The Seven Steps to Purchasing Your Home

If you have never purchased a home, starting the home buying process can feel overwhelming. How do you get a home loan? Do you qualify? How do you pick a home? Who writes the offer? What happens when you are under contract? These seven steps will help guide you through the home purchasing process.

Step One: Choosing a Real Estate Agent: My first recommendation is to find a qualified real estate agent in your target area to help guide you with the home buying process. An experienced real estate agent can be a fountain of knowledge. They know the area and are familiar with sale prices; they have recommendations for lenders, inspectors and title companies.  Your real estate agent will request your home criteria andset you up on a saved search (email updates when new homes matching your criteria hit the market) and schedule appointments to view properties.

Step Two: Obtaining Pre Approval: This step actually goes hand in hand with Step One because your real estate agent will more than likely ask you in the beginning; how you plan on purchasing your home? Unless you have cash available in the bank, you’re going to be using a home loan. Your home loan will most likely be a conventional, FHA or VA loan, depending on your down payment, credit history, and military status. Once you find a mortgage lender that you would like to work with, they will ask you basic questions regarding your financial and employment status. Most lenders will also request documentation (pay stubs, bank statements etc;)  to verify the verbal information that you provided, which is very useful for your pre approval letter. In today's active market it is very important that you obtain a pre approval letter from your lender prior to beginning your home search or submitting an offer. The pre approval process will allow you to determine a more accurate price range and it will inform sellers that you are a serious and able buyer.

Step Three: Writing the Offer: Once you select the home you would like to place an offer on, your real estate agent will look at comparable properties that have sold within a mile radius or within the specific community to establish a good initial offer based on recently sold comparables in the last 6 months. In addition to negotiating the sales prices there are many other terms within the purchase offer that can be negotiated, such as; closing date, earnest money, closing costs, condition of the home, home warranty and inspection period, your agent will go over each item with you.

Step Four: Execution of Contract: Once your offer is accepted. You will pay the option money (out of pocket expense) and the earnest money, typically 1% of the sales price but negotiable (out of pocket expense). You should receive a credit at closing for both the option fee and earnest money unless you choose not to (option fee). Once you have an executed contract, your real estate agent will send a copy to your chosen lender. Your lender will then contact you to begin the financing process (loan application must be signed, additional documents submitted, financing terms agreed on and conditions met etc.;)

Step Five: Option Period and Home Inspection: The option fee that you pay to the seller buys you the period of inspection, the duration of this period is based upon the negotiated number of days in your contract, it’s typically 5-10 days but can be more or less. During this time is when home inspections occur. The home inspector is a third party inspector of your choice. Home inspection costs vary depending on the size of the home and the prices of the home inspector you select. This is also an out of pocket expense and will NOT be credited to you at closing. It is highly encouraged that you and your real estate agent attend all home inspections in order to fully understand the condition of the home that you are purchasing. After the inspector is done with his report he will provide you a copy that can also includes pictures. From this point, if you wish to either ask the seller to make repairs or provide funds for the repairs your agent must do that within the option period. If for any reason you wish to back out of purchasing the home it must be done within the option period to receive your earnest money refund from the title company (not the option fee).

Step Six: The Appraisal: Once the home inspection and negotiations are completed we will ask the lender to order the appraisal, this is another out of pocket expense for you as the buyer and the price will vary. It is important to discuss this cost with your chosen lender upfront to be sure you have the funds required. Appraisal fees are typically credited to you at closing as well.
 

Step Seven: Closing: From the moment the contract is executed Title is opened on the home either at a Title Company of the buyer’s choice or the seller. When a home is purchased through financing it can take 30-45 days to close. Title is responsible for reviewing and preparing your deed to the home as well as communicating with your real estate agent and lender to work towards an on time closing. Your closing will take place at the title company unless you are unable to attend, in which case you need to notify your real estate agent in order for the title company to make arrangements for you ahead of time.

