The basics of a Real Estate transaction (residential).
The basics of a Real Estate transaction (residential).
Ever wonder how to buy a home? Scared to even ask? Feel like you can’t do it? Maybe it’s just to complicated. Well, if you’ve read my prior posts you know how amazing and beneficial owning a home is. Maybe, you need to put yourself out there and see if it’s possible. With a good lender, a solid tax refund and a good realtor, owning can be attainable.
Remember my mission statement, “ To provide the finest service with a trustworthy, caring and educational approach.”
Let’s get into it… The #1 most important thing to know and obtain, the almighty……..
Pre-Approval Letter…
Without it your dead in the water. It doesn’t matter how much you can pay, put down or how much you love the house, you need this letter. What is it? It’s a written statement from a lender stating the lender’s preliminary determination what a borrower can approve for, based on some guidelines. The guidelines… stretch from your income to your debt to your credit information. It’s an in depth analysis of those numbers that gives you your buying power.
There are different types of loans with different benefits that can include down payment grants and closing cost help. This is will be addressed in another post.
Shopping time…
You have the Pre-Approval letter and now you know what you can afford. This process is different for everyone, you may see 5 homes, make 2 offers and then get accepted. You could see 20 homes, get rejected 10 times and get accepted on the 11th try. There’s a handful of reasons why it can go one of many ways. But, the key is to remain realistic and confident that you’ll get the house that is for you…… SO, now you get accepted and its ESCROW TIME…
Escrow time…
EMD… earnest money deposit. You have 3 days to get it in and it’s usually 3% the accepted price. This is the deposit showing your promise to buy the home. This money is included in your down payment, don’t worry.
Contingency period…
This is the make or break period and where deals succeed or not. These contingencies are apart of most deals, especially those dealing with some type of financing.
1. Physical Inspection… get this done as soon as possible. This is a simple inspection of the house by a professional that checks every part of the house that is reachable. The keyword here is “Reachable”. This includes the major systems like plumbing, AC, bathrooms and the roof.
A request for repairs is made up and the parties negotiate from there. Be careful don’t be nit picky, go after health and safety issues. A lot of deals can die during this period over the littlest of things.
2. Termite Inspection… depending on how the deal is written and what needs to be done dictates the process. The seller in most cases will and should pay for this. Things get a little dicey when the house needs to be tented. In my experience, it’s about 50/50 if it needs it, especially here in So. California. Clearance is given by the termite inspector once the work is completed.
3. Appraisal… this report is ordered by your lender and is done early in the process. This is a report done by a professional that puts a value on your purchase. It takes a look at, neighboring like homes and what they sold for. Appraisal issues do pop up time to time and can be difficult to navigate around. When the appraisal comes in short of the agreed upon price, a few things can happen. The price can be negotiated down to the appraised value, you can meet half way with cash, make up the value with cash or kill the deal. The lender will only lend on the appraised amount so the additional value will have to be made up with cash.
4. Clear Title… title to the home must be cleared by owner to buyer before the deal can be closed. The list is long with issues that put a cloud on title. This rarely kills a deal. Items can include things like loans against the house, unpaid taxes, mechanic leans and even unpaid alimony.
5. Loan Approval… Usually the last thing in the contingency period. The lender has their appraisal, now it’s time to cross the t’s and dot the i’s. DO NOT make any large purchases when buying a home, especially in escrow, it can alter your loan numbers and kill your deal. Wait till escrow is closed. Wait on furniture and appliance purchases.
The contingency period as a whole usually has 17 day limit on it, unless an extension is filled and signed by both parties.
Lastly….. Loan Docs, Funding and Recording
once you have loan approval you go and sign loan docs that will include the grant deed. This is finalizing the loan and getting you on title.
Then finally the loan funds into escrow and the property records with county. The rest of the down payment is due. Depending on what county you’re in this could be on the same or in consecutive days.
Beware, in a lot contracts the statement COE plus 3 days exists. This simply sates that the now seller has 3 days after the close of escrow to vacate property.
Concluding…
Thanks for taking the time to read this post. Understand, that every residential deal has it own path from start to close. This is a simple skeleton model of how it will go.
If you have further questions, call me (626) 824–3768. Visit my sites ajcorsini.dilbeck.com, realsatisfied.com/aj-corsini, facebook.com/AJCorsiniRealEstate/
“ To provide the finest service with a trustworthy, caring and educational approach.”