Step 1: Select a Realtor
“As the leading advocate for homeowners and real estate investors, Realtors® have been subscribing to NAR’s strict Code of Ethics as a condition of membership for more than 100 years; the Code separates them from other real estate licensees,” said NAR President Gary Thomas, broker-owner of Evergreen Realty, in Villa Park, Calif. “Protecting the interests of consumers demands high standards of professional conduct and training, and the Code of Ethics is the golden thread that binds the Realtor® community together.”
There are almost a million people in the United States who are licensed real estate agents, but not Realtors, and therefore not required to comply with this extensive consumer-oriented code. It’s no secret that buying or selling a home is one of the most important financial decisions anyone will ever make in their lives. It’s therefore prudent for consumers to strongly consider working with someone who actively subscribes to the highest and most comprehensive code of ethics.
“Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price.
But a basic rule in real estate is that all properties are unique. No two properties – even two identical models on the same street – are precisely and exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. Also, no two transactions are alike.
In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local REALTORS® who serve your area.” (source Realtor.com)
Experience matters. If this is one of the most important financial decisions of your life, as it is for most, the most prudent and financially responsible decision to make is to work with professionals expert in the transaction throughout the process, including Realtors, lenders, inspectors, and title experts, among others. Realtors are highly trained professionals expert in the contractual laws governing the sale of real estate. Protect your rights as a consumer by ensuring that you are well-informed and expertly advised throughout all stages of the transaction.
What about commissions? Can you save money by going it alone? If you’re buying a home, recognize that the Seller who has an active listing with a licensed broker has already committed to pay all of the commissions involved in the transaction. If you don’t have a broker on your side of the transaction, the Seller will simply pay that amount to their broker, who ends up representing both sides of the transaction, but who is obviously working for the Seller in most cases. If the Buyer wisely chooses to have their own broker representation, he or she benefits by this customary arrangement by receiving expert assistance in the contractual and transactional process, while the Seller pays for the expertise to represent the Buyer and Seller independently on both sides of the transaction. It’s an amazing benefit built into the customary sale of the real estate in our country, and much of that benefit goes to Buyers.
We’ve been involved in hundreds of transactions throughout our career, and each has presented something unique to contend with or explore. Even the most experienced buyers and sellers have likely only completed a handful of real estate transactions in their lives, which puts them at a disadvantage in navigating the waters of the transactional processes involved. You wouldn’t get into a sailboat to sail across the ocean without a captain at the helm or a captain’s license in your wallet. The stakes aren’t quite as high in your real estate investments, but they’re high enough to take every precaution.
What about commissions? Can you save money by going it alone? If you’re buying a home, recognize that the Seller who has an active listing with a licensed broker has already committed to pay all of the commissions involved in the transaction. If you don’t have a broker on your side of the transaction, the Seller will simply pay that amount to their broker, who ends up representing both sides of the transaction, but who is obviously working for the Seller in most cases. If the Buyer wisely chooses to have their own broker representation, he or she benefits by this customary arrangement by receiving expert assistance in the contractual and transactional process, while the Seller pays for the expertise to represent the Buyer and Seller independently on both sides of the transaction. It’s an amazing benefit built into the customary sale of the real estate in our country, and much of that benefit goes to Buyers.
Also, keep in mind that national statistics suggest that Buyers and Sellers who go it alone either sell their homes for too little or buy their homes for too much because of their inexperience with the market conditions, the real value of real estate, and perhaps most importantly, in the negotiation of this very specific type of emotionally charged transaction.
This article from Forbes Magazine really sums up some of the best reasons to work with a real estate professional on the purchase or sale of a home: http://www.forbes.com/2010/05/25/why-you-need-real-estate-agent-personal-finance-commission.html
Step 2: Get a Loan
If you’re buying with cash, you can obviously skip this step, but most of us will buy with the assistance of a loan, and sometimes buying with cash doesn’t make financial sense (ask us why not). Many buyers skip this step and jump right into looking at listings and imagine their future lives in their future homes. We all love to dream, but when purchasing real estate it’s critical to understand your buying power, and how much you’re going to need to budget for so we can help you make your dreams a reality.
We’ll recommend an array of excellent and reputable lenders and assist you in getting pre-approval for a loan. With a pre-approval letter in hand, you’ll help position yourself as a qualified Buyer, which will give you an advantage in the negotiation, or at least mitigate the disadvantage many put themselves in by not being prepared for the offer process.
Local or National Lender? It really depends on the property type. Though we’d always recommend that you strongly consider using a local lender in any market you’re interested in, sometimes it’s a critical part of your decision. Lenders understand the markets they work and live in the best, just like Realtors, Title Companies, Surveyors, Inspectors and all the other service providers you’ll encounter during the home buying process. When you’re speaking with a loan officer, you’re speaking with someone who makes sales and facilitates loans, not the underwriter – who ultimately approves the loan. Many times there are specific issues with warrantability (ask us about this one), type of property (condos in resort communities), or density of commercial space in mixed use residential complexes, that pose specific challenges once a loan reaches underwriting. Local lenders know the various issues with developments throughout their communities and can often best assist you in navigating the issues inherent in the loan approval process, overcoming obstacles, and foreseeing underwriting challenges that may not be obvious to those farther removed from their market knowledge. This is critical because often thousands of dollars of your earnest money is at risk in the transaction, and the best and most knowledgable lenders can assist in mitigating the risks inherent in the process, while working with us to enhance your probabilities for success. No matter who you choose as a lender, we’ll work closely with them to ensure you are well informed and protected throughout the contractual process.
