The Top 5 Tips For First Time Homebuyers !

I decided to spend a moment and focus on buyers for a moment.  I have a lot of information for my sellers, but when it comes to working with buyers I would have to say first-time home buyers are my favorite.  Perhaps I like the "challenge" but it is a different kind of reward when you hand someone the keys to their very FIRST new home ! 

Get Your Finances In Order

Before you start working with a buyer broker, getting a mortgage pre-approval is a must.  I have seen too many homebuyers starting looking before they find out what they can afford.  The result is disappointment that you may have looked at some wonderful homes that turns out does not fit into your budget.   Most licensed brokers will have reliable, and attentive mortgage brokers they work with that they will be able to refer you to. 

Know The Language 

Know the terminology of real estate, you want to understand what brokers are talking about.  Short sales vs Foreclosure, there is a very big difference.  You want to be sure even when you are looking without an agent you have a good understanding of what everything is.  You need to understand the difference between Listing Agents, Buyers Brokers, and disclosure.  Listing agents obviously list the house, and work for the sellers.  Every first time home buyer should work with a Buyer Broker, they will provide you with information about the homes in the neighborhood your looking for, make sure everything the seller is representing is true !

Find A Good Buyers Agent

This is the most important part for a first time home-buyer, you are going to be depending on this person to help you make a life changing purchase.  You need someone who is okay with having to “hold your hand” so to speak during the process, not because you need it but it is a resource that is available to you.  I once stayed in a closing with my first time buyers for 5 hours, it was a short sale and the bank was having its own issue with paperwork which held us up.  Before leaving the attorney, pulled me aside to thank me for staying and explaining what was going on to his clients.                  

Decide What You “Must Have” And What You Would “Like To Have”

I had a home buyer once tell me that she would never purchase a ranch they would never give her the space she needed.  For the most part she was right, almost every single home that was a ranch would not meet what she needed to have.  Before we began looking I asked her to make me a list of her “must have”,  and “like to have list”.  Must haves are the number of bedrooms, a school district, or a price range.  These are things that if they did not have them it would be impossible to move to that home.  Fireplaces, pools, central air, these are all things that you would like to have but, you could live without.  These lists are different for everyone, in this clients case the home she purchased ended up being a ranch.  If we had limited the search she would have missed out on her “perfect home”. 

Should I Spend The Money To Have A Home Inspection?                                                                                                                                  

Absolutely. The $200 to $500 that a professional home inspection costs could be the best money you ever spend on your house. Not only does the home inspection seek out any defects (and gives you some peace of mind), the home inspector will often give you tips on maintaining and repairing your house. See the section on Home Inspections for tips on what to look for and how to choose a home inspector.

For more information on Buyer Brokerage Take a look at my virtual presentation ! 

What Happens After Your Offer Is Accepted

You have successfully gotten an accepted offer it may have been a quick simple negotiation or it may have been a bit of back and forth, but either way you have officially gotten passed one of the biggest parts of the home buying process ! This blog is specifically what will happen with a straight sale, there is a much different process for short sales & foreclosures, I will be writing another blog specifically about those in an upcoming blog.

The next 2 weeks are going to be a very busy time for you, because although your offer is accepted the homeowners will still show it to other potential buyers and place an offer on your dream home !! Lower offers or offers with less desirable conditions will be held as "back up" offers, but their is always a chance someone will outbid you and their offer may have terms that the owner may prefer. That is the reason why time is of the essence so your going to want to get things done as quickly as you possibly can !!

Before Your Offers Accepted - Call Your Mortgage Broker
Your realtor should have already developed a relationship with your mortgage broker, if they have not spoken to them they shouldn't wait any longer to get that relationship going.

Sometimes the seller will want you to get a 2nd mortgage pre-approval, this is not unusual in my business, because I work for a company who has their own mortgage company. A seller can not however tell you who to get a mortgage with, they can only request a pre-approval thru a specific company.

Step 1 - Sales Agreement & Attorney Review
This is a very standard form and is very important to your purchase, this is really sometimes the first step, but if you have had to negotiate and make changes to your original offer you will want to fill out a new updated one to send over to the attorneys. The buyer and the seller will fill this out independently and receive a copy. You attorney will review this document normally without any changes, because the contract will have the specifics credits or add-ons.

