10 Steps To Buying

1. Are You Ready?

Do You Know What You Want? Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy. Are you planning to move to a new community due to a lifestyle change or is buying an option and not a requirement? What would you like in terms of real estate that you do not now have? Do you have a purchasing timeframe? Is this a primary residence or a second/vacation home? Whatever your answers, the more you know about the real estate marketplace, the more likely you are to effectively define your goals.

Do You Have The Money? The good news is that over the years new and innovative loan programs have evolved which require a 5 percent down payment or less. In fact, a number of programs now allow purchasers to buy real estate with nothing down. Note: Foreign Investors are usually required to put 20-25% of the purchase price down. In addition to a down payment, purchasers also need cash for closing costs (the final costs associated with closing the loan). Several newly emerging loan programs not only allow the purchase of a home with no money down, but also underwrite closing costs. Not everyone, however, elects to purchase with little or no money down. Less money down means higher monthly mortgage payments, so most homebuyers choose to buy with some cash up front. However, those great loans with little or nothing down are not available to everyone. Basically you only need good credit. For at least one year prior to purchasing a home, you should assure that every credit card bill, rent check, car payment and other debt is paid in full and on time.  

Home Buying Costs In many instances, a 'good faith deposit' is required to reserve a property when you decide to make an offer. For resale homes, a deposit of 1-2% is usually sufficient. Most new homebuilders also require specific deposits, but that fee varies depending on the particular builder. Good faith deposits are held in an escrow account until the actual closing. When buying a home, there will also be some closing costs involved. These costs are incurred when completing the purchase of a home. At the beginning of the loan process there is a fee for a credit report and appraisal, which can range from $300-$500. As the loan advances there are other expenses to be paid, such as the mortgage set-up fee, legal costs associated with the registration/ purchase of property, title insurance, and homeowner's insurance.  Buyers also typically pay for home inspections, which runs approximately $300-$450. There is also a homeowner's association fee that varies by community. As a guide, buyers should allow around 5-6% of the loan amount to cover closing costs. 

2. Get Professional Help! NOT ALL AGENTS ARE REALTORS! This is an important designation, so be sure to ask! Licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called Realtors. They proudly display the Realtor logo on business cards or other marketing and sales literature. Realtors are committed to treat all parties in a transaction honestly. Realtors subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate.

How Realtors work in Florida

Working with an agent is virtually different no matter where you live, which is why it is important that you understand the process here in Florida. Many buyers believe that they have to work with several agents at a time because they think that it is the only way they will see everything available on the market. Nothing could be farther from the truth! The reality is that all agents in Central Florida have access to the same database of available homes. Each time a home is placed on the market, that information is entered into a computer system called the Mid-Florida MLS (Multiple Listing Service). All Realtors in Central Florida have access to the MLS and we all cooperate with one another. This means that we are able to show you any of the available homes on the market, provided they are listed with an agent. This cooperation works to each Realtor’s benefit because it means that properties for sale get more exposure and usually sell faster. More importantly, it works to your benefit because it means that we will show you a wide range of available properties.  

Why You Should Choose One Realtor To Work With

There are a number of reasons why you will benefit from selecting to work exclusively with one agent. Not the least of which is, whether you want to be unimportant to many agents, or very important to one. As you may or may not know, most Realtors work on a commission basis and it's only human nature that an agent wants to feel that there is going to be some sort of remuneration for his or her efforts at the end of the day. Even though it is the seller’s obligation to pay the real estate commission in the transaction, a lot of work goes into a deal from the Buyer’s agent. You may not feel that this should need to concern you, and perhaps rightfully so. However, loyalty is an important part of a relationship and it flows both ways. If you are loyal, then you can demand that same loyalty in return. We hope that you will choose to work exclusively with us, as we work very hard for our customers. 

What We Will Do For You  

Not only do we cooperate with all other Realtors in the area, but we also work with new homebuilders as well. This ensures that you will have the opportunity to see everything that is available on the market, both new and resale. Our goal is to show you what is available in an unbiased manner while providing you with the tools and resources to make a good decision. After all, buying a home is a big investment and you should have the guidance and information to make a commitment that will be right for you. Our main objective is to find you the right home, in the right place, at the right price! Here are just a few of the services that we will provide:  

• Helping you to find the most suitable property

• Handling negotiating aspects of the purchase

• Monitoring construction and taking photographs

• Following-up with the mortgage broker and ensuring that the final paperwork is in order

• Carrying out the inspections, coordinating the delivery of furnishings, organizing the connection of all services, and more

3. Get Loan Pre-Approval Few people can buy a home for cash. The real issue with real estate financing is not getting a loan (virtually anyone willing to pay lofty interest rates can find a mortgage). Instead, the idea is to get the loan that's right for you -- the mortgage with the lowest cost and best terms. We strongly suggest that consumers start the mortgage process well before bidding on a home. By speaking with a lender, you will find which programs best meet your needs and how much you can afford. We also recommend pre-approvals for another reason: Purchase forms often require buyers to apply for financing within a given time period, in many cases, 1 to 7 days. By meeting with loan officers in advance and identifying mortgage programs, it won't be necessary to quickly find a lender, check credit, and rush into a financing decision that may not be the best option.

