Buyer Tips for first time home buyers or those not familiar with buying a home in North Carolina.
It has been a very busy week this week for working with buyers. I have had showing appointments in Statesville, Mooresville and the Troutman area just about every day and I will say, the pickins are gettin slim! It is becoming harder and harder to locate that “perfect” home and the good ones are moving quickly. With that being said, this week I wanted to remind you what you can expect when getting ready to put in an offer on a home and a summary of what you can expect after your offer has been accepted.
I found a great home, Now What?
After many hours of search for homes, driving by, scouring the internet and touring the neighborhoods, you have finally found the right home for you. It was that “wow” factor the minute you walked through the front door. You love everything about it and know this is the one for you. Ok, now what do we do? This is when your buyers agent really goes to work! Finding you the right home is a lot of work, but negotiating the deal and getting it to closing is where they earn their paycheck.
Always be sure to go back through the home you have selected a second time before putting in an offer. You want to really take a good look at all the features and condition of the home so that you can address any problems you see right up front. Open the cupboards, check the appliances, check out the attic or basement, look for obvious things that you know you will want fixed or items you would like to remain with the home. Maybe you would like the refrigerator, the washer and dryer or that swing set in the backyard. Anything that is not “nailed, glued or screwed” down is considered personal property and should be removed by the seller unless you ask for it to stay as part of the negotiation. Make a list of everything to include in the offer. If you see any obvious repairs that you know you need to have fixed, put it on the list and address it in your offer to purchase.
Your agent will then go to work getting all the paperwork together to work up an offer. They will perform a market analysis for you to help determine a good offer price, find the covenants and restrictions for you to review, see if they can locate a survey so you can check the boundary, pull the deed to confirm ownership, prepare all the Offer documents for signatures along with many more “behind the scenes” tasks that need to be handled before presenting an offer.
How much money will I need to put in an offer?
This is one question that I get every time and it is a good one. Most buyers don’t know what to expect as far as costs upfront. At this point, you should have already talked with your lender and received a pre-approval letter stating that you can purchase the home and that your credit has been reviewed. Your lender should review a good faith estimate of charges that you can expect in connection with your loan. These costs may include : Down payment, lender costs, attorney costs, inspection costs, recording and processing costs, pro-rated taxes and homeowners fees and monthly escrow amounts. Depending on the type of loan you are receiving, these costs will vary.
You could ask the seller to pay some or all of your closing costs as part of the negotiation but the down payment (if required) will have to be paid by you. On the NC offer to purchase, you may offer the seller an earnest money amount or a due diligence amount or both. This is part of the negotiation and can vary depending on the skills of your agent, the size of the deal, the length of time until closing and other factors. On average, it is usually $500 to $1000. Earnest money will be kept in a trust account with one of the real estate offices involved and the due diligence money will be made out the the seller directly. The due diligence money will not be returned to you but will be credited at closing. If you back out, you will lose that money. Earnest money may be returned depending on the reason for termination. Each deal will vary so be sure this is very clear and that your agent has explained this to you thoroughly.
You will also need to have money available for the appraisal. As soon as the offer is accepted, your lender will need a check upfront for this (usually around $450). If you have asked the seller to pay for closing costs and they have agreed, you can ask that your inspections be paid at closing, but if you are paying for these items, you will want to bring your checkbook and pay the contractors directly. Home Inspectors, Termite inspectors, septic and well inspectors and any other contractor you ask out will expect payment or at least a credit card number to have on file that will be charged if the transaction does not close. As the buyer, you are still responsible for these costs as they are not required for most loans. Inspections are for your protection and highly recommended but you could be out of pocket a large amount if things don’t go well and the seller refuses to fix items of concern. Your agent will help you through this process and make it as smooth as possible but be prepared to weather some bumps.
My offer is accepted – now what?
After negotiations are completed and the agreed upon terms are accepted by all parties, you can begin the process of the inspections and getting your loan moving forward. Schedule your inspections right away and plan to be present. Call your lender and get all the required paperwork to them plus the appraisal check, make plans to start moving, contact utility companies to set up an account. The best thing to do is to get a good checklist for things to do and attack them one at a time. I provide my buyers with a refrigerator checklist of things to get done and people to contact to help keep you on track and I also provide a first time homebuyer binder that will have a great moving checklist in it. Be sure you get your copy. You can also find some good ones online.
After inspections are completed and any needed repairs are addressed, you are in a holding pattern. It could be weeks where you are just waiting for things to happen. Waiting on the lender to clear your loan, waiting on the sellers to complete repairs among other things. Don’t lose patience here, it is normal and you just need to go with the flow. Before you know it, closing day will be here. Your agent will keep track of the due diligence date and make sure everything is in place before that date expires. This date is your cut off for backing out of your deal. After that, you are hooked. Be sure you want to move forward and that you are confident your loan looks good, appraisal is good, repairs are complete and your feet are not cold! Soon after that, you will call to turn on utilities in your name, set up the movers, do a final walk through and get ready to sign lots of paperwork.
Once the deed is recorded and you have those keys in hand…….you are good to go! Enjoy your new home. I hope this helps answer some of your questions about the basics but I know there are many other things involved in buying a homes and if you have additional questions, call me anytime. I am happy to answer them for you.