Step 2 - Home Inspection
Many companies will have a preferred list of home inspectors, if you already have someone. You want to have the home inspection as soon as possible, even with a first accepted offer. A home inspector should check for of course the obvious red flags: mold, mildew, termite damage, but you also want them to check to make sure of some other things you may not think of. Most will check to make sure that the hot water, actually gets hot, in older home this will take a bit longer but these are things that once you move in can become important. They will also check things in the attics, basements and crawlspaces.

Homes that are remodeled it usually only takes about an hour for a full inspection, and others usually take about 2 hours. You will get a full copy of the report, and they will talk to you about it before they leave the property.

Step 3 - Sign The Contracts
Now depending on how your home inspection went sometimes you will be just going in to sign contracts with no changes, but sometimes there will have been more changes because of things that came up during your home inspection. Remember your offer is still accepted, but now you are going to be changing the terms.

I can appreciate a seller does not want to have to do work to the home but remember no matter who the buyer is there will be a home inspection and if it is a significant problem it will come up again.  That being said sometimes buyers should be reasonable also don't let fear of losing the house force you to overlook a major problem but don't let a little problem cause you to loose your dream home either.

Now that you have completed those 3 steps you can finally take a deep breathe and celebrate a bit about the purchase of your new home.   There are of course a few more steps that will happen between going to contract and your closing, I will write another blog giving you the timeline and what you can expect to be doing next ! 

Why Should I Use A Real Estate Attorney ?

It is time for another blog directed for both the buyers and sellers at there whose home is either on the market, or are thinking about doing so.  The one thing everyone must be prepared to do is find an attorney that they like, and trust.  Don't just pull someone out of the phonebook, either ask your real estate agent for a referral to one that they have worked with before.  If you are a buyer, than you should be working with a buyers broker so your agent will be able to refer you to one as well.

Not all states require the use of attorneys during the purchase of a home, but even if you are buying a home out of state I always  recommend you use a attorney to protect yourself from entering into a contract that is not in your best interest.  That being said, it is time to get to the point of this blog which is why you should be using a REAL ESTATE ATTORNEY, notice those 2 words in the beginning says real estate.  There is a saying, you can only do one job well.  Attorneys can do many different things divorce, elder law, criminal law, family, ect.  and each one of these areas have its own set of rules and quirks.  Do not use an attorney who does not specifically work on real estate transactions, and I don't mean someone who does them whenever they are requested to.  You should be using someone who does it every single day, because you want this attorney to know absolutely everything they may need to to help you during this transaction.

I happen to be very lucky and we have quite a few attorneys who are on our preferred attorney list, and they have only earned a place there because 1.  They are real estate attorneys and 2. Our clients have told us what a wonderful experience they had working with them.  We do not add attorneys to our list and let them stay there just because, if we get complaints they are removed.  A common mistake is that people choose their attorney based on price, and I understand the concern over the money when your making such a large purchase but take into consideration that a good real estate attorney can cost anywhere from $800 - $1200 for the entire transaction, it is well worth it.  Plus many general practice attorneys will charge a higher rate, or even an hourly rate for your file so you will end up spending quite a bit more if there is even the smallest hiccup.

I have worked on some very hard deals, and the only reason they closed was because of the  options that the Real Estate Attorney offered to them, at the same time I have had attorneys almost kill a transaction over something completely avoidable just because they weren't aware of a simple resolution.  Sometimes after the bidding is done, and the attorneys are involved your agent will need to step back in and play the middle man, you should never feel pressured by your agent but understand they are trying to be the glue that keeps you on track to either buying or selling your home and that is what you hired us to do!

Let me give you an example of the difference in what COULD happen during a transaction where a Real Estate Attorney was not involved.

A deal is made and signed by both buyers and sellers. 
Seller agrees to close within 30 days on a cash deal, but the house will be sold as is.
Buyer agrees to close within that time frame, and agrees to the contingencies which go along with a cash transaction.

Attorneys are contacted and asked to send out the contracts to both parties.

Contracts come back and buyer is "requesting" home inspection with repairs to be made, and/or credits and adjustments.
 
You are always entitled to a home inspection but homes that are being sold as is, mean exactly that AS IS.  Non real estate attorneys will often overlook this and send out a standard contract, and it will start a un-needed disagreement.  This is something we commonly see with estate sales, short sales, and foreclosures.

