Buyer's Tips

How exciting, you are ready to buy a house!! Let’s visit some of the details and set proper expectations so you’re well informed, less anxious and know what to anticipate!

I. Most real estate transactions will require a loan and you’ll need to meet with a lender before you start your home searching process. Mortgage loan officers are required to be licensed in order to process mortgage loans and with over 2 decades in the business, we have several trusted professionals who are communicative, effective and timely that we can recommend if needed. Most sellers will not review an offer unless it is accompanied by a “Pre-qualification” letter so it’s important to be prepared for submitting offers. In planning to meet with a lender you should have the following documents ready, keeping in mind that the mortgage loan officer may require additional documentation, but here’s the basics to have on hand:

1. Last two years of tax returns
2. Most current pay stub
3. Most current bank statement
4. Fill out their loan application which will ask about any assets, investment accounts and debts, like credit cards or other loans

Finding The Right Property

We love this part! Assisting in your search for the right property is something we thoroughly enjoy and we help clients find the home they fall in love with every day. Area, price point, the “must haves” and the “have nots” are all important considerations for us to design your alerts for homes that fit your criteria. These alerts can conveniently be accessed via your email and when you see something you like, we go see it in person!

When we think about looking at potential properties, here are some things to consider: 

1. Time- Most sellers will want some notice for us to walk through, especially if it is occupied. Generally, two hour notice is good enough, but some Sellers will want over night notice, some even 24 hours. There are also sellers who have a “go and show” philosophy and we can go immediately.
2. Multiple showings in a day- To be efficient, we should plan a few hours to see several properties at a time. Generally, when we look at properties, sellers will limit the amount of time we can be in the home to between 15 and 30 minutes. We need to be efficient while looking at homes, paying attention to details like needed repairs, features and layouts. Keeping mental notes, written notes and photos at each house for us to discuss later is helpful.
3. While showing- Many times, sellers have security cameras in their homes that pick up sound. A best practice is to keep comments to yourself until we leave the home for discussions in private to avoid disclosing any negotiation positions.
4. You’ve found the house you love? We’ll revisit the comparable sales within the past 90 days for a good indicator of value and agree on what a solid offer price will be. Offers are conveniently signed via docusign, wet signatures for real estate contracts are no longer required. Once signed by you, we present your offer to the seller’s agent and the negotiations begin! Whether your offer is accepted or countered, we are prepared for coming to an agreement. Once an agreement is made and we’re Under Contract, the next step is to have a check made out to the Title company the seller has selected for Earnest Money funds. Earnest Money funds are required on every purchase and typically varies on purchase price; generally between $3000 and $10,000.
5. Monthly Payments- The number one question is “What will my monthly payment be?” Payments for your loan are based on the following, known as the P.I.T.I payment:
6. Your Principle payment, which pays down the loan balance
7. Your Interest payment, the amount of interest you are paying each month
8. Your Tax Payment, the cost of your property taxes divided by 12.
9. Your insurance payment, the cost of your property insurance divided by 12. 
10. You will receive a bill from the County for your taxes that you will not need to pay and your Mortgage Company pays this for you but you might have additional costs such as Home Owner’s Association payments.
    

Congratulations! You're Under Contract, Now What?

Once the offer has been accepted, the clock starts on getting certain things done. We talked about earnest money. The next thing is to schedule a home inspection. Home inspections give you an idea of what is wrong with the property. Keep in mind that inspectors are paid to find everything wrong with a home. Some of these items will be minimal things and some will be major. Typically, we focus our requests of a seller to be health and safety items only. This could also include things that are not visible as we walk through. Don’t be alarmed if we get a report back with a multitude of things wrong, we’re experienced in interpreting these reports to educate you on how we should handle any issues presented. Home inspections typically cost about $500 and will have to be paid for out of your pocket at the time of service. There are other things that should also be inspected depending on the age of the property, primarily sewer lines and radon. Sewer line repairs are costly, approximately $9,000 and up and radon is a colorless, odorless gas that occurs frequently in Colorado due to our mining history and type of soils. Radon is suspected to cause brain cancer and is particularly dangerous for children. Radon gas typically builds up in basements and crawl space areas, however high levels are easily diminished though a radon mitigation system and in most cases, won’t exceed a cost of $1,000. We can itemize Health and Safety or repair items in a form called an Inspection Objection that we’ll present to the seller’s agent. The seller then has decisions what they will or will not address which will be returned to our side in the form of an Inspection Resolution. Moving forward or terminating the contract is your choice at this juncture. 

Here are some additional costs that you should be prepared to pay for. Some of these items might be included in your closing costs on your settlement sheet, some will have to be paid for at time of service, like the inspection.

1. Home inspection typically about $500 depending on the size of the house and any other inspections selected
   
2. Appraisal- Generally between $750-$1500. This is also dependent on location and the size of the home. In some cases, the lender will just order this and charge you whatever they pay. In some cases you may have to pay for it out of your pocket. This is always ordered by the lender and Real Estate Agents do not have any control over who completes the Appraisal or what the cost is.

I. During the contract phase, expect the lender to reach out looking for more information and documentation. Please respond to their requests as quickly as possible to prevent any delays. A typical transaction will be complete in 30 to 60 days. The Appraisal will be returned to the lender and is used to verify that the property is worth what you are paying for it. IF the appraisal comes in below our contract value, you can elect to terminate the contract or we can request the seller to reduce the contract price to the appraised value. You can make the decision to pay more for the home than its appraised value but that difference has to be paid in additional cash down payment and It is generally not advisable to pay more than the appraised value. Once the mortgage brokers have collected all the information required and the appraisal is satisfactory, the file is submitted for final underwriting approval and we proceed to closing! 

Closing- The Final Piece of the Puzzle!!

a. At closing, you will be signing lots of documents. The process generally takes about and hour and is done at the title company with a closing specialist. The closing specialist will ask you for a couple of things.

1. Your identification- Valid Driver’s License, Passport or Government issued ID. Some lenders may require two forms of ID, so bring two forms with your picture regardless.
2. A Cashier’s Check or Wire- All closings require “good funds” to close. Good funds are guaranteed so personal checks are not allowed, and typically neither is cash. In cases where the funds needed to close are over $100,000, the title company will require a wire direct from your bank. 
3. A note about wires- Wire fraud is rampant. Title companies will not change their wiring instructions. If you get an email that looks like it came from the title company, but suspiciously is changing any previous wiring instructions, error on the side of caution and send those directions to us for follow up! In most of these cases someone is trying to take your money!
4. Approximately 3 days prior to closing, your Lender and Title will advise of the amount you’ll need to bring to closing. This amount consists of your down payment minus the amount of Earnest Money you submitted at the beginning of this process.
5. The day before or the day of closing, we will perform a walk-through inspection. This is to make sure the condition of the property has not changed since our contract was accepted. Should additional damage be discovered, we will reach out to the seller’s agent for compensation or a reduction in the sale price to cover the cost to repair.
6. Things to consider before closing.
7. Change your mailing address.
8. Set up trash service if it is not provided.
9. Set up your utility account with the electricity and gas providers.
10. Set up Cable and internet services.
11. Set up Water and Sewer service. These providers are typically notified by the title company upon completion of the sale.

Congratulations!!! You have purchased your home and it’s time to enjoy it!!

We are here to support you from start to finish in this process. There is no such thing as a silly question and your comfort throughout the course is of utmost importance to us. We appreciate your trust in us to assist you in completing one of the most important purchases you will make. We love Real Estate just ask us!