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The Home Buyer’s GuideWritten and Edited
Jeffrey Shapiro
Buying a home is a major undertaking. Before taking the plunge, make sure that you've thought it through and are ready to proceed. I have put together this manualto help you better
understand the process of buying a home.
Jeffrey “Jeff” ShapiroRealtor® Sales Associate
Accredited Real Estate Professional©Certified Negotiations Expert®Senior Real Estate Specialist©
Circle of Excellence - 2011Coldwell Banker Residential Brokerage®
15 Vervalen Street, Closter, NJ 07624201-767-0550 (office)
201-519-1600 (cell)201-884-1061 (E-fax)
J
Prepare and Plan - Buying a home is a major undertaking. Before taking the plunge, make sure that you've thought it through and are ready to proceed.
Deciding to Buy
Consider your motivations for buying to help determine if you are really ready to enter the market.
Personal Considerations
Think about your personal reasons for moving. Do you need a larger home to accommodate a growing family? A shorter commute to work? Don't forget to consider the difficult aspects as well. Are you emotionally attached to your present home - will it be painful to leave? Being mentally and emotionally prepared is the first step toward a well-conceived and well-executed move.
Do You Feel Pressure to Move Now?
Do you feel that you'll be priced out by a rising market if you don't buy now? Or are you afraid you'll miss bargains in a troubled market? Rising mortgage rates cutting into your budget? These are all understandable reasons to act quickly so let’s ask the following….
Assess Your Financial Condition
Do you have enough cash to fund the down payment and closing expenses? Can you comfortably afford the mortgage payments as well as taxes and insurance? Do you have any credit problems? Ask Jeff to recommend a mortgage agent or financial planner.
Homeownership as an Investment
While markets can be turbulent and values occasionally decline, owning a home remains an attractive investment over the long term. Additionally, don't forget to consider the tax advantages of homeownership - mortgage interest is deductible and the Federal government allows us large capital gains deductions.
Prepare and Plan - Assemble all of your information and develop a good idea of what you want before you begin shopping.
Getting Organized
Your house hunting will be more efficient and less stressful if you take the time to organize yourself. Make sure you know what you can afford, where you want to live, and what features you want in your new home.
Where Do You Want to Live?
Think about the communities in your area and decide which ones you like and why. Consider schools, recreational facilities, and access to work and shopping. Write down the various features you like and dislike about each community; then review the list to decide which areas are right for you. It's important to know where you want to live from the start - otherwise it's too easy to get excited over a great house in the wrong location. Don't forget to consider price range when narrowing down your choice of locations - you'll want to spend your time looking where you'll have a good chance of finding something appropriate. Spend some time preparing with your agent who will be able to give you information for each area.
Make a Features List
List the features you need in your new home which will includenumber of bedrooms, kitchen size, architectural style, access to schools, recreation, etc. Then create a second list naming it thewish list, which will includes items you don’t absolutely need but would like such as a pool.Share these lists with your agent to make the home buying process easier.
Remember that needs are different than wants or wishes.
Pre-qualify for Your Loan
Many lenders allow you to apply for a mortgage before you even find a home. Once prequalified, the only major requirement for your loan is a satisfactory appraisal of the property to be purchased (once you find it). Prequalifying can not only give you peace of mind while shopping; it can really give you an advantage in a tight market - where a seller may preference a buyer who has funding secured.
Ask Jeff for a list of qualified lenders that have come through in the past and have proven reliable. Finding the right mortgage is almost as important as finding the right house.
Shop for a Home - Finding a good agent — one who knows and understands the local market — is the next step in your home search.
Selecting an Agent
A good real estate agent is a partner in your home search, someone with whom you'll be working closely. Spend the time to develop a strong relationship.
Advantages of Using an Agent
Your agent can give you valuable insight into the market and provide access to a large number of available homes through the Multiple Listing Service. Working every day in the local housing market, your agent is an invaluable source of advice on pricing, features, and trends.
An agent can put you in touch with lenders, home inspectors, attorneys, and any other professionals you need to complete your purchase. Don't hesitate to ask for recommendations - chances are your realtor knows qualified professionals in all of these areas
Choosing an Agent
A good agent is experienced, with a strong knowledge of the local market and a willingness to put in the time required helping you find the right home. If an agent doesn't have the time, interest, or commitment to develop a thorough understanding of your needs, look for one who does.A GOOD AGENT IS HAS A SUCCESFUL TRACK RECORD AND WORKS AT THE PROFESSION FULL TIME.