There are many moving parts to purchasing a home and also many unexpected circumstances that pop up during transactions. It's extremely important that you choose to work with an experienced agent that can guide you through the entire home purchasing process. 

 

How to Prepare Your Home for a Home Inspection

Photo by travellinglight/iStock / Getty Images
Photo by travellinglight/iStock / Getty Images

There are a number of things that can be done to prepare for a home inspection.  The buyer or real estate agent should work with the seller to ensure that: 

  1. The utilities are turned on
  2. Pilot lights are lit for any heating or cooking appliances that will be inspected
  3. Heating units are accessible
  4. Electrical panels are accessible and unlocked
  5. The attic area is accessible and cleared of stored items
  6. Crawl space entrances are accessible and unlocked, and that they are not screwed or nailed shut
  7. Showers and bathtubs are free of stored or personal items
  8. Sinks and dishwashers are cleared of dishes, and the area beneath all sinks should be free of stored items
  9. Any pets are secured for the inspector's safety
  10. All items and areas to be inspected are readily accessible

 
1.  The utilities are turned on.
      

      Electric, gas and all other utilities should be working so that your inspector can properly test and operate all the systems and components in the home. Some home inspectors may charge a fee to return to the home and inspect anything that they could not properly inspect or test the first time, so don't overlook this!


2.  Pilot lights are lit for any heating or cooking appliances that will be inspected.

     
Home inspectors will NOT light pilot lights for stoves or heating units. These units need to be operational at the time of inspection. Put yourself in the inspector's shoes for this one: would you want to walk into an unfamiliar home and ignite an appliance that may not have been properly maintained or repaired? For an inspector, it's an invitation to a disaster or a lawsuit, and a home inspector WILL NOT take that chance. 


3.  Heating units are accessible.

    This means that the area around the furnace, boiler or other heating appliance is free of stored items and clutter. Your home inspector is not required to (and in most cases WILL NOT) move items away from the heating units in order to do his or her job.   


4.  Electrical panels are accessible and unlocked.


    All electrical panels and sub-panels should be readily accessible so that the inspector can remove the panel cover and inspect the wiring within. Also, be aware that a home inspector may refuse to inspect an electrical panel if part or all of the panel or distribution box is wet, or shows signs of fire damage or short-circuiting.

5.  The attic area is accessible and cleared of stored items.


     The attic of a home is a very important area. By inspecting the attic, a home inspector can diagnose the causes of roof damage or premature roof failure, mold, ice dams, and many other problems with the home. This area should be readily accessible. Your home inspector needs to be able to get into the attic, first of all. Scuttle holes, walk-up accesses and pull-down stairs should be unobstructed and free of stored items so that an adult male can enter freely. If access to the attic is gained through a closet ceiling, then the closet area should be free of clothing and other stored items in order to allow the inspector to place his ladder there and climb into the attic. 

    In the attic area, be sure that all areas of the attic are visible and accessible. Remember - a home inspection is a visible evaluation of the home....if it is not visible, it cannot be properly inspected.  

6.  Crawl space entrances are accessible and unlocked, and that they are not screwed or nailed shut.

    Another important area of the home is the crawl space. Let's face it...nobody likes to go down there. Crawl spaces hold all kinds of unsavory things: rodents, snakes and spiders, not to mentionplumbing, electrical and structural components that are rarely seen. So it stands to reason that the crawl space is one of the least maintained areas of a home, but one of the most important.  Be sure that your inspector can gain access to the crawl space to view the floor structure, wall structure and any plumbing or electrical components in that area of the home. If you contact a home inspector and they state that they do not inspect crawl spaces, look for another home inspector. But be aware that your inspector is within his rights to refuse to enter a crawl space if the area presents an obvious health hazard such as standing water, leaking sewage, evidence of rodent activity, evidence of snakes or other life or health-threatening situations. 


