Getting Started in Buying Your Home
Buying a home should be exciting and fun, but if you are not familiar with the process it can be confusing, stressful, and full of anxiety. I try to make it as easy as possible for my clients by explaining everything as we proceed, and pointing out considerations that may not be obvious to a less experienced buyer. This page is written primarily for owner-occupant buyers, although investors should go through a similar process, with more emphasis on the financials, and less on the emotional impact of a purchase.
The best way to start, is to get pre-approved by a lender, and find out what payment amount you will qualify for. (All it takes is a phone call, and I have several trustworthy lenders that I would be happy to recommend.) The rates are still low by historical standards, and there are many good loan programs that can help keep your fees and payment low. I generally don’t recommend using online lenders without comparing to “real humans” that you can meet face-to-face. I don’t have anything specific against online lenders, but I prefer to be able to go to their office and pound on their desk, if problems occur. I know several great lenders who have taken good care of my clients, so please call me or send me an email and I will give you a name and number to get started. (*I do not receive any financial incentive from the lenders I like – I just know that they won’t let me down!)
Once you know your budget, selecting the area, size, and features of your home are your next step. I like to meet with my buyers to go over all the factors that will influence their decisions. I try to learn what is really important to you, so I ask a lot of questions to help you focus on the most important features of your home and neighborhood.
The number of homes that you look at will vary. Some buyers are ready to make a decision after seeing only a few homes, while others will take months and need to see over 100 before they are comfortable making a decision. Your individual comfort zone will dictate this part of the process, and I never push anyone to buy. (Although I may warn you that if a particular house meets all of your needs, it may not last while you “think it over.”)
Once you have found a home that you like and can afford, the next step is to make an offer on it. The Purchase Offer form is currently 8 pages long, with 2 additional pages called the Buyer’s Inspection Advisory. Sometimes, if there is a great deal of interest in a property, you may have to pay over the asking price. Other times, if a home has been on the market for a while, or if the sellers are “highly motivated” you may be able to negotiate a lower price. I will provide you with the list of recent sales of similar homes and help you decide how to write your offer so that it will be accepted.
After your offer is accepted, you will usually have a contingency period (between 5 and 17 days) to read all of the disclosures and complete a physical inspection. I have a list of several reputable home inspectors, but if you already know of one, you are welcome to hire them to inspect your new home. The purpose of the inspection is to make you aware of any items that may need to be repaired. Some of these will be very minor, others may be complicated or expensive. The seller is not required to fix anything that is discovered during the inspection, but many times they will agree to take care of repairs to keep the buyer from backing out. (That is your option if you discover a condition that you are not willing to accept!)
In addition to the home inspection, buyers are given a number of disclosures about the property and the area. These usually include :
- Seller’s Transfer Disclosure Statement (“TDS”) – This tells what is included in the property, whether the seller knows of any items that aren’t working properly, if the property is subject to a homeowner’s association, if there are any neighborhood noise problems, etc.
- Preliminary Title Report (“Prelim”) – This is the legal description of the property along with a list of current liens,easements, or encumbrances.
- Homeowner’s Association CC&Rs, Budgets, and Minutes – These documents will tell you the rules of the association that govern the property, along with the current budget, and usually the last 12 months of minutes of the board of directors’ meetings. You should review these to make sure the that you can live with the rules (often there are restrictions on parking, animals on the property, a procedure for getting approval for exterior improvements, etc.) because when you buy in the association, you are agreeing to live by those rules!
- Natural Hazards Disclosure Report (“NHD”) – This will tell you if the property is in a flood zone, earthquake zone, a high fire hazard zone, or Mello-Roos tax district.
You should review each disclosure carefully, and ask questions about anything that you don’t understand.