Shop for a Home - It's a good idea to do some fact-finding before you start looking at homes — before you get caught up in the excitement and stress of the
shopping process. Hopefully you've gotten to know the communities you're considering during the organizational phase. Now it's time to narrow the search
and find your new home.
●Research Markets
Review your notes and decide where you want to conduct your home search. Talk with your Jeff and explore the differences in individual towns and neighborhoods. Take a look at the town and school tabs on www.njfineliving.com to help you decide on the right location. Your agent can help you review recent sales activity in the area to get some idea of what you can expect to find in your price range.
Gauge Market Conditions
Real estate markets are highly cyclical. The current status of the market can have a significant effect on your home buying strategy. Try to develop an understanding of the state of the market, so you'll have some idea of the conditions to anticipate when shopping - and a feel for how hard you can bargain when negotiating
Don't listen to anecdotes about bidding wars and homes getting snapped up in one day. There is no substitute for accurate information. Check out the actual sales prices of area homes, and try to get a feel for what is really happening in the marketplace. Again your agent can be an invaluable source for this information.
What's Best - Hot or Cold Market or a Time of Year?
Unless you're a first-time buyer, you've probably got a house to sell while you're shopping for a new home, so it's not easy to determine if a strong market is helpful or harmful. As a general rule, if you are moving up - looking for a new home significantly more costly than your old one - you may want to act during a weak market, when the savings on an expensive, new property will more than outweigh the losses on the older one. Conversely, empty nesters looking to switch to a smaller home may want to plan their move during a hot market, when they can maximize gains on the sale of a larger home.
In most markets there are two primary selling seasons - spring and fall. Spring is the strongest, since many buyers want to move in before the next school year begins. Summer and winter are generally poorer selling periods.
Finding a Home
There are two primary characteristics of a successful house hunting experience - staying focused on exactly what you want and exposing yourself to the maximum number of suitable properties. Your agent can help you find suitable properties, but it's up to you to remain calm and keep your wants and needs in mind.
Working with Your Agent
Once your search begins, make sure to take advantage of your agent's knowledge and experience. Don't hesitate to ask questions or request market data to help in the search. There is no such thing as a “silly” question.
Your agent should compile a selection of properties that match your general search criteria add your input and arrange for viewings. Do not see too many houses in one day. Four to six is enough. Even for experienced agents; everything after three viewings starts to “run together.”FOCUS-FOCUS-FOCUS
Look Around Yourself
Your agent will find most of the available homes in the area, but you can help in the search. Check the popular internet sites. (See the attached list.) Drive around any neighborhoods you find attractive looking for signs or open houses. Your agent can arrange a showing of any appealing properties.
Get the Info You Need
Make the most of your home shopping time. Remember to bring your wish list. Take notes. Don't forget to ask questions during showings - get all the information you'll want later when you're considering each property.
Don't forget to check out new housing in the area. New homes offer many advantages, including warranties, customization, and modern features. You can get a good idea of the new housing in your area from your agent or through ads in the local newspapers.
Should You Consider Building?
Building a new house is stressful and time-consuming, but the reward can be considerable - the chance to have a home that is custom-designed to suit your family's needs. If you're considering this route, Sit down and discuss the advantages and disadvantages to building a home will give you an idea of what to expect. Your agent can help you find a lot (and probably a builder as well).
Buy a Home - You've done your homework and seen what the market has to offer - now its decision time.
Choosing a Home
Choosing which home to purchase is the critical phase of your search - make sure the house is right for you before deciding to buy. Consider your needs list, the location, and the price when making your final decision.
Check the Details
You've already researched the community (I hope!) in general terms - now it's time to take one last look at the neighborhood to make sure it's the right place for your family. Consider your route to work, the local shopping - anything that affects your lifestyle and daily routine.
Make sure the house is right for your family and lifestyle. Will your furniture work out? Is the yard big enough? Does the layout work well for your family's routine? Check through your wish list and notes to make sure you're not forgetting anything.
Don't Buy if You're Not Sure
Don't buy a home out of frustration or impatience - this is a major investment and it should be treated as such. If the market is strong or your standards prove to be unreasonable you may need to revise your expectations before continuing the search.
Buy a Home - You've chosen a home — now it's time to get the best deal you can.
