THE HOME BUYING PROCESS-WHAT SHOULD YOU ASK? (C) 2012 by Wayne D. Lewis, Sr.

The Home Buying Process- What to Ask? © 2012 by Wayne D. Lewis, Sr.

 

How many steps are there to buying a home? I don’t think that many of us as Realtors ever counted how many steps there are, but it is a process that is made up of a tremendous number of components that are all working together to help Buyers and Sellers to successfully get to the closing table.  The Home Buying process probably has features that are more ominous to a buyer who is financing the purchase of a home compared to someone who is buying a home for cash.  In the same fashion, buying a home using an FHA Loan compared to a Conventional Loan presents a different set of dynamics.  Unfortunately, a buyer learns much of the home buying process usually as an on the job training event.   If buyers are lucky, they are able to attend a Home Buyer’s Training Class in their area, where they can get an upper hand on a lot of the information needed to know that usually comes to them on a seemingly as need to know basis.

 http://homebuying.about.com/od/buyingahome/qt/121907_buy-path.htm

If a buyer is not able to attend a home buyer’s training class, they should not feel compelled to accept everything that each member of the home buying process tells them.  They should have questions.  They should ask questions.  And, they should be given an answer to all of their questions- that is, a satisfactory answer to all of their questions.  Hopefully, the home buyer arrives at a reasonable understanding of the process that they are involved in well before they sign closing papers, perceivably because of the answers that they receive.

Obviously, when a buyer gets a lot of information in buying a home, the information itself can be overwhelming, and for the buyer, the desire to buy a home may sometimes becomes a distant dream.  A lot of that information may end up being broken down by brief canned explanations followed by “initial here!” or “sign here!”  It’s not fair to the buyer, nor the seller, for that matter.  For some buyers, the process may appear to be designed against them in buying a house, and an opportunity to walk away is usually not very far away.

 http://www.homebuyinginstitute.com/

            Fortunately, many buyers are able to regroup and are able to move forward with the aid of extremely competent real estate professionals, such as their Realtors, lenders, home inspectors, appraisers, insurance agents, title attorneys and personnel, as well as others who are involved in the home buying process. They are able to regroup and hopefully are able to take the information acquired to make their experience the best ever.  But, as Realtors, we must leave no stone unturned by ensuring that buyers are exposed to as many pieces of information as possible for buyers to access, at will, but not to the point of being overwhelmed.  How do we avoid overwhelming buyers?   One of the things we should always do is ask our buyers if they understand the information provided, or if they have any questions.

For some buyers, they are not sure what to ask.  They may think their questions are insulting, stupid, or they believe that their question is something that one of their professionals will eventually answer.  First of all, we should let our buyers know that there is no such thing as a stupid question.  We should also encourage them to ask whenever they have a concern.  But, for many buyers there maybe a question as to what to ask.  Some may not feel comfortable in knowing that it’s okay to ask a question when you first meet, before you part, or as the circumstances present themselves.  But in any event, buyers should not be afraid to ask questions, they should know or have an idea of what to ask.  To help to that end, I thought it would be helpful to provide some pertinent questions for the buyer.

 
I indicate that the questions below are pertinent, but not necessarily Germaine to each specific case.  Buyers should practice asking some of these questions to the various members of their team.  After all, each member will each be working hard to help  the buyer to get their new home.  There is no guarantee that by asking these questions, that a buyer will get the best answer, but the emphasis here is having an idea of the types of questions that a buyer can ask.  For example, under Preliminary Concerns, asking someone how much house can afford, afford, should net for you from your lender or Realtor, an overview of your debt to income ratio you should have, thus helping you to understand how much how you can afford.

http://realestate.findlaw.com/buying-a-home/home-buying-process/

 

Please review the questions below.  You may put together some of your own.  Some of these questions may not give you the answers that you want to hear, but there is no reason why a potential buyer cannot take information that either of the above professionals mentioned above provide, and move forward confidently in the purchase of their new home.

