Buying a New Home, Made Easy!
The Home Buying Process by On Demand Realty
To help you become more informed on the buying process, click to view the video below to better understand the buying process, who the people are that are involved, what their roles and timing are in the process and how working with On Demand Realty as your REALTOR can help you navigate to your goal!
First time home buyers click here for some helpful information.
Click here for a Free Copy of the On Demand Realty Buyer Answer Book
Click Here for Buyer Frequently Asked Questions.
THE 5 STEPS OF BUYING A HOME
Step 1 - Know What You Can Afford
Before you begin to look for you new home, you should determine what you can afford both in terms of a mortgage and down payment that satisfies your NEEDS and LOCATION. You can use our online calculators to estimate your mortgage payments, apply some standard ratio's of income to expense, but the BEST solution is to visit with a lender or mortgage broker and get Pre-Approved. See our Buyer FAQ's for the difference between Pre-Approval and Pre-Qualification. Your lender can also inform you about First Time Buyer Programs, the difference between FHA and Conventional mortgages as well as compliant strategies for down payments. Being Pre-Approved give you the confidence of knowing that you are looking at homes that will meet your NEEDS in a LOCATION that you can AFFORD. A lender will request certain information from you to complete your loan application. Click here to see the Paperwork You Will Need to Apply for a Mortgage
Step 2 - Decide What You NEED and What You WANT
Make a list of what you NEED in a home and what you would LIKE or WANT. Remember that NEEDS must be met for you to move forward and most likely are not negotiable, while WANTS can be prioritized. If you find a home that meets all your NEEDS and has all or some of the WANTS, it is a Winner, but even it is has only a few of the WANTS, it still may be a serious consideration. Click here for a Home Buyer Information Sheet which you can share with us to help get your ideas started.
Step 3 - Decide on Various Locations and Prioritize Them
We all have heard the phrase, Location, Location, Location when discussing real estate. This is the time to put that to work. Consider which locations are the best for you and your lifestyle. Take into account if you are working things like the commute and transportation. If the outdoors interests you, then look for parks, open spaces, trails, boating, etc. Or if your lifestyle is closer to home, look for community services, shopping conveniences, and maybe walkabilty scores. By combining Step 1 and Step 2 you can now begin to target areas that will fit your lifestyle. Click here for a Zip Code Map of the East Bay which you can use to get a relative position and to use in your search (see Step 4) Click here for Homes for Sale Near BART or click here if you want to find Homes for Sale in School Districts.
Step 4 - Begin Your Search
Click Here to watch a short video on the benefits to sign up and save some searches.
Now the fun begins and you can begin to look for your new home. Start your search on a website like this one. To get started, select some cities or zip codes as the area, then the price range and the number of bedrooms and bathrooms. Click the search, view the listings and if they are what you want, Save the Search and name it with the City, Zip etc. then when ever any new listings come online or the prices changes, you will get an email update, automatically.
Note: Below is some information to make your searching easier and fully informed on working with an agent.
- How to Create and Save a Search - Click here for search instructions that will walk you though the process of creating and saving a search as well as how to edit one.
- Search by Zip Codes - To help with Zip Code searches, Click here for a Zip Code Map of the East Bay so you can see where the zip code is relative to the area you are wanting to search. This will allow you to target an area in a city.
- Agency Disclosure: All agents are required to Disclose with you their agency relationship when working with you. They should disclose if they are acting as a Seller Agent (representing the seller), a Buyers Agent (representing the buyer) or a Dual Agent (representing both the Seller and Buyer). You then Elect their role in representing you, and provide Consent by completing a Buyer Agency Disclosure Form (click here for a sample copy) This is so you will be informed on how you are being represented in the sales transaction going forward. Questions? Call.
Step 5 - Make an Offer on Your New Home
After viewing some homes, and getting comfortable with the market, the homes, the neighborhoods etc you will begin to decide it is time to make an offer. Discuss with your agent the amount you would like to offer, any terms or questions and work with them to complete the offer to be presented to the seller. Think of all the reasons why you are the best buyer: you are financially qualified, you like the area and the home, you can see yourself and your family in the home, etc. and share this with the agent as well. The agent can then use what you tell him to help create a representation of YOU to the Seller so they can begin to feel comfortable with you as the new owners of their home! If the offer is accepted, CONGRATULATIONS! If the offer is countered, decide if you want to continue and accept or make a counter, or move on to look at another home, as you are now experienced!
Offer Accepted - What's Next?
Once your offer has been accepted, you now have a "contract" to buy the home, based on the terms of the Residential Purchase Agreement (RPA) that was signed by both the Buyer and the Seller.
- Escrow Account - The Buyer's agent will open an Escrow Account with a Title company by presenting the Executed RPA and any Earnest Money that has been presented in the RPA. The Escrow Agent is an unbiased 3rd party in the transaction that receives, holds and distributes all funds and tracks compliance in the execution of the "contract". The Escrow Agent only takes direction from the "contract" instructions or if both parties, Seller and Buyer, agree in writing to make changes to the RPA contract.