Making the Offer
The offer is the first step in negotiating the purchase of your new home. Try to consider all of the relevant facts when determining your offering price. Homes often sell for negotiated figures that are below the asking price - sometimes considerably below, so give serious consideration to your initial offer.Meet with Jeff and come to a consensus on a negotiating strategy. There are many different scenarios based upon personalities, offering price etc..
Consider Market Conditions
Home pricing and sales activity is strongly affected by the strength of the underlying market. In a weak market purchasers may be able to negotiate substantial reductions from asking prices. Conversely, it is risky to make a low offer in a strong market - another buyer may appear suddenly and pay full price.
Review the Specifics of the Property
Review the comps. Does the home suffer from a lack of curb appeal or other problems? If so, you may want to be more aggressive in your negotiations - chances are there will be less competition, even in a strong market. If the house needs renovations or repairs make sure you know exactly what to expect so you don't have any unanticipated expenses after closing.
How Badly Do You Want the House?
Will you (or your family) be extremely disappointed if you lose the house? If so, consider being less aggressive in your negotiations — especially in a strong market. Conversely, if you are willing to take a chance you may be able to get a better deal.
Evaluate the Seller's Motivation
A homeowner who is under pressure to make a sale is more likely to accept a low offer. Recognizing a motivated seller is a major step toward making an advantageous purchase. Common causes of pressure on a seller include financial difficulties, divorce, or the need to move by a certain date.
Consult with Your Agent
Your Realtor is an experienced professional with deep knowledge of the local market, so make the most of this resource. Your agent can tell you how long a home has been on the market and can provide comparable sales for review. It's even possible that your agent may know of a motivated seller.
Writing the Offer
An offer will be in the form of an actual purchase contract written by Jeff. Make sure that you clearly specify all of the required information and terms in the offer. If you are pre-qualified for a mortgage, provide a copy of your approval letter to strengthen your hand.
The contract specifies the terms of the sale and the rights and obligations of the buyer and the seller. A well-written document protects both parties, while a poorly drafted contract can cause serious problems.
Counter-Offer and Negotiation
Instead of accepting your initial offer the seller will probably respond with a counter-offer. After reviewing the counter-offer you are essentially back to the beginning of the offer process - but with a better idea of the seller's negotiability. Consider all of the information and decide if you are willing to increase your price. This offer and counter-offer phase of the negotiation is often done verbally - through the agents or even at a meeting of buyer and seller - with revised contracts signed after price and terms are accepted by both parties.
In this area it is standard practice to retain an attorney to handle the closing. When you do hire an attorney (which is a good idea), I recommend choosing someone local and who specializes in real estate closings. An experienced real estate attorney can help you move quickly to closing and sidestep any problems or oversights. Jeff can give you a list of approved local attorneys.
Attorney Review
Once the contract is agreed upon, the signed copies will be delivered to both attorneys. All contracts in New Jersey will have a clause that states, you will be given time for your attorney to review the contract written by your realtor. During this attorney review period which generally lasts 3 business days you and or the seller has an option to declare the contract null and void for no reason to be given. This gives you the chance to make sure all bases are covered before you are committed.
Cover All Contingencies
Make sure that the contract covers all contingencies of the purchase and allows sufficient time for any required activities or testing (i.e. obtaining a mortgage, home inspections, etc.). Reasonable contingencies are essential to protecting yourself in the purchase - don't allow anyone to pressure you into skimping on due diligence.
Know Your Deposit Obligations
The contract should specify the due dates and disposition of earnest money and deposits. Typically a small amount is posted at the signing of the contract with the balance of the deposit (usually 10% of the purchase price) due in 10 days. Don't agree to a schedule you cannot meet - if you need extra time to line up the funds, specify this in the contract.
Close the Deal - Securing a mortgage is the first step toward closing - and moving day. Of course, if you're pre-qualified you are a step ahead.
Getting a Mortgage
YOUR CONTRACT WITH THE SELLERS WILL PROBABLY INCLUDE THE PROVISION THAT YOU APPLY FOR A MORTGAGE WITHIN 3 WORKING DAYS OF YOUR CONTRACT BEING LAWFUL AND BINDING. (“UNDER CONTRACT”)
The mortgage application process can be confusing and intimidating, especially to first time purchasers - but today's market still offers homebuyers many options.
Have Your Records Ready
Organizing your records ahead of time will help speed things along when you're completing mortgage applications. Our mortgage documentation checklist can help you keep track of everything you need.
