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The Process of
Buying a Home
by
Paul Fuqua and Joyce Carcaise
Realtors at Rose & Womble Realty
Copyright@2017 Paul S. Fuqua All rights reserved
An outline of the steps to purchase a new home.
Table of ContentsPage Content
Pg 3 Overview
Pg 4 Buying process outline
Pg 6 What do you want in your home
Pg 7 Establish most important criteria
Pg 8 Other important criteria
Pg 11 Know financial limits
Pg 12 Review homes in price range
Pg 13 Search and touring elementsPg 13 Search and touring elements
Pg 14 Keys to successful tours
Pg 15 Your personal checklist
Pg 18 Recording your tour results
Pg 19 Deciding to make an offer
Pg 20 What is a house worth
Pg 21 What are terms and conditions
Pg 22 Enforceable contract
Pg 23 Closing process outline
Pg 24 Closing date, fees, costs
Pg 25 What else is vital
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This booklet is designed to guide you through the home buying process in Virginia.
Although we cannot cover every aspect of the buying process, we have attempted to hit the key elements that will help you:
● Determine what you want in a home,
● Identify key features of homes you tour,
● Find the best location with convenience to work, schools, shopping and recreation.
OVERVIEW
work, schools, shopping and recreation.
● Understand the importance of establishing a budget and being pre-approved for a loan,
● Successfully tour homes to determine their functionality and livability.
This report is not all-inclusive and does not guarantee that you will find and buy that “perfect” house. But you will have the tools.
North Carolina purchases are very similar other than in the contingency aspects.
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BUYING PROCESS OUTLINE
1. Meet with lender and begin loan application and approval process.
2. Outline your major concerns to your agent.
3. Identify specific areas and neighborhoods which fall into your pricing range.
4. Determine your minimum requirements in bedrooms, baths, lot size.bedrooms, baths, lot size.
5. Schedule tours of properties with your agent.6. Use your checklist as you tour each home.
7. Once you’ve found “the house you have to have” ask your agent to research the values of other houses in the neighborhood which have sold.
8. Use those as the frame of reference for your offer.
9. You must be willing to walk away from a house if your offer is significantly lower than the asking price.
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BUYING PROCESS OUTLINE
10. Draft your offer with your agent.
11. Provide earnest money deposit.
12. Request written loan pre-approval letter to submit to sellers with your offer.
13. Rely on your agent to place the offer in the sellers’ or listing agent’s hands.
14. Relax. A well-drafted, reasonable offer with terms and conditions in accordance with current trends will have a significant chance of being accepted.
15. Sellers may well accept your offer as submitted but the vast majority will make a counter offer to you.
16. Be prepared to concede on a term or condition. Good initial offers may well include items on which a seller can win.
17. Once all provisions and terms are agreed upon in writing by all principals to the contract, it is considered ratified.
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DECIDE WHAT YOU WANT
IN YOUR NEW HOME
Every real estate data base out there in cyber-space requires some sort of filter or criteria to be used in searching for your home. In this area REIN (Real
Estate Information Network) is the hub from which all other sites pull information.
REIN is Hampton Roads’ dedicated, totally up-to-date source for houses offered for sale through a real estate brokerage and agent. There are no others.
This powerful tool supports searches and sorts on a multitude of aspects of homes: bedroom count, porches, garages, schools, exterior finish, stories, city, and on and on.
Figure out what your priorities are: how much can you or are you willing to spend; what City; what schools; how many bedrooms and baths; how big a yard and how long a commute?
Just those few answers will reduce the numbers of properties to a manageable quantity for you to review.
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ESTABLISH YOUR MOST
IMPORTANT CRITERIA
Before you pick up the phone to call an agent to show you houses on the market, be absolutely sure that you have firmly established what is important to you.
Location is the first and absolutely the most critical element to consider. It cannot be changed. It will drive the growth in the value of the home. It will influence your commute, where you shop, who will be part of your daily life. There is no other criterion as important as location: from city, to area, to neighborhood, to street, to position on the street and location neighborhood, to street, to position on the street and location on the lot.
The vast majority of homebuyers make the selection of a home by choosing their preferred neighborhoods and finding the right house in one of those neighborhoods.
Make your list of absolute must-haves for any house beyond Kitchens, Baths and Bathrooms. All houses don’t have: Flex Rooms, or Finished Rooms Over the Garage (FROGS!) or Offices or Mother-in-Law suites or Laundry Rooms, not to mention Garages, Dining Rooms, Living Rooms, Great Rooms, Family Rooms, 1st floor Bedrooms, 1st floor Master Bedrooms, screened Porches or 3rd floors. All these elements can be used restrict or expand your search...