 

http://ezinearticles.com/?The-Home-Buying-Process,-Step-by-Step&id=2040881

 

Ø      Preliminary Concerns

o       How much home can I afford?

o       Is this a good time to buy a home?

o       Who can I trust to help me through this experience?

Ø      Finding a Real Estate Agent

o       How much experience do you have in real estate?

o       How well do you know the market around this area?

o       Have you ever been sued?

Ø      Choosing a Lender

o       How many deals have you closed this year?

o       How many years of experience do you have?

o       Are you going to run my credit?

Ø      House Hunting

o       Should I get an inspection and why?

o       Is the price of the house negotiable?

o       Is the seller willing to make repairs?

o       Is the seller willing to help with closing costs?

Ø      Making An Offer

o       How much should I offer to buy this house?

o       Is there such a thing as too low an offer?

o       What if the seller rejects my offer?

Ø      The Home Inspection

o       Do you recommend any home inspectors?

o       Does everything that the Inspector finds has to be repaired?

o       Does “As Is” mean “As Is”?

Ø      The Home Appraisal

o       What happens if the property is appraised higher than the sales price?

o       What happens if appraised amount is below the sales price?

Ø      Pre-Closing/Pre-Settlement

o       Who pays for the Title Attorney?

o       What if there is a cloud on the title?

o       What is a cloud on the title?

Ø      The Closing Process

o       When do I own the house?

o       What if I can’t be at the closing?

o       What does a Title company do?

 

            These questions should be taken generically.  Your situation may vary.  But, as a buyer you have the right to ask questions.  You, especially.  You are spending a tremendous amount of your hard earned money.  Buying a house should be a learning experience where you determine what it is you need to know.  Don’t be afraid to ask questions, and don’t be afraid of the answers.  You can only be greatly enlightened, provided you asked all of the right questions.  And since there is no such thing as a dumb question, you should be well informed on the purchase of your home.

 

 

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ARE BACKUP OFFERS MAKING A COMEBACK? © 2012 by Wayne D. Lewis, Sr.

Previously Posted at: http://richfitusa.com/

BACKUP OFFERS, they are absolutely no guarantees, but it is amazing how more often than not, Backup Offers seem to be moving forward more frequently. There was a time when someone would make a Backup Offer on a house on the market, and the Realtor would have to bring the bad news to the buyer, that the deal had closed on the original contract. Now, Backup Offers are making an apparent rise, by this Realtor’s perspective.
It seems that now, the original contracts are carrying less weight. Whether it was a change of mind, financing fell through, appraisal too low, or inspections revealed too much work to be done, original contracts are not the solid contracts that they used to be, and many Backup Offers are falling in place, with greater security. But certain things should be in place for the buyer of the Backup offer as well, if a Backup Offer is going to pay off (consult with your Realtor for further details). Here are some suggestions (your situation maybe different):
 Cash/Financing

1. Know the deadlines of the current contract
2. Try to obtain any current inspections from the seller (may require a fee)
3. Deposit
4. How much to offer
5. A property Under Contract for an extended amount of time could indicate a return to the market.

First of all, after submitting a Backup Offer and it is tentatively accepted, if the buyer is paying cash, it would be important to secure that cash for a given period of time. I suggest putting it in a savings account for at least 30 to 45 days, or as long as the buyer is willing to wait to see if and when the original deal either closes or falls through. Financing is a different set of issues, but the principal of protecting your ability to move forward and buy is paramount if that original deal falls through. On the front end, when looking at putting in a Backup Offer, and financing is involved, be sure that your lender has you in a ready-set-go position in the event the 1^st offer falls through. Your letter of pre-approval will be needed to go with the Backup offer, but additionally, we know that pre-approval still doesn’t mean you can buy the house. Use the time between submitting the Backup Offer to work with your lender to make sure that nothing on file will keep you from buying your desired house should it come back on the market.