Shop for a Lender
There are many types of lenders in today's mortgage market - review their loan terms to decide which offers the best package for your needs. If you have credit problems or other difficulties, look for a lender specializing in this type of loan. The reality of this is… Because your offer to the seller will include a pre-qualification letter, you’ll probably go back to that mortgage broker when the time comes.
Consider Loan Types and Terms
Today's mortgage market offers a bewildering array of financing options and loan programs - each with different rates, points, and amortization schedules. Consider the details of each so you can select the one that best suits your needs.
Choose the Right Loan
After considering the various mortgage programs available it's time to make your selection. Don't forget to review all aspects of the loan, not just the interest rate - the points, fees, and term can be just as important.Watch Interest Rates. Keep an eye on interest rates during (and after) your mortgage search. Many lenders offer the option of locking in the interest rate before closing - a valuable alternative if rates are rising.
Apply for Your Loan
Carefully complete each section of the application and provide all of the documentation required by the lender along with the loan application fee. Maintain frequent communication with your loan representative - if you haven't heard anything within 1-2 weeks call and ask about the status of your application. Respond promptly toclose the Deal - You're almost there — but there are still important tasks you have to complete before the closing.
Schedule Inspections
A comprehensive licensedhome inspection is a must for any responsible homebuyer. A proper inspection should help uncover any defects in the home - before you move in and get hit with unexpected repair costs. Depending upon your location and the age of the home you may need additional inspections as well - radon, termite, septic, etc. Your realtor can help guide you through this process, so draw on their experience.
The Appraisal
Your lender will probably hire the appraiser, but you need to make sure it gets done on time. A satisfactory appraisal is essential to obtaining your mortgage commitment and moving toward closing. It is not necessary for you to be there. Usually your agent will be on hand to answer any questions.
Review Contingencies
Make sure that any contingencies specified in the contract are satisfied. If the seller is required to make repairs prior to closing, schedule a walk-through to insure that they are properly completed - and don't hesitate to have your home inspector review the work if you are uncomfortable making the determination yourself.
Finalize Your Mortgage
Your lender should issue a mortgage commitment shortly after the property is appraised (assuming the appraised value is adequate). Contact your mortgage representative to make sure things are proceeding as expected. Don't wait until the last minute - if there is a problem you want to find out as soon as possible.
Order a Survey
You'll need a survey of the property. Contact the last surveyor who worked on the site and make arrangements at least 2-3 weeks before the closing date. If you are using an attorney, he or she may arrange to get the survey, so check and make sure before you order one as well.
Order Title Insurance
It is essential to make sure that the title insurance is ready for closing day. The title company will need to do a search on the property to uncover any potential problems with the transfer. Make sure to leave enough time before closing, not only for the search, but to deal with any problems that surface. If any title problems arise, don't panic - usually these issues can be resolved fairly quickly. If you are using an attorney, he or she will probably arrange for the title work to be done. Generally your attorney will hire a title company on your behalf.
Preparing to Close
There's a lot to do in the weeks leading up to the closing so good organization is a must. Proper scheduling can reduce your stress and prevent any mistakes or delays.
Get Organized
Create a schedule of the items you need to complete before closing. Set up a file with all of your purchase and closing related documentation so you have it readily available.
Prepare Your Purchase Funds
You'll need to have certified funds available to cover the purchase price and closing costs, so now is the time to cash out investments or make other arrangements to free up the cash. Your attorney can help you determine the total amount you'll need to bring to the closing.
Purchase Homeowner's Insurance
You'll need a binder from your insurance company to verify that you have properly insured the home - otherwise you may not be able to close on your mortgage.
Get Ready for Moving Day
You probably want to move in right after the closing (you'll have to if you're selling your old home the same day), so now is the time to start preparing. You need to hire a mover (unless you plan to handle the move yourself) and start packing your possessions. It's also time to make arrangements for utility shutoffs and installations.
Schedule the Walk-Through
Your agent will schedule a final walk-through inspection the day of or before the closing. The walkthrough allows you to confirm that the house is ready and that any required repairs have been completed. If you're buying a new home the walk-through also gives you a chance to identify any items that have not been satisfactorily completed.
Close the Deal
You're almost there. The preparations have been completed - now it's time to finalize the purchase
Do a Final Walkthrough
Make one last inspection of your old home to insure that nothing has been forgotten and left behind. It's OK to have a few minutes to yourself if you are feeling emotional at this point. Any concerns should be brought to the attention of your attorney immediately.