Step 3: Create a Wants and Needs Analysis
This is where the fun begins. We’ll ask you to put together a fun list of your desires for your future home, including the features you absolutely must have. We love this part, and we’ll do it together. Here are some things to consider when putting your list together:
- price of home
- size of home
- number of bedrooms and bathrooms
- garage size
- lot size
- commuting time to work
- access to recreational activities
- age of home
- time until you plan to move in
- neighborhood conditions
- style of home: contemporary, traditional, ranch, 2-story
- length of time you expect to live in this new home
- new home versus previously owned home, etc.
This is an excellent opportunity to get input from your entire family.
We will use this as our starting point to help you locate the home which most closely meets your requirements. We will also use this as a basis to make you aware of some features possibly unique to the area’s homes and neighborhoods which you may find desirable.
Step 4: Review Our Research
Once we have your wants and needs established, we’ll get to work on providing a moving target list. Why a moving target? Because this is a live process! With every day that goes by, there will be new homes on the market, as well as homes that leave the market for a variety of reasons, including being sold. We’ll keep you apprised of the changes as we go along in real time, as every change in the market provides useful information for your financial decision and for our ultimate negotiation. We’ll present the list of properties that most closely match your wants and needs (and dreams) and help you pare down a list of properties you want to spend your valuable time viewing. We recommend that your final viewing list include no more than 10 total properties. We’ve found over years of experience that our customers and clients garner the best results in their search with the focus to eliminate properties from their tour that already feel like they have little to no chance of working. Viewing too many homes waters down the process and makes it that much more difficult to focus on what’s most important to you and your family. Conversely, seeing too few homes doesn’t give you enough information to make a final decision. So, we really like to show between 6 and 10 properties from your list. What if you don’t find the perfect house in the first 6-10 showings? Well, we certainly wouldn’t be surprised, because this is one of the most important decisions many of us will ever make for our family and for our financial future. We’re in this for the long haul, so we’ll work with you to find the home most suitable for you in consideration of the hundreds of factors to evaluate in the decision making process. Sometimes it takes more time to find the right home, and we’ll take that time with you.
Step 5: Visit Properties
We love what we do and this is truly our favorite part. We’re getting so much closer now to finding you the perfect property, and we get to learn so much more by seeing you and your family interact with the homes on our tour and by taking careful notes on the features and benefits that appeal to you the most (as well as the things you don’t find appealing). We’ll be well prepared to give you a tour worthy of your valuable time, and will share as much information about the various neighborhoods and home features and benefits that you find useful. Here’s where our experience really counts. We’re not just opening doors and turning on lights. We’re showing you and telling you about all of the features and benefits of a community or neighborhood that we’ve learned over years of experience and many satisfied sales. We’re helping you evaluate the home based on our experience with thousands of other homes and sales, as well as the experiences of our extensive clientele. If we’ve done our job in advance, we’ll narrow down your choices to one or two homes on this tour, and you’ll be well prepared, advised, and ready to make an offer.
Step 6: Make the Offer
In Colorado, licensed Real Estate Agents are authorized by the Colorado Real Estate Commission to prepare contracts to purchase real estate if the forms used are approved by the Real Estate Commission.
Once you decide which house you wish to place an offer on, you will have many decisions to make including:
- Purchase price you wish to offer
- Financing terms: Cash down payment, earnest money deposit, type of loan, interest rate, pre-approval letter
- Time period for inspection of property
- Time period for appraisal of property by your lender
- Time period to review title opinion of property
- Contingencies you wish to include – for example, the sale of your current residence
- Time period for loan approval
- Setting the date and time of closing
- Presenting the offer to the Sellers
- Negotiating and finalizing any terms and conditions which the Sellers may wish to modify from the original offer presented to them through a counter-offer
Through this entire process of preparing, offering and negotiating the Purchase Offer, we will work closely with you to maintain timely responses and provide market savvy answers to questions as they come up. We’ve honed our negotiation skill over many years of being in the business and our goal is to both protect your contractual rights and to negotiate the most attractive possible price and terms.
Step 7: Due Diligence
Now that you have a negotiated agreement, the clock starts ticking for many items needed to meet the requirements of the agreement and your protection. We will assist you in finding qualified responsible professionals to do most of these investigations and will provide you with written reports.
Specifically, you will want to have an inspection of the property for such things as: the mechanical, plumbing, electrical systems, foundation, walls, flooring and windows. You will want to see a preliminary report of Title on the property to determine any easements or issues of Title. Your mortgage lender will require an independent appraisal of the property. In some cases, we may want to review a survey or have a new survey performed to identify any property boundary, easement or other survey concerns.
Any problems noted during the inspection are subject to additional negotiations between you and the Sellers. We will help facilitate this process. If you are not comfortable with the inspection resolution with the Seller, you will have the right to terminate the contract, if acted upon in a timely manner.
Our goal throughout this process will be to advise you of and manage the contractual dates, and to protect your rights within the contract, and specifically to make sure you’re aware of when your earnest money will be at risk. We want to be sure you’re prepared to take each subsequent and critical step in the due diligence process.
Step 8: Closing and Possession
Closing on the property is usually handled by the Title Company which issued the title opinion. We will be with you to provide answers and assistance for you during this process which usually takes from 30-90 minutes. We will be sure to review all settlement statements for you as Buyer for accuracy and reasonableness.
Time of possession is established at the time of negotiating the original offer. In Colorado, it is customary for the Buyer to take possession at closing or up to 2 days after closing.
We can’t wait to congratulate you and celebrate the purchase of your new home.
Integrity Leads, Sales Follow®