Since this will be my last blog until the Christmas Holiday, I just wanted to wish everyone a Merry Christmas and a safe and Happy New Year!

I’ve been fielding a lot of questions about how exactly the process of buying a home works, from the initial showings, all the way to the closing table.  This blog will be dedicated to giving buyers the best possible description as to what they can expect on the way to buying their new home. 

Obviously, the buying process starts with scheduling private showings on some homes in the desired neighborhoods, price range, and other criteria that the buyers are looking for.  Your Realtor will assist in calling the listing agents and setting up times that work for both you (the buyer) and the owners (the sellers).  Keep in mind, that 24 hour notice is sometimes required before viewing a home.  This is because a lot of sellers are still living in their homes, and might need some time to prepare the home to be shown. 

After a successful showing, which might not come until about the 20th to 30th time (which is the current average for buyers in today’smarket), you may decide to write an offer for the home.  There are many intricate parts of an offer to purchase Real Estate, but that’s where your Realtor will take your hand, and guide you through the process step-by-step.  Our job is to make the home buying process as smooth, relaxing, and convenient as possible.  With any offer that is accepted, deposit money is required.  This amount is negotiable, but should be somewhere in the vicinity of 3-5% of the purchase price.  This deposit is also referred to as “Earnest Money”.  The check or money order will be made out to the listing broker (the company representing the seller), and will sit in their escrow account until the closing table.  It’s important to remember that this money does NOT go directly to the seller until closing, which is important for stuff that we’ll talk about later.

After this step, many buyers are unsure what happens next.  I’ve had questions like “What if the offer I’m writing is too high?  Can I still get my loan?” and “Can I still back out of the offer if I lose my job?”, amongst many others.  This is the part of the blog you should really pay attention to, and re-read many times, especially if you’re unclear on something.  The very next step after submitting the offer (assuming it gets accepted) is inspections.  There is a part in the Real Estate Contract for inspection contingencies, such as termites, radon, water & sewer, and the general property inspection, including roof, foundation, electrical, plumbing, etc.  Your Realtor will provide you with a list of licensed inspectors in the state you reside in, and have you contact one of them to schedule inspections promptly.  In most cases, you will have at most 15 days to inspect the home, before the contingency period expires. 

So what happens if there are problems with the home?  The roof is leaking.  The electrical is knob & tube.  The appliances (which were supposed to be included) are not working properly.  Well, at this point, you can write what’s called a “Reply to Inspections”, which is basically a piece of paper, signed by you and your Realtor, that requests either monetary credits towards the repair of faulty items, or you can ask for the items to be fixed and documented by the sellers, before the purchase goes to the closing table.   If the sellers agree to your requests, the next step in the buying process is made, which we’ll talk about later.

But wait.  What if the sellers deny your requests?  They don’t want to give you any more money towards closing, and they are refusing to fix any of the items listed in the inspectors report.  They have already accepted your offer, which was lower than market value, and they will NOT budge on anything inspection related.  Well, you still have options at this point.  Just because the sellers are not willing to answer your reply to inspections, you are not required to continue the home purchase.  At this point, if nothing can be resolved and the sale is at a standstill, you can get your earnest money back, and back out of the deal.  There is no penalty for this, and the only money you cannot collect back is the money you paid the inspector for doing his job, and providing you with a report.  The home will likely go back on the market for another buyer to purchase, and you can then start looking at other homes with your Realtor.

Let’s assume there are no problems with inspections, and you are happy with whatever was listed (or not listed) in the inspection report.  The very next step is the appraisal.  This is where a licensed appraiser will come to the home to determine it’s value.  Value is determined by what other similar, or comparable, homes have sold for in the past 6-12 months and within a 1/2 mile radius.  A homes value is always determined by this criteria.  So let’s say you wrote a $200,000 offer for the home you are under contract for, but the appraiser says it’s only worth $185,000?  At this point, your bank is refusing to lend any more money than the home is worth (which they will refuse, and why wouldn’t they?).  There is another section in the Real Estate Contract that you fill out prior to the offer being accepted, which is the “Mortgage Contingency Clause”.  This section basically says if you cannot obtain financing for the home, due to low appraisal, loss of job, or any other reason, you do NOT have to purchase the home, and are entitled to have your deposit money returned to you.  Sometimes, the seller will receive the appraisal and agree to take less, since that’s what the value came back as.  If that’s the case, then this problem can be avoided and you can proceed to closing. 

Once the inspections and appraisal are completed and pass, there isn’t too much standing in the way of you and the closing table.  As a buyer, it is ALWAYS in your best interest to have a title search performed.  A title search is performed by an Abstract company.  Some attorneys are also able to perform the search.  What the heck is a title search?  Well, basically, it makes sure there are no outstanding liens against the property you are buying, and gives you assurance that you won’t be inheriting any of the bad debt that the previous owners might have had.  There is of course a cost associated with having this service performed, which is all tied into your closing costs, which are paid at the closing table.  Title insurance cost is determined by the value of the home, and the Abstract company you choose.

I know this blog was long, but I also feel it’s important.  As a buyer, you have to know these things before getting tied up in a contract.  If you do not have a Realtor, and are currently looking at homes by yourself, stop wasting your time!  There are dozens of questions that you will have after going to an open house, or calling the listing agent to see a home.  You should have a Realtor in your corner to answer these questions.  Chances are, we’ve heard all of them before, and know how to answer the tough ones. Our service to you is absolutely free (unless otherwise specified), and we normally collect our commission from the sellers, for finding them the buyer. 

If there’s something I may have been unclear on, or something else you really want to know, you can call or text my cell @ 570-780-4567, or email me at pgodlewski@semiangroup.com !

Merry Christmas!