Buying a home is one of the most exciting milestones of your life. To prepare yourself for this moment, you need to know what to expect during the process. This step-by-step buyer’s guide will help reduce the stress of buying a home and help you enjoy the journey as much as possible.
Are you tired of paying rent? Have you outgrown your current home? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Do you want to downsize? Does a condo, townhome, or single-family home best suit your needs? Which features do you like and dislike? What’s available on the market now? Now is the time to start researching. In addition to looking for homes that interest you, also take note of any changes in asking prices. This could give you valuable insight into housing trends in specific neighborhoods and help you when the time comes to make an offer.
Notice I said to decide on your budget—not determine how much the mortgage company will give you. In many cases, a mortgage company will pre-approve you for more than you’re comfortable spending, which is why you need to determine the monthly payment you feel comfortable with before talking to a lender. This likely includes doing a full household budget and taking into consideration what changes other than a mortgage payment will occur once you move into your new home. If you’ve lived in an apartment or with roommates, you may overlook new expenses like trash, water, a gardener or HOA fees that could easily blow your budget.
Just because you think you can afford a certain payment every month doesn’t mean the mortgage company will agree. Just as they may approve you for too large of an amount, they may also approve you for a lesser amount or deny you a mortgage altogether. Lack of time at a job, insufficient credit, past bankruptcies, or other financial issues can cause major problems when trying to secure a mortgage. Before you get your heart set on a home, talk to a mortgage professional to find out what amount you can qualify for. This will also be an advantage when you make an offer on a home, as some sellers won’t entertain offers from those who aren’t already prequalified for a loan.
Can you shop for, look at, and ultimately make an offer on a home without a real estate agent? Technically yes, but why would you when you can work with me to protect your interests in an expensive and often very complex negotiation. Not only will I help identify properties you might be interested in, arrange showings, and ultimately handle the offer process all the way through closing, but I also have a knowledge of the market that you don’t possess. I may be able to point out the negatives with a potential home that you miss, suggest hidden gems or neighborhoods that you are unaware of or give you pointers that will help you find your dream home for the right price. I do this every day for a living and I take great pride in doing an excellent job for my clients.
This should be the most enjoyable step of the entire process (other than moving in!). I will arrange showings of homes you’re interested in that are within your price range. Take notes about what you like and don’t like, and make sure to pay attention to details. There are also open houses to attend, most often they are held on the weekends and during Tuesday's Broker Caravan. I can accompany you if you want, or you can visit on your own schedule. It may take a while to find the right home, so be prepared for that and don't give up after a few weeks. During this time you should explore the neighborhoods you are interested in and keep an eye on traffic at certain times of the day so you can figure out your commute time, the parking situation, and how close it is to necessities like schools and grocery stores. But also take this opportunity and don't forget to explore new neighborhoods and expand your horizons about where you might live. Los Angeles is a big city. Friends and family may have their own opinions about the neighborhoods you should live in, but this when you get to make up your own mind.
Once you have selected the perfect home, we're going to work together to craft the offer that will get you under contract. To start we'll look at the recent sales of comparable homes within the neighborhood. Then depending on what the home is listed at and whether the current environment is a buyer’s or seller’s market, you'll decide on your offer price, which may be below, at, or even above the asking price. There's more to the offer than just the price. We'll discuss contingencies, length of escrow, what will be included with the sale and other terms that could swing the sellers in your favor. I will be able to help you negotiate if you receive a counteroffer and hopefully soon after you'll reach an agreement with the seller and at this point you will be under contract and the house will go into escrow. It is usual in Los Angeles for the buyer to place a 3% good faith deposit into escrow at this time.
In most cases, your offer will be contingent on having the home inspected to ensure there is no major structural damage or large repairs needed. I can help you arrange this and know inspectors with excellent ratings and many years in the business to cover any inspection needs that you will have. These are outside vendors, who report directly to you. You do not have to use any of my suggested vendors, I am simply providing you with options. There are many aspects of a home to consider and it takes more than one inspector to make sure that everything is looked at and thoroughly inspected. This is the time for you to really discover the condition of the home, so it's not the place to skimp and try to save money on inspectors. Alongside the physical condition of the home you will also want to inspect the paperwork and look at the Title Report plus the seller disclosures. It's also the right time to make sure you can get Homeowner's Insurance on the property. If there are no major issues, the process goes to step eight. If there are issues then you can try to renegotiate your offer based on what needs to be fixed, or you can cancel escrow and walk away.
As soon as you got the property under contract we gave the completed contract to your lender and introduced them to Escrow. This is the time for you to keep in close communication with your lender who will let you know when additional documents are needed to approve your loan application and fund your loan. Your lender will also discuss "locking in" your mortgage rate and based on your unique financial situation you will decide which mortgage option you feel the most comfortable with.
The lender will send an appraiser out to the property and you will pay a fee for this service. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs and recent sales of comparable properties. The appraised value may or may not be the same as the agreed upon contract price between you and the seller. If there is a negative discrepancy you will need to decide if you want to pull out of the deal, try to negotiate with the seller or make up the difference from your own funds. If the property appraises for more than the agreed upon contract price, you do not pay more for the property.
A few days before escrow is due to close, we'll do one last walkthrough to make sure everything is in order. If repairs were requested and agreed to, we'll make sure those have been carried out. Here you are: you've completed your final walkthrough, satisfied yourself as to all inspections, agreed upon any repairs/credits, reviewed all disclosures, secured homeowners insurance, gotten a home warranty and are ready to move to the finish line. Closing is where ownership of the home changes hands. Escrow will work with your lender to receive the closing/loan paperwork and will set up an appointment for you to meet with a notary to sign these papers. This paperwork is reviewed by your lender and they fund your loan. At the same time you are depositing your funds to close into escrow.
Once escrow has all the monies to close, they will instruct Title to record the property in your name.
Once that happens the property is yours, and I will hand you the keys to your new home on closing day!
Welcome to your new home!
She has represented buyers and sellers in all price ranges, from modest condominiums to multi-million dollar estates throughout Los Angeles.