- Gift Funds - If the Buyer has received any gift funds from relatives or a company, the Escrow Agent will require the giver of those funds to complete a "Gift Fund" letter stating the funds are given as a gift and do not need to be returned. Make sure that any parties in this situation are made aware of the need to complete and sign this document or it may delay or cancel the contract if the Buyer is not able to secure the funds as stated in the RPA contract. Click here for a Gift Fund letter.
- Preliminary Title Report - One of the first actions taken by the Escrow Agent is to order and present the Buyer a Preliminary Title Report on the sales property. This report will show the Buyer if the title is clear of encumbrances and that the Seller is authorized to sell the property. Any easements, liens, etc. should appear for the Buyer's review.
- RPA Acts as the Escrow Instructions - The RPA also acts as the Escrow Instructions for the Escrow Agent to follow and contains areas of performance required by both the Seller and the Buyer that must be met before the contract is complete. These are called "contingencies, have specific performance dates detailed in the RPA that need to be met and must be removed for the contract to move to completion. These contingencies include:
- Buyers Acceptance of the Preliminary Title Report,
- Buyers Acceptance and Approval of the Seller's disclosure reports,
- Property Appraisal being completed,
- Buyers Loan being approved by a lender,
- Buyer Acceptance of Inspection Reports of the Property (Home, Pest, Roof, etc),
- Buyer's Final Walk through of the property to show it is same condition as when the offer was made,
- Buyer's Acquisition of Homeowner's Insurance and Title Insurance,
- Buyer deciding how to hold title to the property
Before the Closing Process can begin, the lender must provide the Closing Disclosures at a minimum of 3 days before the closing papers can be signed, Step 3 below. As the Buyer, you will need to make sure your lender, agent and escrow officer make sure these performance dates are met so you can close on time.
Once all the contingencies are removed, then the Closing Process begins. Note: if any of the above are not met, the contract can be cancelled or the parties can complete Amendments to modify the RPA contract terms and conditions such as sales price, credits for work to be performed, extension of dates, etc.
Closing Disclosure Explainer - click this link to view online what the Closing Disclosure form looks like and what you need to check to make sure you understand the form and the contents. Quesitons? Ask your closing agent or lender.
The closing process has 3 steps:
- Step 1 - Signing - both Buyer and Seller review and sign all the lender and legal paperwork prepared by the Escrow Agent. Any additional funds required to compete the contract (deposit, closing costs, etc) are deposited with the the Escrow Agent. Note: all signers need to bring current photo identification to the signing as well as any additional funds to complete their commitment. These funds can be in a Cashier Check, cash or wired to the Escrow Agent.
- Step 2 - Funding - The signed papers are reviewed for accuracy and consistency by the lender, who then funds the loan. Some lenders require 2-3 days after signing to review the signed paperwork, others fund the loan upon signature, making for a faster close. Note: if the lender finds gaps or errors in the paperwork, they may request more information to complete the process, which may delay the lender funding the loan. "Table Funding" - this is when the escrow agent is able to forward the signed papers to the lender and upon receipt the lender funds the loan by sending the funds to the escrow agency for distribution to the parties. Non-table funding is when the lender requests the signed papers for further review before they will fund. This can take days, has the risk of finding issues and delaying the funding and in turn the recording of your loan so you can take posession.
- Step 3 - Recording - Upon lenders positive review, the Escrow agent receives the funds from the lender (loan is funded), distributes funds to the various parties (Seller, Agents, service providers etc.) and takes the signed documents to the County offices to be Recorded. Note: Recording is done at the county courthouse at special times of the day, so if the funding occurs too late, the recording may need to be moved to the next Business Day.
After the completion of all 3 Steps, the transfer of property ownership is complete and the Buyers are given the possession (keys) to the home.
Click above for some answers to frequently asked questions, such as:
- What is the difference between Pre-Qualification and Pre-Approval
- How much can I afford?
- What is the difference between an FHA and Conventional Loan?
- What are the Qualifying Ratios, Maximum loan amounts, and FICO score requirements?
- What is a FICO score? How can I improve my FICO score?
- What should I consider when buying a home?
- What should I look for in a new home?
- How do I make an offer when I am interested?
- What does it mean to have a "Buyer's Agent"?
- Who pays the commission?
- Who pays for the inspections, the taxes, insurance?
Buying a Home is a Journey, not just an Event.
On Demand Realty is prepared to guide you along that journey by answering your questions and helping to make the process understandable.
Questions? Call On Demand Realty and we can help set up the searches for you. Once you have seen a few homes online, you will then want to see them in person. Call us and we can make arrangements to go see some of the homes. Set up time to see 4-6 homes so you can compare and not get overwhelmed. Bring your NEEDS list along with a notepad so you can take notes and remember what you've seen, questions you may have, etc. Also, let your agent know what you felt about each home. This communication will help you express your feelings and give you a sense of how the homes made you feel about them, the area, and how they met your NEEDS.