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CONSIDER OTHER
IMPORTANT CRITERIA
Gross Living Area
Specifying Living Area square footage is important but not as critical as some think. There are 3200 square foot houses which feel and live as though they were 2200 feet and 2600 square foot houses which feel and function as though they are 3200 square feet.
Footage measurements include those areas of the house which are under roof, finished and there is controllable heat. Garages are not included in the Living Area computation unless they meet the heated test. Measurements are take of the outside of the home, not the interior.
Ceiling Heights.
Ceiling height has an effect on the perception of size, as do the width of hallways and the amount of natural light present in the key rooms.
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CONSIDER OTHER
IMPORTANT CRITERIA
Number of Rooms.
Depending on the total Living Area, the number of rooms in a home has an impact on the traffic patterns through it and its sense of openness.
Number of Stories.
The common areas of a Ranch of 2000 square feet often will feel larger than those in a 2-story of 2400 often will feel larger than those in a 2-story of 2400 square feet.
Size of the yard.
Larger lot sizes will require more time to maintain but provide room for expansion, for a pool, for a shed or detached garage and for play.
Construction Details.
Brick exterior or siding of Hardi-Plank or Drivit or Vinyl? Each has benefits and each must be maintained although differently.
(continued next page)
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CONSIDER OTHER
IMPORTANT CRITERIA
Proximity to Water.
This area is Hampton Roads, desirable because the Atlantic Ocean, Chesapeake Bay and a multitude of other waterways provide plenty of land for waterfront construction. Waterfront properties are the basis for home values in the area.
Flood Zone.
Flood insurance can be a sizeable monthly cost if the property falls into certain flood zones. “X” zones are flood free.
Schools.
Research the neighborhood schools and determine if they meet your expectations. Listings include school zones.
Neighbors.
Visit prospective neighborhoods on an evening or weekend to meet folks living there.
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KNOW YOUR FINANCIAL
LIMITS AND BUDGET
PRE-QUALIFICATION
Get pre-qualified by your lender. The vast majority of
mortgage lenders can quickly determine the price range your financial situation merits. This step requires answering a limited number of questions and very little documentation. Pre-Qualifications are for informational purposes only and are not binding on the lender. They give you a good idea of where you stand.
APPLICATION AND PRE-APPROVALAPPLICATION AND PRE-APPROVAL
You will be asked to pay a minor application fee and
be given a list of the specific documents a lender’s underwriting department requires to process a loan application. Your loan officer can guide you through the process. Once your information has been reviewed by underwriting, any minor fees have been paid, your lender can issue you a pre-approval letter which is equivalent to cash in your pocket.
Bear in mind, nothing in this endeavor is etched in stone until you have found a house, made an acceptable offer and are walking into the attorney’s office to sign the final paperwork on your new home.
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REVIEW AVAILABLE HOMES
IN YOUR PRICE RANGE
Once you are comfortable with the elements of financing a new home: down payment, loan amount, interest rate and projected monthly payment, start looking seriously at what homes are on the market, where and how much.
It can be wise to set your price range based on a lower monthly payment than that for which you lower monthly payment than that for which you have been qualified. Remember that (as of 2017/2018) each $10,000 higher in price will cost you about $90 more per month.
When you set up your search, however, set the upper price at no less than 5% higher than where you wish to be. Prices are dynamic and a house priced just above your limit may well sell at a number just below it.
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ELEMENTS OF THE ACTUAL
SEARCH AND TOURS
Once you have set the criteria for your search, including price range, location elements, bedroom and bath counts and the other sortable features on the REIN database, have your agent start organizing tours.
Prepare your checklist, drive the neighborhoods, click on the city’s website and look up crime rates and schools’ rankings and performances.
Some homes are so meticulously prepared for showings that functional weaknesses such as clumsy showings that functional weaknesses such as clumsy layout or insufficient storage can be overlooked.
Schedule tours during daylight hours. Darkness can disguise exterior flaws and interior lighting can mask poor use of natural light.
Try to avoid touring more than five or six houses in a day. More equals less in looking at houses. Your focus on critical details wanes after the sixth or seventh house.
Record your impressions of a house immediately after exiting it. Don’t wait or you’ll forget what you liked.
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KEYS TO SUCCESSFUL
HOUSE TOURS
Tour each house and compare it to other similar houses. Look at the following:
FUNCTIONALITY AND CONDITION
Traffic flow through public rooms.Lighting levels, artificial and natural.Room sizes relative to intended use.Age of Kitchens and Baths.Bedroom and Bathroom layout and size.Bedroom and Bathroom layout and size.Number and size of closets.Available storage space.Views from house.
LIVEABILITY
Look at cosmetic condition, chipped paint, doors closing, windows and screens.Envision your furniture in this house..Check age of systems: AC, hot water heater, stove, and others.Try and gain a feel for the house. Sit down and lean back in it.
