The job of a Realtor® is to help home buyers throughout the entire of finding and buying a home. This can take days, weeks or even months, depending on your situation. In order for an agent to best serve you, they will need to spend time learning more about your needs. If you are a first-time home buyer, it will take more thought and study to determine what needs you have. If this is not your first time purchasing a home, you will have a much better idea of what you want in a home. Regardless, even the most experienced home buyers will benefit from working with a seasoned real estate agent. They will have a good working knowledge of the available home inventory in your market. The right agent will save you time and open up opportunities you otherwise might not get. The best part: many times, a buyer’s agent is compensated by the listing broker, meaning you have no out-of-pocket costs to use an agent. That’s important when you’re already paying for the down payment, inspections and other closing costs.
Financing
The first step in your home buying process should be determining what money you’re willing to invest in your next property. Some people pay cash, but many use some combination of cash and financing. Knowing what a bank will allow you to borrow and what that looks like in terms of cash needed to close and monthly payment is crucial. Going through this process with a lender is often called getting preapproved. The lender will review your information and provide you with a tentative commitment to lend you money for the purchase. Sellers of any properties you would want to purchase will expect you to have this completed before seriously entertaining any offer from you. If you wait to get preapproved until you find the perfect house, another buyer will likely already have this step completed, and they will be the one the seller wants to work with. I can’t stress this enough to first-time buyers.
Locating The Right Home For You
A buyer’s agent should take comprehensive approach in determining what buyers are looking for in a property. Location, features, timeframe and price are often the most important. Adjusting this criteria throughout the process should help you find the perfect home. Focusing on what you like may sound like an obvious first step, but sometimes the ease of looking at 1,000s of homes online can become overwhelming. Once you know roughly what you’re looking for, your agent can start showing you houses in person! Walking through the houses can be much different than only seeing the pictures online. You will likely need to adjust your search once as you move throughout the process.
Negotiating The Best Price And Terms
After locating the right home for you, the next step is to write an offer and hopefully get it accepted by the seller(s). Before your agent writes and negotiates an offer on your behalf, you’ll want to have a good strategy to be sure all of your needs are met. Price is only one of many terms that make up an offer. Is your purchase contingent upon you selling your current home? Are there certain upgrades or help with closing costs you’d like from the seller? Sometimes it’s easy for home buyers to lose sight of what they really want, because they’re focused on getting a steal of a deal. Remember, years from now, when you’re looking back in this purchase, you’ll realize that paying a fair price for the right house is almost always better than getting a “deal” on the wrong house.
Example
You’ve been looking for a while and find 1234 Main Street. It’s the perfect house. The sellers are asking $369,000 and the house is likely worth closer to $375,000. How do you decide what to offer?
You know houses in this neighborhood are selling fast, but are worried about paying too much. One approach is to offer low and increase your offer until you and the seller meet in the middle. Depending on the market, this strategy could mean that another buyer ends up living in your favorite house. For that reason, it may be best to make a strong initial offer. Imagine holding firm with a $365,000 offer only to find out that the house sold to another buyer for $370,000. Keep in mind that this $5,000 difference would cost you about $32/mo (assuming 6.5% interest on a 30yr mortgage).
A good agent spends a lot of time and effort studying the market, and will know the best strategy for getting the home you want at the best price. They will know things like: what similar houses have sold for, what current inventory looks like, what showing activity as been, what are the listing agent’s tendencies, what is the seller’s motivation, and what other offers are on the table? By understanding how your needs align with the current market, your agent can help develop the right offer with the best negotiation strategy, and ensure the highest probability of getting the home you want for the best price and terms.
Inspections And Repairs
After getting your offer accepted, you usually have a certain amount of time to have the property inspected by a professional (10 days is standard).
There are many different elements of a property to be inspected such as:
- Structural and Foundation
- Roof
- Mechanical equipment: Furnace, Air-Conditioning, and Ventilation
- Plumbing
- Electrical
- Pests & Infestation: Termites, etc.
- Environmental Hazards: Mold, Radon, etc
- Well & Water Quality
- Sewer & Septic Systems
A whole house inspection will provide a general overview of the standard items in a house. Some items will require additional inspectors, or further evaluation by a specialist. Regardless of whether a home is brand new or 100+ years old, there will be dozens of little things noted by the inspector. The purpose of the inspection is to provide you with information about the house (good, bad, or otherwise). While most of the time, things found by inspectors aren’t a major concern, there can often be more serious defects found as well. A good agent can help you determine how to address these issues. If there are any “deal breakers” found, you only have a certain amount of time to address them with the seller, as outlined in your purchase contract. Most of the time, your options for proceeding are as follows:
- Accept the property as-is (no issues or nothing major)
- Request the seller correct certain issues (you won’t have total control over repairs made by the seller)
- Request the seller credit the buyer for certain issues (this often does not put money in your pocket to make repairs)
- Cancel the contract completely
It’s not uncommon for there to be another stage of negotiations between the buyer and seller based on the inspection results. Again, it’s important to keep the big picture in mind when handling this 2nd round of negotiations. Some issues will be serious enough that you will be willing to walk away if they’re not handled properly. Other issues are minor enough to accept without giving up on the property. Sometimes it takes a little creativity to find a solution that works for both the buyer and the seller. An experienced agent can help keep the deal together in these situations.
Making It To Closing
It’s a very exciting and often stressful for home buyers as they navigate through this purchase process. However, once a buyer gets through the inspection and appraisal phases, they can typically relax as they now wait for their closing date. However, the agent’s work continues. There are literally dozens of tasks to complete and deadlines to meet. Here is a quick recap of some of the important milestones the agent must assure are on track to get the purchase contract to the closing table:
- Deliver ratified contracts to all parties (agents, lenders, title company, etc)
- Deposit of earnest money and delivery of receipt
- Order title commitment
- Assist buyers in scheduling inspections, meeting inspectors, and obtaining reports on time
- Helping buyer determine next steps after inspections
- Coordinating delivery of inspection results, or title issues and resolutions to all parties
- Assist seller’s agent in hiring quality and affordable contractors as needed
- Monitor progress and completion of repairs; collect documentation of repairs
- Schedule re-inspections upon completion of repairs
- Coordinating appraiser access
- Monitoring loan status and assisting to obtain necessary documents from buyer
- Assist buyer with common real estate related tasks
- gathering utility contact information
- contractor referrals
- general research and tips – ask your agent anything, they’ve done this before 🙂
- Schedule closing
- Schedule final walk-through
- Review closing documents prior to closing date and request corrections as needed
- Facilitate transfer of keys, garage door openers, and other items to buyer
Proper follow-up and coordination by your agent will keep everything moving along as smoothly as possible. As mentioned, a Buyer’s Agent commission is typically paid by the seller, which means all of this work often is done on your behalf…at no out-of-pocket cost to you!
Justin Rollheiser – REALTOR®
Keller Williams Realty | Diamond Partners Inc
13671 S Mur-Len Rd | Olathe, KS 66062
Direct 913-800-7653
Office 913-322-5878
www.JustinRollheiser.com
Comments or Questions?