Be a Brilliant Home Buyer

There is nothing I can write to control interest rates or affect the overall availability of homes. This information is to make sure that a Buyer is in the best position possible to win a contract, make it to a successful closing, protect their investment, and own the property in the way that is best for their situation. It also reflects the need for the buyers to surround themselves with carefully chosen professionals to guide them through the process.

Choose the Right Real Estate Agent

• ?In Georgia, there are real estate agents and Realtors?. All real estate agents are licensed by the Georgia Real Estate Commission . Many real estate agents also join the National Association of Realtors? and become Realtors?. Realtors? undertake additional education and are subject to the Realtor? Code of Ethics.
• Agents come in all negotiating styles and personality types. Before you agree to work with your sister's co-worker's best friend, consider speaking with a few agents and pick one that matches your preferred style. This person will be helping you with one of the biggest financial decisions you will make in your life.

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Make Smart Lender Choices

• Choose your lender carefully. If you list a lender on the financing contingency in the Georgia Association of Realtors? contract, you need to use that lender. If there are issues later in the process, this is the only lender who can issue a loan denial letter and let you retain your earnest money during your financing contingency period.
• Seek approval before you go house hunting. Many lenders now offer a pre-approval process which is different than a pre-qualification. A pre-qualification uses basic self-reported information from a buyer to estimate the amount of money the buyer will be qualified to borrow. It may involve pulling credit but also assumes the information given is accurate and there are no surprises. A pre-approval requires the lender verify assets, credit, and income information from the original sources. Lenders usually label this pre-approval process with special programs names. What a buyer would be looking for is a program that verifies and confirms everything. The only thing required for final full approval is a property with a sufficient appraisal. This gives more assurance to a seller that the transaction will close successfully so the seller will prefer this buyer over another buyer who has not been pre-approved.
• If you plan to pay cash from invested funds, talk to your financial advisor before you go under contract. Many buyers who speak to them afterward are advised to borrow rather than liquidate assets. If you decide to borrow instead, it is best to figure that out at the beginning of the process and go under contract accordingly.

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Do Your Due Diligence

• Get a home inspection. Most agents will recommend that you have the home inspected. This is a great opportunity to look at the property in-depth with a trained professional. They will check out all of the major systems in the home. They are generalists so other experts may need to be hired if there are special areas of concern.
• Get a termite inspection. The running joke in Georgia is that there are only 2 types of properties - ones that have had a termite infestation and ones that will have one. Many homeowners have a termite bond that the buyer will want transferred into their name after closing. Bonds come in 2 varieties: (1) retreat and (2) retreat and repair. Both get rid of the termites; the latter also repairs the damage the termite did while in residence. Properties may have preventative measures to prevent termite damage - soil treatment prior to the home construction or a termite baiting system which can be installed at any time in various locations on the property and surrounding the home.
• Get a land survey. Everyone should; almost no one does. Result - no one really knows where their property lines are. The seller will confidently point out the property lines but rarely have any evidence that what they are describing is accurate. Why don't buyers get surveys? Lenders may tell them they do not need one and it is a good way to cut costs. Agents may also tell them that they have title insurance coverage for surveys. The lender's title coverage for survey matters is different that buyer's coverage. Buyers need to understand that not all title policies cover survey matters and those that do have deductibles and limits of liability. Also, wouldn't it be better to know with certainty where your property lines are?
• Be aware of environmental concerns and inspect accordingly. Lead-based paint was used in homes built prior to 1978 and can also be found in newer homes if older "reclaim" elements were brought into the home for architectural effect. Sellers are required to disclose these risks under federal law and the buyer has the right to opt to inspect for the presence of lead and terminate the contract if it is found. Radon is a naturally occurring radioactive gas that can concentrate in indoor spaces. If high levels of radon are found, there are a number of mediation systems which may be used depending upon the radon levels, the size of the home, and the type of foundation.

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Decide How to Take Title

• Are you buying under a company name? Go under contract in the name of the company. The seller does not have to allow the buyer to assign the contract if the buyer goes under contract in their personal name and then tries to change it later. If the buyer is getting a loan, the buyer needs to find a lender that will loan to an LLC. Buying and borrowing in your personal name and transferring the title to a company later is a default of the loan under the Due on Sale Clause.
• Do you have a Trust? A transfer into a trust, even with a loan involved, is an allowable transfer. Whether the buyer is buying in the name of the Trust in a cash transaction or borrowing and transferring the title to the Trust, the closing attorney will need the Trust Agreement or Trust Affidavit prior to closing giving them the full name of the trust, the date of the trust, the trustee(s), the powers of the trustee(s), and confirmation that the Trust Agreement was fully executed.
• Do you want to add other people to title? Transfers to spouses are allowed, even with a loan involved. Do not wait until the closing attorney is handing out checks and documents at the end of the closing to ask for your spouse to be added. Tell the attorney ahead of time so that they can do the necessary title and "OFAC" searches required for buyer and prepare the transfer deed. Transfers to children are allowable but adding a minor to title will require a court order later to sell or refinance the property until the child reaches majority. Significant others cannot be added to title under the Due on Sale clause. In order for a non-spouse partner to hold title, the lender must include this person on the owner documents, including the Security Instrument, so that the closing attorney can include them on the ownership deed.

Buy Title Insurance

• What is title insurance? It is an insurance policy that protects a buyer from issues that are found after the closing. These may come from title examiner error, government errors in the tax or recording offices, forged documents, incorrect legal descriptions, fraud, etc. While historically title policies covered errors and issues from the past, enhanced title policies now also cover for fraud after-the-fact. This is when someone attempts to take title to the property after the buyer purchases by forging documents.
• What does title insurance cost? The price is a one-time fee based upon the value of the property or the sales price. There is a discount for title insurance in Georgia when a lender’s policy and an owner's policy are purchased at the same time. Lenders will require title insurance as a condition of making the loan. Owner's policies are optional but are highly recommended and are included in the settlement unless there is a specific request of the buyer to remove it. If removed, the buyer will be asked to sign a confirmation that they are assuming the risks of error or omission or fraud in the title and tax records.

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Ask as Many Questions as You Want!

?Real estate transactions have a lot of moving parts. Most of the people in the process have done this thousands of times. We sometimes use short-hand phrases and make leaps in thinking because of this. The lender, the agent, and the closing attorney should always be ready, willing and able to answer any questions and explain any part of the process so that you can feel confident and informed as you make one of life's biggest and most rewarding purchases.