buyers can help to make the process smoother too. For starters, do not change or alter your financial situation. This means do not buy a car, do not make any major purchases, try not to add additional debt to any credit cards and, above all, this does not go without saying: do not quit your job. Don't even think about buying a refrigerator or a washer or dryer. Don't change your finances. Period.

*Don't alter your personal situation. Don't go on vacation or get married or leave the country without discussing these things with your agent and mortgage lender.

Just try to hang tight for 30 days and focus on closing your transaction.

3 Things That Can go Wrong After a Purchase Offer is Accepted

• Be prepared to walk away from buying the home if you discover major defects that cannot be addressed in a satisfactory manner to you. You don't know what could be wrong with that home until you hire a professional home inspector.

*Talk to me about the types of repairs, if any, a seller might agree to complete. Most homes are sold in an "as is" condition, and sellers are not always required to make any repairs at all.

• Be prepared to walk away from the home if you cannot obtain the type of financing you were qualified to get and the new terms are unacceptable. Just because you are holding a preapproval letter in your possession does not mean you are qualified to buy the home. Only an underwriter has the final say about your qualifications. You might not know if your loan will be approved until just days before you are ready to close. This can be very stressful.

• Be prepared to walk away from buying the home if your appraisal is not high enough to justify the sales price the seller has accepted because there is no guarantee the seller will lower the sales price if the appraisal is low.

*You might not want to pay the difference in cash or be able to. While you can ask a seller to lower the sales price to meet the appraised value, some sellers might prefer not to sell under those circumstances. Not every seller will be agreeable to working with you after a low appraisal.

We will be submitting a form 22AA – Appraisal Addendum with every offer. Which allows for a reappraisal at seller’s expense, seller reduction of price, or seller rejection of price – which would release you from the purchase. There are many ways in which to negotiate this when it happens.

Step 12

CLOSING

In a real estate transaction, there are dozens of loose ends to tie up between signing the contract and

closing the sale. Windermere Realty is known for our attention to detail during this important phase in

which we coordinate and oversee the following steps:

• Deposit earnest money with the seller or seller’s agent

• Recommend and schedule a home inspector and accompany the buyer on the inspection.

*It is always highly recommended that the buyer attends the inspection along with the agent to make

sure that any issues that come up are properly relayed.

• Obtain important documents, such as property disclosure forms and condominium documents

(budget, declaration, condo association minutes), and deliver them to the buyer and buyer’s attorney.

• Recommend a mortgage broker and help expedite the loan-application process.

• Monitor all contingencies to ensure that they have been met.

• Recommend service providers for moving, home-improvement and repairs

• Schedule a final walk-through. This is to be completed 5 days prior to closing. Again, both buyer and

buyer’s agent should be present.

• Coordinate your closing.

I will work closely with you, your lender, your attorney, and the seller’s agent to make sure everything

is in place for a smooth and efficient closing.

Typically, two or three days prior to the closing, your lender will forward all loan documentation to the

title company and let you know the amount required to close.

*You will be responsible for bringing the balance of your down payment and closing costs (such as

lender fees, title company fees, and state and city transfer taxes) to the closing in the form of a

cashier’s check

Money Generally Needed to Close

• Earnest Money Deposit: 1-3% of the purchase price, due within 2 days of accepted offer,

must come from your verified funds, credited toward your costs at closing.

• Inspection: Typically, inspectors charge from the range of $400 to $700 depending on the

square footage of the inspection or if sewer needs to be included on the scope of work. Buyer

pays the inspector directly.

• Appraisal: $450 - $600 (larger houses may be more). Paid by credit card to the lender or as

part of the closing cost (each bank is different).

• Closing Costs: 1.5%-3% of the purchase price (Escrow, Title, etc.), paid at closing and can be

negotiated to be paid by the seller.

• Down Payment: This amount will vary and will be paid at closing.

Your down payment options are determined by your credit score, location, and mortgage value.

• The maximum FHA loan in Pierce County, Washington is $540,500.

• The maximum Conforming loan in Pierce County, Washington is $540,500.

*Example of down payment and closing costs with home value at $345,000

Mortgage

Type

Minimum

Down Payment

Mortgage Payment Closing Costs

FHA 3.5% of Home

Value

$12,075 down

payment

$1,731 monthly mortgage

payment(Includes $236 monthly

mortgage insurance)

$9,740 total closing

costs(Includes $5,826 FHA upfront

mortgage insurance premium)

Conforming 5% of Home

Value

$17,250 down

payment

$1,712 monthly mortgage

payment(Includes $170 monthly

mortgage insurance)

$3,914 total closing costs

20%

Down

Payment

20% of Home

Value

$69,000 down

payment

$1,298 monthly mortgage

payment(No monthly mortgage

insurance)

$3,914 total closing costs

Escrow and Lender will work together to prepare Closing Disclosure to determine the funds needed

for closing. The Lender will then provide you with Closing Disclosure 3 business days prior to the

signing appointment. Escrow will then prepare Settlement Statements for the buyer and seller with

escrow instructions, wire instructions, and pertinent documents, including the Deed. Your statement

will match the fees on the Closing Disclosures.

I have step by step guides for you if you have any questions on the Title and Escrow process and

whichever company is requested by the seller they are always happy to answer any questions that

you have.

Within 1 week of closing we will take these steps to completion:

*Confirm “included items” with the listing agent

*Schedule and attend the walk through

*Confirm Delivery of Settlement Statements to Escrow

*Review Settlement Statements

*Confirm the signing appointment

*Meet at closing

*Arrange key transfer

You will need to: *Get Home Owners Insurance *Home Warranty (if desired)

* Set up Utilities *Schedule Movers *Schedule place for pets during move

AFTER CLOSING

While your transaction is complete, my work is not.

I will contact you again within no more than 48 hours to make sure everything has gone smoothly and

see if there are any issues that need to be addressed.

You will need to change locks and reprogram alarms and garage doors.

I will personally deliver your completed closing file within 2 weeks of closing.

In fact, I will always be glad to help you find a variety of service providers and tradesmen to perform

work on your home or if you need assistance with your new location, I would love to help in any way!

Tanya Morton - Managing Broker

Windermere Real Estate – Bonney Lake / Lake Tapps

253-534-5591 Cell