Closing Title
Check with your attorney day or two before the closing date to confirm that everything is on schedule. Remind the attorney or agent to complete the closing statements and other documentation in advance - this may seem obvious, but closings often become protracted affairs because the professionals are unprepared.
Bring Certified Funds
You will need to bring a certified check to cover the down payment (less the funds already on deposit) and closing costs. Check with your attorney or review the documents to get an estimate of the total amount required. It's also a good idea to bring your checkbook as well — small last minute costs (filing fees or photocopying charges) can often be paid with a personal check.
Have Your Paperwork Available
Bring all of your documentation to the closing in case you need something at the last minute. Your closing file should include the contract, inspection reports, and copies of all correspondence relating to the purchase.
Understand the Closing Documents
Review the closing statement (HUD-1) and other documents beforehand so you understand the purpose of each. Check with your attorney if you have ANY questions with theclosing documents.
Close Your Mortgage
You will probably execute your note and mortgage just before the closing of title. The lender should have provided a check to be released subject to the execution of the documents, the confirmation of clear title, and the satisfaction of any other conditions.
Deal With Any Problems
Closings frequently proceed without a hitch, but problems are not uncommon. Don't panic if the closing hits a snag - most issues can be resolved by simple means, such as escrowing funds to cover a contingency or unfinished repair. Even if the closing has to be postponed, don't overreact - chances are the matter can be resolved in a few days.
Execute the Documents
At this point the parties should execute the closing statements and the seller should sign over the deed. The deed must be filed with the local recording agency - your attorney or escrow agent should handle this but it's a good idea to confirm that this was done. Congratulations, you've just bought a home!
Collect the Keys and Other Items from the Seller
In addition to the keys, the seller should bring (or leave in the house) any relevant paperwork - service records, warranties, instructions, etc. If these are not provided, request that they be forwarded as soon as possible.
Close the Deal - Congratulations! It's done — you're a homeowner.
Moving In
It's finally moving day! Depending upon your arrangements with the seller, you will be able to move in either right after the closing or the next day.
Be Prepared for the Movers
Make sure the moving van has room to park as well as easy access to both houses. Movers expect payment upon delivery, so you'll also need to have a certified check and/or cash available to settle the bill. Many movers accept credit cards as well, so inquire in advance if this is your chosen payment method. Tipping is customary - usually about $20 per mover - though this is obviously highly variable with the length and difficulty of the move.
Work With the Movers
Be available to answer questions about packing order and fragile items. Point out any items you intend to move yourself, and keep these things separated from those to be handled by the movers. Make sure the movers have clear directions to the new house as well as a phone number to reach someone if they get lost or have any problems. Make sure someone remains at your old home until the movers are packed and ready to leave.
Arrange for Mail to be Forwarded
You'll actually want to make these arrangements a week or two before moving day. Go to your old post office and arrange for mail to be forwarded to your new address (if you had a P.O. Box you may want to retain it for a period of time). Send out change of address cards with your new location.
Get Settled into Your New Home
Target the most important areas of your new home and unpack for these rooms first. Arrange to have someone available at the house during the first few days to coordinate installations and deliveries. Have written instructions prepared for installers to make sure you get phone lines and TV jacks in the right places. If you have any improvement projects planned you can start scheduling the work if you haven't done so already.
Change the Locks
Though many people don't bother with this precaution it is extremely advisable to do so — you probably know very little about the seller and even less about anyone to whom they may have given a key.
Deal with Any Problems
If you discover any problems with the home after you move in, stay calm. Have the problem checked out and documented by a qualified professional, and then consult with your attorney - the seller may be liable for any deficiencies that were not disclosed to the purchaser.
Finish the Paperwork
Store your purchase and closing documentation where you can easily find them at tax time (or whenever else they are required). Luckily you are working with a Coldwell Banker Agent so you are entitled to access your documents through their exclusive Home Base® system. Complete any paperwork required by local schools (if you have children who are enrolling). Don't forget to change your driver's license, automobile registration, and voter registration, if necessary. Lastly, confirm that the deed was correctly filed with the appropriate authorities.
I hope this guide was of help to you and your family. If you have any questions, please don’t hesitate to give me a call. 201-519-1600
Thanks, Jeff
Please note that this information is meant to help you in your decision making process, this information deemed reliable but not guaranteed and should be independently verified. Neither Jeffrey Shapiro, nor Coldwell Banker Residential Brokerage® shall be responsible for any typographical errors, misinformation and misprints and will be held totally harmless.