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CREATE YOUR PERSONAL
CHECKLIST OF IMPORTANCE
1. Is this house close to your work, schools, shopping, recreational facilities or any other important part of the area?
2. Is the neighborhood attractive and well-maintained?
8. Is there privacy?
9. What is the condition of the roof?
10. Is the siding located above grade? If brick, are the courses free of cracks and crumbling mortar?
3. Have you visited the area schools?
4. Did you meet the administrators?
5. Is the yard higher or lower than the neighbors?
6. Is the home oriented for maximum benefit from the sun?
7. Is the view pleasant and can it change?
11. Are the exterior walls free of bulges or depressions?
12. Are all the windows and doors sealed properly?
13. Are the windows double or single hung? Are they double pane/thermals?
14. Is the front entrance appealing?
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CREATE YOUR PERSONAL
CHECKLIST OF IMPORTANCE
15. Does the house welcome you?
16. Are your eyes drawn to a central element?
17. Is there natural light in all the rooms?
18. Does your furniture fit?
23. Is there enough storage space?
24. Are the closets big enough?
25. Do the bathrooms meet your needs?
26. Are floors be easy to maintain?
19. Is there sufficient wall space?
20. Do all interior doors open correctly into dead space?
21. Are the floors level, squeak-free and thresholded at the doorways?
22. Are there enough electrical outlets?
27. Does the layout offer privacy zones for you?
28. Is the Kitchen laid out well?
29. Is there enough counter space?
30. Are cabinets in good repair?
31. Are all counters well-lighted?
32. What plumbing lines are installed in the house?
(continued next page)
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CREATE YOUR PERSONAL
CHECKLIST OF IMPORTANCE
33. Is there a laundry room or laundry closet?
34. Is shelving installed for storage of cleaning supplies?
35. Do the bedrooms get natural light?
36. Are the ceiling fixtures
40. Is the garage free of odors?
41. Does the garage door opener operate smoothly?
42. Where is crawl access?
43. If so equipped, is the deck in good repair, 36. Are the ceiling fixtures
and ceiling fans on separate circuits?
37. Are there blinds or shades installed? Are they in useable condition?
38. Are there window screens mounted to the house?
39. Is the staircase well-lighted and the handrails secure?
deck in good repair, especially the railings?
44. Do all exterior lights work and do they provide enough light?
45. Where do you see yourself spending the most time in this house?
46. Are the hallways and bedrooms protected by smoke detectors?
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RECORDING THE RESULTS OF
YOUR TOURS
Once you have left a prospective house, try to grade it numerically overall and note its positives and negatives.
If you can, take a few minutes to stroll up and down the street. Look for the same standard of care you will be setting for your home: well-kept grounds, organized garages and yard.
As you tour, you may arrive at a scheduled house which just doesn’t appeal to you. Tour it anyway. Every property you go through educates you on what your price range offers. A house not overly appealing from the outside may be heaven inside.inside.
Look past the paint color you don’t like, or the carpet which looks like Grandma’s. Painting and carpet are relatively cheap to change if the house has all the attributes you need and want.
When you do walk into that “I gotta have this” house, DO NOT announce it aloud. Just tell your agent, quietly. Preserve your bargaining power by showing - not disdain - but objectivity about the home even though inside your heart is pounding and you can already see how your holiday decorations and entertaining will work.
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WHEN YOU DECIDE
TO MAKE AN OFFERBuying a new home is an emotional decision tempered by the size of your bankroll. It is not, and never will be a true business decision because too many important memories are created in a home and bonding with a house has to happen.
But there is no reason that the emotional appeal of a house shouldn’t be balanced against its financial aspects, especially in regard to necessary updates.
Be honest with yourself on the condition of the house. If it is run down, you will be spending money and time to fix it up. run down, you will be spending money and time to fix it up. That money, that time, may well never be recovered when you sell the house in the future.
Take the time to walk the neighborhood. Look at the house from every possible angle. Introduce yourself to the neighbors. Make the effort to drive to your place of business to get an idea of your drive time every day.
Review with your agent the comparative market analysis on the neighborhood. Make your offer be consistent with the values the analysis provided.
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ESTABLISH WHAT THE
HOUSE IS WORTH TO YOU
Any home is worth exactly what you or other buyers
are willing to pay for it.
The comparable statistics of a neighborhood’s sales
provide the current ranges of prices paid for homes
in it and should be your guide.
If you purchase your home within those ranges you
will have the greatest chance of a successful
investment.
Other elements to consider center on the condition
of the home and its grounds and the age of the key
components in the house.
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KNOW THE TERMS AND
CONDITIONS IN YOUR OFFERUnder real estate and contract law, until all terms and conditions are agreed upon in writing by all parties, there is no contract in place. It is easy to assume that during the offer/counter offer process there exists an understanding between buyers and sellers. There is, but no contract exists until any and all changes are initialed by everybody.