The sellers opt to not sign into this contract because it does not meet the terms of the original agreement that was made, and the agent is not due to check in with the attorneys for another day or 2 and is not contacted regarding this hiccup.

Now if a real estate attorney a few things more than likely would have gone differently because

• The attorney would have taken specific notice to the terms/closing time and checked with his/her clients regarding what was being represented in the home and what was not. 
• The attorney would have been in direct communication with the agent which would have allowed the 3rd party mediator AKA The Realtor to review original terms of the transaction with his/her buyer eliminating the problem in a timely manner before it escalated.
• If the issue was something simply fixed this can sometimes be done via a verbal agreement that does not require money held in escrow.  

Please keep in mind this is just an example, sometimes transactions where non-real estate attorneys were used have gone thru with no issues at all BUT this is a big decision you are making.  Would you go to your general practitioner if you were having a heart attack ? No you would go to a emergency room, sure the GP might be able to help but what if it doesn't ? This may seem extreme, but you have no idea what it is like to see someone lose their dream home! 


There are 3 circumstances that you absolutely, positively must use a real estate attorney.

• Cash Deals: These deals can be tricky because they have very specific terms as far as what is being represented and your closing date.  

• Short Sale/Foreclosure: Banks are hard to deal with, and in this case it is who you are not only buying your house from, but it is also whose financing your loan.  There must be a direct line of communication to the banks, your lawyer needs to be educated on what these processes are.  

• Estate Sales:  This is where it gets tricky because there is usually more than one seller, it usually involves family members who are not familiar with the what is legal on the home and what is not, plus the condition is not always all that great.  It also comes down to how the home is titled and who needs to be present for the closing, and what paperwork is required.  

Now for those of you non-believers lets also look at another reason why you need to use a Real Estate Attorney, and it has nothing to do with the Attorney or his knowledge.  An attorneys staff is also important, they are usually the ones drawing up the contracts and who is contacting all the parties involved.  Keeping with the Dr analogy if you were having a heart attack, and the nurses assistant told you to just go home you would end up in quite the pickle but she may assume it was just a bit of heart-burn, even though she meant no harm it can cause a big problem for you! 

Sellers On The Move !

I recently wrote  a blog for the buyers to give a breakdown of what you should be doing after your offer is accepted, and what they will need to do.  This blog is directed for what the SELLERS need to begin to do and prepare themselves for.  Most would think that the sellers have the easy part, they just sit back and wait for the closing to be set but I am finding for every educated seller there are more that are not really clear on what they need to be doing.

Just as a buyer has things they need to be doing, you as the homeowner also have things you need to be doing like packing, or finding your new home.  Homeowners who are buying a new home are usually diligent about getting their search underway before their current home is even in contract. I am finding more homeowners that either A. Already have a home and do not require a purchase or B. Homeowners who are opting to become renters are often unsure of when they are supposed to make their move and what will be happening after they have accepted an offer.

Disclosure & Home Inspections 
I did write an entire blog about the home inspection process for sellers, but I wanted to touch base on it again just for a moment.  The two most important rules to home inspection are:

1. DO NOT try and hide or cover-up anything in your home, it will make you look secretive and cause the home inspector to search harder to make sure they didn't miss anything.  Things that you may consider a big deal, may not be to your potential home buyer.  An example of this is lets say you have one leaky faucet, so you decide to shut off the valve completely obviously the home inspector is going to check, and with the valve completely turned off they may think it is more than what it actually is.

2. BE REASONABLE, if one home inspector finds an issue I can guarantee you any other that comes into your home is going to find the same one.  These are trained professionals and although your Realtor will be there to protect you we are by no means experts in home construction.  If there is a safety, or structural issue you can not expect a potential buyer to just take your word that it isn't a big deal, and they can live with it.  If they have gone thru the process of spending money for someone to protect them from buying a home that they will not be able to handle you must respect that.  You do have options, you can ask for a 2nd opinion from a licensed professional who works specifically on that issue (ex: Electrician, Plumber, Roofer) to give an estimate for repair or confirm that the point the inspector made was not one that should have caused so much concern therefor making it a non-issue for the buyer if they are comfortable with that.  If the professional confirms with the inspector that something must be done to rectify the issue you still have options you can either repair it, or credit the buyer so that they can have it repaired prior to moving in.