Secondly, and this is not in a particular order, find out any deadlines within the original contract. From the moment a contract is written, there are a number of deadlines that the buyers and sellers have to meet. From the inspection to loan approval, to appraisal, all have certain timeframes in which they will need to be accomplished. Knowing, for example, that the original inspection may take 15 calendar days to be completed, and that there are approximately 72 hours for the seller to respond, and additional 72 hours for the buyer to accept what the seller is committing to, helps the buyer on the Backup Offer to determine whether or not they want to stick with the Backup offer. So, try to find out where the current contract is, where it does not infringe on, or compromises the current buyers’ or sellers confidentiality.

A third suggestion is to see if there is a current inspection on the property. Sometimes, a property may have been inspected before, either by the seller when they decided to put it on the market, or by a previous buyer. The request for an inspection report should not interfere with an existing offer on the table. If the sellers are willing to provide any previous inspection report, the inspection report should be at least within 6 to 9 months, to be sure that the buyer can have an idea of what they maybe getting into. A fee maybe charged by the seller. Note that receiving such a report, does not exclude any buyer from obtaining their own inspection/inspector. Wherever possible, obtaining a prior inspection gives the buyer in the backup position, an opportunity to determine how to move forward, should the current offer fall through.
Fourthly, the deposit. I personally, and professionally, discourage putting a deposit down on a Backup Offer. Why? Chances are slight, perhaps even slim, that the deal will fall through. And while I point to the increase of Backup Offers rising, here are 2 reasons why you shouldn’t put up a deposit.

1. Your offer may not be the only backup offer. In many cases, there maybe only 1 backup offer, but don’t bet on it, not just for this reason, but other reasons as I will discuss later. Your deposit can be a promise, depending on your addendum structure to the Agreement to Purchase (LA). The option is either to, or not to, pledge a deposit, but there is an indication of how much a deposit a buyer will be willing to put up if their offer is compared later by the seller. So, putting up a $500 deposit compared to say a $2000 deposit indicates to the Seller that you are truly serious about buying their home.
2. Your deposit will take anywhere from 1 to 2 weeks to be returned in the event you decide to resend your Backup Offer. Better to promise a deposit and not have to wait. Also, it would help if you didn’t have to wait for your depositi in the event you decide to put an offer on another house, where you, as the buyer, are the primary buyer and not the Backup.

The 5th suggestion to consider when putting in a Backup Offer on a desired property, is how much to offer. Very rarely, hardly ever, is it known how much the primary contract is for. My guess is, in case the initial contract falls through, the seller does not want to show their hand as to what they accepted. When putting in a Backup offer, make YOUR best offer. Your best offer maybe the Sales Price/Asking Price, or it maybe the Market Price, which maybe less than the Sales Price. Or, your offer maybe over the Sales/Asking Price and/or the Market price in order to gain an upper hand on any potential offers that are being submitted, or that may come in during the initial contracting process. Consult your Realtor and Lender, because your pre-approval amount should match the amount you are offering, even if in a Backup status.

As a bonus, let me share this with you, as a sixth suggestion: if you are in the market to buy a home, I encourage you to make your move as quickly as possible on the house that you most truly want. Whether it is a Buyer’s Market, or a Seller’s Market, MAKE YOUR BEST OFFER! And if you see a house that you decide to put an offer in on, find out if any offers have been rejected, see if you can find out what previous offers were submitted and turned down. Even if the house you are interested in is under contract, this bit of information can help you in making a good Backup Offer. Or, if a house has been under contract for a long time, there maybe a reason that the house is sitting under contract for so long. Have your Realtor contact the Listing Realtor to see if there are any cracks in the contract that the house might be going back on the market and if there are any Backup Offers on hold.

Each of the above ideas are suggestions, but are not a substitute for homework when looking to buy your home. Consult with your Realtor, your lender, others who have recently bought a home, or go on line to see what are some of the best ways to put in a Backup Offer. Good luck, and as always, MAKE YOUR BEST OFFER!