7.  Showers and bathtubs are free of stored or personal items.


    One aspect of the plumbing inspection is running water into tubs, showers and sinks in order to look for leaks and obstructions, and to ascertain that the plumbing fixtures are in good working order. Obviously, if the tub is full of clothes or other items, your inspector will not run water into it and will not be able to properly inspect the plumbing components.    

8.  Sinks and dishwashers are cleared of dishes, and the area beneath all sinks should be
     free of stored items.


    A home inspector needs to be able to see and freely inspect the plumbing and drainage components for sinks, dishwashers and garbage disposals. Be sure that the inspector is able to access these areas so that YOU can be sure that everything is in good working order. 


9.  Any pets are secured for the inspector's safety.


     Even chihuahuas can turn into Cujo when a new person shows up in their home. You, or the home seller, may think that the dog is not a threat, but bear in mind that the dog doesn't know the home inspector, and the home inspector doesn't know the dog. Unfamiliarity can sometimes breed contempt: the dog has never seen the inspector and may view him or her as a threat. Your inspector is there to sniff out problems in the home, and may not have an extra half-hour to gain Fido's trust. It is always best to tie or otherwise secure any pets during a home inspection. An important note about cats; cats may not pose a threat to the inspector but cats love running out of the house and getting into the attic. Nobody want to spent hours looking for the lost cat. Please secure them too.

10.  All items and areas to be inspected are readily accessible. 


    This may seem redundant, after discussion about crawl space accessibility, attic accessibility, etc. But it bears repeating. 

    Home inspectors will not normally move items out of the way to inspect systems or components, and most inspectors will take pictures of obstructed areas to document that there were items in the way at the time of inspection in order to absolve themselves from litigation issues. So if an area is not accessible and visible, the home buyer is ultimately the person who is short-changed after paying several hundred dollars for an inspection.  In my experience, home inspectors are very qualified in general...rarely have I encountered a home inspector who doesn't take their task seriously. But a home inspector is only as good as their accessibility. 

** Home inspection information provided by: 

Carlos Roca

Certus Home Inspections

2506 Llano Springs Dr

Katy, TX 77494

832-378-7622

CertusHomeInspections.com

Navigating a Multiple Offers Market

In an ideal market finding the perfect home shouldn’t be a stressful process, on the contrary that’s the fun part. Houston’s current market conditions are anything but fun, unless you're a seller. I understand firsthand how stressful a limited inventory market can be. You save up enough money for a down payment, you obtain or maintain a great credit score in order to be able to qualify, you search online and find the home that you know is perfect for you and then it’s gone, it was gone before you even signed the offer. That’s the stress of a multiple offer market. 

Questions I hear from my buyers:

Should I increase my price range?

You don't have to increase your price range but I would definitely discuss different financing options available with your Realtor and lender. It's extremely important that you understand the market that you are looking into so you don't miss out on available options. There are many creative financing solutions that you can take advantage of in order to increase your competitiveness. Also, there are other terms of your offer which your Realtor can explain to you that can be modified in order to present a more appealing offer. 

Is the Price Negotiable?

Your initial offer is very important. If you’re looking for a deal….you might want to wait for the market to settle down a little bit. Your Realtor should be educating you on market conditions, if you love the home make sure your offer is strong because chances are if you love it so does someone else. However, not EVERY home is flying off the market pay close attention to DOM (days on market) which greatly increase your chances of negotiating a more favorable deal. 

Should I Look in Another Area?

You can change the interior of a home, some of the exterior but you can’t change the location of the home. Focus your search on the areas where you WANT to live. It is always easier when you have more than one option so explore the city and surrounding communities, you might fall in love with an area you weren't orignally considering. 

Should I Postpone My Search?

I wouldn't recommend it. Especially, with the increasing home prices that are very prevalent in and around Houston. Houston still is a very affordable city. Just keep in mind that it might take more than one offer (stay  and remember to be competitive if the market supports the price. 

In Summary:

Know your market and understand your financial standing within that market.