The Buying Process | What to Expect
You found the home you want... now what happens?
You are looking to buy a home, you found an agent. You have been pre-qualified and pre- approved by the lender. Everything is running smoothly and you find a home in your budget.
What happens next? Is it as scary as you heard?
First thing is your offer to the seller. In New York, all offers are presented.
Note- If you are looking at a house for 900k and you offer 100k, your agent will present that offer to the seller's agent. (You never know what they might say, or counter with! Negotiations are not just about the price, but of a dozens of possible elements of your purchase ; for simplicity, I will only cover price base, and the typical process that follows)
1. You Found the House
You come up with a number based on what you can afford and what you think the seller is likely to accept. Your agent may offer their input. The agent may forecast what the seller may counter offer with, and what you should do with the counter. Sellers and buyers are motivated differently. Sellers want to sell high. Buyers want to buy low.
2. Offer Accepted
Now it gets exciting. Contracts are drawn up and sent to your real estate attorney.
3. Attorney Review
Contracts go to the buyer's real estate attorney. The attorney will review and communicate concerns if any arise. The attorney will then likely contact you to come in and sign your side. Copies will be sent to the seller's attorney. Then you wait, while other steps are completed. Don't forget, and don't get scared! All of these parts are in place to protect both the buyer and seller!
Lets say you already were pre- qualified with information you gave the lender. If your information was accurate, this part can be fairly smooth. You will have to give the bank a financial history. This may include:
Previous Tax returns
Employment History - They will likely call your current employer
Sources of other income
Credit card statements
Loan statements - auto, personal, Etc.
Child Support information, if applicable.
Current rent obligations, If applicable
Current Mortgage information, if applicable
Tip- Thinking about buying a home? Help the process:
Save your pay stubs six months in advance if you do not have easy access to copies.
Know where your previous 3-5 years worth of tax returns are located. If you are missing some, contact your tax professional or service that assisted in filling your returns.
Generally speaking, try not to change jobs after you started the home buying process. This may delay your closing by weeks or months. It could void your loan approval. With everything, exceptions exist; Promotions are good! Leaving one employer to go to another employer of an established business for a raise might be beneficial in your approval. (Talk to the lender before you switch jobs, they can give you accurate to-the-situation information.
As the buyer you will pay for a few inspections. Some will be mandated by the bank as contingent on your approval. These inspections protect both you as the buyer and the lender. Negative findings may be easy to correct, give you negotiation leverage, or allow you to rescind your offer. Don't resist having inspections and make sure a reputable inspector is working with you. Some buyers, if not using a lender, will forgo this step and buy the premises "as is" with no guarantee on it's condition.
Termite Inspection - Most homes have had a termite issue at some point. Don't let that scare you. The important part is that there is no structural damage, and if so, that the repair was done correctly. The inspection will performed on the home and other
Home Inspection - A licensed and Certified Home Inspector will come to the property and check a multitude of components about the home. This will include the plumbing system, including cesspool. Electrical, ventilation, roof, foundation, and often other specifics such as smoke and carbon monoxide detectors, asbestos and lead presence.
5. Bank Appraisal
Your lender will send out an appraiser. Appraised value is not market value. The "Market" is the pool of buyers interested and bidding on your property. An appraisal is the value of the land, plus improvements (Structures). The bank simply is looking for protection in their investment in you. If the bank lends you 500k, and your property appraises at 650k, they are happy; if you default, and they repossess the property, they can still profit. Conversely, if you want the bank to lend you 500k for a 250k property, they may be more hesitant.
6. Title Search or Abstract of Title
The bank will have a title search performed. The actual "searching" of the title is not difficult; The title/ deed to the property is filled with the town in NY. Reviewing the title is criticle in the sale for several reasons:
1. Documents all owners of the property.
2. Restrictions on the land and how the land is used
3. Easements, Real Covenants,
4. Liens on the property that are due before the title can change ownership.
The town will typically have a survey on file, but at the lender's discretion, they may want a new survey performed. The survey will, in a topographically drawn image, document the property lines, structures, fences, land marks, and other pertinent information. The surveyor will document the distances of side lots, front and rear set back, drive way, and length and width of property.
8. Final Walk Through
This is for the buyer to validate that the property they intend on purchasing is in the condition it was in when an offer was accepted. Correction of issues found at inspection would/ could be validated at this time. The buyer should be looking for a few things at this point:
1. Appliances and light fixtures are still in place. (Seller's can take attached light fixtures, if it was a condition of sale)
2. No new and obvious damage to the home .
3. Systems like heating and air conditioning still work,
Scheduled by the buyer's and seller's attorneys with the lender. This is where the transaction takes place.
1. The contract will be signed by both parties.
2. The lender will have relevant mortgage documents for the buyer.
3. A closing statement will be presented, showing who owes what, to whom and for what. This might include inspection expenses, credits for lack of repairs at final walk through, payment of taxes, and even the value of the oil in the homes oil tank. Pre-paid expenses of the seller would be credited back based on the time left until the next payment. For example, if the seller paid 12 months of taxes for $12000, and the closing is on July 31st, the buyer would credit back from August 1st- December 31st.
4. Keys and access codes like garage codes