What is it? "Pre-approval" means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power. You can visit as many lenders as you like and get several pre-approvals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports. Although not a final loan commitment, the pre-approval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained.

How do you get pre-approval? Real estate financing is available from numerous sources. We work closely with several independent mortgage brokers and banks to ensure that you obtain the most suitable and competitively priced mortgage relative to your personal requirements. For basic information on mortgages, click here

4. Look At Homes

What are you looking for? A home is more than just a collection of bedrooms and bathrooms. Several properties -- each with four bedrooms, three baths, and the same price -- may well represent radically different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes. Each of us is different and so it's important to list the features and benefits you want in a home. Consider such things as pricing, location, size, amenities (extras such as a pool or extra-large kitchen) and design (one floor or two, colonial or modern, etc.) Next, it's important to consider your priorities. If you can't get a home at your price with all the features you want, then what features are most important? For instance, would you trade fewer bedrooms for a larger kitchen? A longer commute for a bigger lot and lower cost? Lastly, consider your needs in several years. If you'll need a larger home, maybe now is the time to buy a bigger house rather than moving or expanding in the future. If you expect your income to increase, perhaps you should consider a more expensive home financed with a loan program where monthly payments increase in the future.

Where should you look? All neighborhoods and communities have a special nature that gives them identity and value. One community may be well known for historic homes while another offers both suburban living as well as easy access to downtown office areas.

How do you find a house? That’s where the we come in! Using our knowledge of the market and the technology of the MLS (Multiple Listing Service) we will search all available properties that most match your needs and wants for a home. Each time we show you a home on the market, we will provide you with a brochure. You may then make notes on each one -- what you like, questions, etc. You should maintain your own file with these brochures and any additional information on each of the homes you like. This will allow you to look back at a later time and reflect on the properties you viewed in person.

5. Choose A Home There's no doubt that choosing a home is a big decision and you want to do it right.

As a buyer, here's what actually happens. A home has been placed on the market for which the seller has established an asking price as well as other terms. In effect, this is an offer. At this point, you have three choices: accept the seller's offer and create a contract; reject it and not make an offer; or suggest different terms and make a counter-offer. If you choose this last option, the seller may accept, reject or make a counter-offer. No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where our experience comes into play. We will display our knowledge of the community, market conditions, and negotiating skills.  

6. Get Funding Often the cost of real estate financing is routinely greater than the original purchase price of a home (after including interest and closing costs). Because financing is so important, buyers should have as much information as possible regarding mortgage options and costs.

7. Make An Offer

How much? You sometimes hear that the amount of your offer should be X percent below the seller's asking price or Y percent less than you're really willing to pay. In practice, the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order.

How do you make an offer? The process of making offers varies around the country. In a typical situation, you will complete an offer IN WRITING that we will present to the owner and the owner's representative. The owner, in turn, may accept the offer, reject it or make a counter-offer. Because counter-offers are common (any change in an offer can be considered a "counter-offer"), it's important for you to remain in close contact with us during the negotiation process so that any proposed changes can be quickly reviewed.

How many inspections? A number of inspections are common in residential realty transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections. Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend if at all possible. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through. If you can’t be present for the inspection, we can attend on your behalf.  

8. Get Insurance

What kind and how much? There are various forms of insurance associated with home ownership, including these major types:

Title insurance: Purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Coverage includes "lenders" policies, which protect buyers up to the mortgage value of the property, and "owners" coverage, which protects owners up to the purchase price. In other words, "owners" coverage protects both the mortgage amount and the value of the down payment.  

Private Mortgage Insurance (PMI): Required by lenders when buyers down payment is less than 20%. A one year premium is paid at time of closing and an additional payment is included each month with mortgage payment. After a period of time, usually a couple of years, when you have 20% equity, this premium can usually be eliminated by having an appraisal done.

Homeowners' insurance: provides fire, theft and liability coverage. Homeowners' policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment.

Flood insurance: Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents.

Home warranties: With new homes, buyers want assurance that if something goes wrong after completion the builder will be there to make repairs. Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by the buyer or seller. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost. Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs.  

9. Closing Go to any local courthouse and you can find property records detailing real estate ownership in your community -- sometimes records that date back hundreds of years. These records are important because they provide today's owners with proof that they have good, marketable and insurable title to the property they are selling. Equally important, such records enable buyers to provide proof of ownership when they sell. The closing process, which in different parts of the country is also known as "settlement" or "escrow," is increasingly computerized and automated. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery. In practice, closings bring together a variety of parties who are part of the "transaction" process. For example, while the history of property ownership has been checked, it's possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.

What to expect
Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately. Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.

What you need to do
One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.

10. What's Next? You've done it! You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you're a first-time buyer or a repeat buyer, there are several more steps you'll want to take. Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes. Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. We can help to provide contact numbers and related information. About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property. If this purchase will be your primary residence, you’ll want to apply for ‘Homestead Exemption’ as soon as possible.

Moving in
It is generally understood that sellers will leave homes "broom clean" when moving out. This expression does not mean "vacuumed" or "spotless." Broom clean makes sense because it means the house is ready to be painted and cleaned.

Your home, your money
For most owners a home is the largest single asset they hold, so it makes sense to protect that asset. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it. You'll want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details. Finally, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what's most important is that homeownership should be a wonderful experience!

Return to Top