After you have completed and negotiated through your home inspected, you as the homeowner must make sure that everything you needed to disclose has been done.  If you "forgot" to mention and illegal add-on or that you are taking that dining room chandelier now is your last chance to clear the air.  Everyone is human, and sometimes things will slip your mind when you are signing your listing agreement and answering your agents questions.  Sometimes these things are what can make or break a deal, just because you may see it as not a big deal the only person who can truly tell you if it is important or not is your agent so be sure to be open and honest about these things.  Nothing is worse than having a wrench thrown into a deal that could have been avoided not only does it cause fixing by your agent, it could very well cause you to lose your buyer!


Signing The Formal Sales Agreement
This is not always required but for my clients I always like to have all parties sign the original sales agreement to have it on record.  This agreement does not only include the purchase price and the down payment it also includes your on or about closing date.  It seems to quite often be overlooked but we as Realtors need to begin making a real point of explaining, and than re-explaining what this date means to your homeowner.  The on or about date is 90% of the time what your attorney will put in the contract if you think for any reason you need more time than that date, make sure you inform your Realtor as well as your Attorney.

If the buyer is purchasing another home this date won't just effect you and your buyer, but it effects the buyer of their current home.  The effect of a closing date being drastically changed can cause them to lose their buyer, which puts your deal very much in jeopardy.  Just like a buyer must respect that the home is yours and they can not push you out, you must also respect their time and situation.

When you receive an offer on your home we will tell you if the buyer has anything he/she needs to sell, in the case where the buyer does not we will point out the fact that this is a good buyer because they are not being held back by anything.  This also means though that this buyer is more than likely renting and will need to give notice, which makes that on or about closing date very important.

This is a very important date to your buyer, if they are renting they will be in a position of potentially being homeless if the closing does not happen in a timely fashion of this date.  You may be thinking that no landlord would ever put someone out on the street but it is very much a possibility.  Your buyers can be penalized for overstaying there welcome and that can cost them anything from an additional months rent, to a daily charge which can become costly quickly.

Signing Your Contract
This needs to be done in a timely fashion for 2 reasons.

First is that there are plenty of homes coming onto the market, and what if a better one comes along and your buyer falls in love with it? They are not required to stick with your deal until your contracts are fully signed and if you are dragging your feet than you can not have hard feelings if they move onto the next one.

Second, is because unless you changed your on or about date the clock has begun running towards your closing date.  Your buyers need that contract to put in for their mortgage if you hold off it will take them longer to obtain the mortgage commitment which generally takes 6-8 weeks. You must respect that they need to move just as you do in a tight time frame because there is a lot to be done in that time frame.

Closing
I always keep my homeowners very much informed about the progress their buyers are making towards closing, because in order to be fair to all parties involved communication is key.   Without proper communication things can turn bad, very quickly and make the experience unpleasant for all parties involved, including the Realtors because unfortunately are usually the messengers that will carry your bad news to your buyer.

If you are purchasing another home you should be constantly checking progress on that deal  this way if there is any unexpected delay you are able to communicate this to your realtor who in turn can inform the other agent.  This respect needs to go both ways, if your buyer has hit an unexpected snag they must also communicate this, so that you are fully informed.

Now this may seem silly BUT when you listed your home your agent will have asked you where were you going after your home sold, if you told us you were moving to your 2nd home that is where we think you are going.  If over the course of the listing changed your mind you have to inform us we are not mind readers, and we will find you a rental but only if we know you need one.   Finding a rental for anyone whether it is a 1 bedroom or a 3 bedroom is a task, because not every apartment is available for immediate occupancy.

You have to respect that your buyers have given someone notice that they are leaving where they are currently living, someone might be moving in the day they leave so even a day or two delay can become a big issue when left till the last minute.  Just like they can not be unreasonable regarding their moving in, you can not push things to their limits and expect the buyer to be happy about it.

I did mention communication, respect and fairness quite a bit in this blog, which I don't normally focus on but these are 3 things that can help prevent ripples from turning into tidal waves of frustration.   Whether your selling or buying a home it is a huge decision and as Realtors we chose to do this, and it is my opinion we should always try our best to make sure you are informed of even these basic guidelines to ensure things go smoothly.