You’ve decided that you are ready to buy a home. Uncertainty about the process can be a major source of stress for first-time homebuyers. Buying a house does not need to be overwhelming. Rest assured that with the right information, and the advice of experienced and trusted professionals, your first purchase can be a painless, and positive experience.
Think about financing. If you will need financing for your purchase, you may want to get pre-approved for a loan before you begin looking at properties. Having a pre-approval will not only help you determine your price range when looking, but it will also ultimately make your offer more attractive to sellers.
Find the right Realtor. Make sure your real estate agent understands not only your cost parameters, but also your personal goals. Are you looking for good schools and a quiet neighborhood? Do you prefer to be close to services or major commuting roads? Choose somebody who will listen to you, and don’t be afraid to speak up about what you do and do not like.
Think before you make an Offer. Don’t feel pressure to make an offer on the first house you see. Try to see a few places to get a sense of the local market. When you do decide to make a bid, work with your real estate professional to ask questions about the property, and make sure that you are satisfied with the answers before you make the offer. If you are satisfied and ready, don’t delay. If you wait too long, there may be other offers, which will put you in a weaker position when negotiating the price.
Understand the process. Generally, there are several steps in the purchase process. First you will find your property and submit an Offer to Purchase. If the Offer is accepted, you will likely have the opportunity to retain a professional home inspector to conduct an inspection of the property. After that, your real estate attorney will work with you to negotiate a Purchase and Sale Agreement (a.k.a your “P&S Agreement”), which is generally signed 1-3 weeks after the accepted offer. After the Purchase and Sale Agreement is executed, you will usually have a period of time for planning and completing your financing paperwork before the real estate closing. The closing will usually occur within 30-60 days of signing the Purchase and Sale Agreement, but can occur at any time by agreement of the buyer and seller.
Know the costs. First time-home buyers often forget to consider all of the costs and timing of payments associated with the purchase before making their offer. Generally, there will be a small check for earnest money paid with the Offer to Purchase. An additional deposit will be required at the time of signing the Purchase and Sale Agreement. The total amount of these deposits are negotiable between Buyer and Seller, but often total 5% of the purchase price. These deposit amounts will then be credited as a portion of the purchase price at the time of the closing. Additionally, the buyer must budget for closing costs which will be due at closing. A first-time homebuyer should work with their real estate and mortgage professionals to calculate this approximate figure to determine the total cost of the purchase when deciding to make an offer.
Avoid Surprises. After an Offer to Purchase is accepted, the buyer will have the opportunity to have the home inspected by a professional. Unless you are a professional contractor or handyman, it never pays to skip the home inspection. A qualified home inspector will identify repairs and defects (both major and minor) which may be missed in a simple walk-through of the property. The buyer can use the home inspector’s report to determine if the house needs major costly repairs that would cause him or her to back out of the deal. Additionally, the buyer can use the report to negotiate a price reduction to address issue that will need repair in the future.
The most important rule to remember when making an offer to purchase real estate is: don’t be afraid to speak up. None of your questions should go unanswered. Your qualified real estate attorney and team of professionals will ensure that you have a smooth purchase process, avoiding any pitfalls and surprises along the way.
Jessica Sales Cohen is a partner at Cohen & Sales, LLC, a Waltham based law firm with a combined 30 years of experience in Real Estate Conveyancing and general litigation. For more information contact Cohen & Sales, LLC at (617) 621-1151 or firstname.lastname@example.org.