The contract elements considered terms are the selling price, earnest money deposit, down payment and all other financial costs, concessions or credits plus the timing of the purchase closing. Items conveying with the property can also be considered as a term of the sale.
Conditions relate to those circumstances surrounding the purchase which are not financial in scope: repair status, property condition, contingencies related to inspections and Property Owners Associations, settlement agent, appraisals and timetables related to those conditions.
Acceptance in writing by all parties of any and all provisions changed marks ratification of the contract; makes it enforceable and starts the timing on the contingencies within it.
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LEARN WHAT MAKES
A CONTRACT ENFORCEABLEUnless your contract was written to accept the property in “as-is” “where-is” condition, you will normally have established a contingency on its closing centered on your acceptance of an inspection by a certified home inspector and by a termite and moisture inspector.
Additionally in Virginia the state mandates that you must be provided specific information relating to the property owners’ association in which your new home is located. Until that information is made available to you and an additional 3 days of study, you have the right under Virginia law to terminate the contract unilaterally with no loss of your earnest money contract unilaterally with no loss of your earnest money deposit.
Any and all contingencies operate under a timetable set forth in the contract or the contingency itself or, in the case of property owner or condominium owner documents, a state law.
Those timetables are expressed as “Time is of the Essence” meaning that the dates are absolute, there is no grace period. If five days is expressed, it’s five calendar days, period. The homebuyer’s inspection is the most important contingency.
Contingency removal is the last step before going into the closing phase of the contract and purchase.
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KNOW THE CLOSING PROCESS
IMMEDIATE STEPS TO TAKE:
Submission of contract to the Lender and Settlement Agent allows a file number to be assigned in both instances, the lender can submit the contract to underwriting and order the appraisal; Settlement Agent can order title search and title binder, survey and requirements of insurer.
Termite and Moisture inspections must be scheduled if not included with the home inspection. The inspection reports are forwarded to the seller if any corrective action is necessary and the final letters indicating a problem-free premises are sent to the Settlement Agent.
LENDER REQUIREMENTS:
Your lender will require additional documentation from you as the package proceeds through their underwriting department. Some of the steps the underwriter takes are: verification of income, assets, credit standing, appraised value of the property, presence of homeowner’s insurance, clear termite and moisture letter, homeowner association in compliance with state and federal law and the property’s flood zone and elevation.
SETTLEMENT DATE:
Within the body of the contract both buyer and seller agreed to a specific date of settlement. There is a grace period allowed if, and only if, the loan processing is not complete or a title problem is found.
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CLOSING DATE, FEES AND COSTS:
CLOSING DATE:
Within the body of the contract you have specified a date of settlement which is commonly referred to as the closing date.
Your lender will work closely with the settlement agent you as a buyer have chosen. All funds will pass through the settlement agent’s escrow account. He will make all necessary payments on your behalf and will also disburse any money due the seller, his lender and any and all others who will be paid at settlement.
LENDER FEES AND PREPAIDS:LENDER FEES AND PREPAIDS:
Your lender will charge fees for the loan and its processing; will require certain future costs be prepaid, such as property taxes and insurance. These costs of settlement must be made known to you from the beginning of the process and more importantly at the time of your official loan application.
TRANSACTION DOCUMENTS:
Under Federal law, your lender must provide a Consumer Disclosure of all the payments, credits and debits which are occurring as the ownership of the real estate, your new home, is transferred. The deed and any deeds of trust must be recorded with the jurisdiction in which the property is located.
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CRITICAL TASKS FOR YOUR MOVE
TO A NEW HOME
Arrange for utilities and communication service, sewer and water service.
Determine refuse collection timing, including recycling collection. Research special collection procedure and cost, if any.
Provide the U.S. Postal Service with change of address and forwarding information.
Provide change of address information to your bank, credit union or other financial institutions including all credit card, insurance carriers, magazine subscriptions, club memberships and all other entities which will need a correct address.
Register, if applicable, your children in the schools to which the neighborhood is assigned.
Change your driver’s licenses and automobile registrations to your new address. Virginia’s DMV accepts changes on-line.
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WHAT ELSE SHOULD I KNOW?
Ask Paul Fuqua or Joyce Carcaise.
They have years of experience in real estate, business, marketing, government, sports and education.
When you ask them a question, you get When you ask them a question, you get an answer. They are honest, dependable, well-schooled and well-known agents whose track records are witness to success.
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WHY ROSE & WOMBLE?
Why are Joyce Carcaise and Paul Fuqua at
Rose & Womble?
In its basic philosophy, the firm reflects their dedication to excellence.
Paul Fuqua: [email protected] 757-449-7463
Joyce Carcaise: [email protected] 757-324-2445
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