October 10, 2012Home sales across the county have begun to rebound. According to a report from the National Association of Realtors, existing home sales rose in July 2012 more than 10 percent over sales from July 2011. Additionally, the price of the homes sold during that month also went up. Many in Real Estate say they believe that 2012 will be the first year since 2005 that both the number of homes sold, and their selling price, will go up.
Whether you are actively in the process of buying a home, or just beginning to consider a home purchase, the first thing to do is talk to a Realtor. Betty Smith, president of Smith Marketing, a company affiliated with Allen Tate Realtors, suggested that prospective home buyers, especially first-time buyers, meet with a Realtor even before they begin looking at homes.
"They can talk about the process together and review the different forms they will be signing, so when the day comes to close, the buyers won't be scared to death of it," she suggested.
The next step is to talk to a lender, preferably in person, said Smith, rather than online. David Nishan, a certified mortgage planning specialist, and the area sales manger for McLean Mortgage, explained that there are four steps in the mortgage process: pre-qualification, pre-approval, the loan commitment and the closing.
During the pre-qualification, potential buyers undergo a check on their credit history, income and employment history, and an evaluation of their current assets for a down payment.
The next stage, pre-approval, is when buyers find out what they qualify for in terms of a loan amount. Smith said that based on the pre-approval, the Realtor and the buyer should then discuss what the buyer wants. Smith said this helps the Realtor present the buyers with the best options.
"Then the Realtor knows what's important to them and can select homes for them to start looking at," Smith said.
For buyers, now comes the fun part of looking at what's on the market and narrowing down their choices to one or two homes that meet the majority of their requirements. Smith said that often she will set clients up with an account on Listingbook – a site accessed via the internet with Multiple Listing Service's Real Estate information – so they can look at homes at their convenience. She said some buyers also enjoy visiting open houses during this period to see what is available.
Once a buyer finds a home, an offer can be written and the negotiation process begins. Smith explained that once the buyer and seller have agreed on an offer, the buyer will officially apply for the loan. This is all part of the due diligence period. During that time, an inspection will also be performed on the home. When the property and borrower are cleared by the lender, then the buyer enters into the loan commitment.
The final step is the closing, when the Realtor, the buyer and seller meet at the closing attorney's office to sign all the necessary paperwork.
Nishan said that someone from his team attends all of their closings and provides a settlement statement at least 48 hours before the closing to insure that everything goes smoothly.
Smith added that if it is not a first home buying experience there will be other factors involved.
"They may have to sell a home before they can purchase. Typically I tell buyers to try to sell before they start buying," Smith said.
She said she suggests this so that the buyers' don't get their hopes up about a particular property and then find their home doesn't sell, making them unable to purchase the one they wanted.
"It's a process you have to go through," said Smith. "For the buyer it's more emotional than for the lender or Realtor, so somebody needs to be very calm and methodical about taking the buyers through the proper process."
If you have decided to build your home rather than purchase an existing home, the process of buying changes a bit. Don Mills, owner of Don Mills Builders Inc., said he advises those looking to build to start with the builder.
"You definitely want referrals and to go out and look at their product. Ask questions, and talk to people they've built for," he said.
Mills also said he urges customers not to purchase a lot until their builder has looked at it, because there can be hidden issues. He said he has seen instances where a lot wouldn't accommodate a buyer's desired house plan because of the size of the home.
Rich Dumas, owner of R&K Investment Properties Inc., agreed, and said it's important to have the builder help with the lot purchase, as well.
"What we do, first thing, is bring the customer in and talk about everything, from what they want in a house to financing. And we do these consultations for free," he added.
Dumas also stressed that buyers should ask as many questions as possible so they're not disappointed during the process.
Dumas said he urges people interested in building to not get caught up in the price until they understand everything they're getting for their money.
"Check out the allowances, and make sure you're getting apples to apples," he said. "You might get a $20,000 cabinet allowance from one and $30,000 from another."
Next, Mills said he believes potential buyers should be aware that it is always easier to pick a smaller floor plan than they can afford, because "it's easier to blow up a plan than shrink it down." He said he also tries to remind people not to overbuild for their location.
"You have to keep in mind what your goal is. You are trying to spend your money wisely, and you don't want to put your money into something and never get it back," Mills said.