What Mike Does for Buyers
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First of all, I want you to know what I will do for clients looking to purchase a home.
Pre-approval and Budgeting
The process of buying a home must start with determining what you can afford. This is determined by two factors:
1) How much will a lender (the bank) loan to you to purchase a home?
2) More importantly, what is your budget?
The bank may be willing to lend you more than you can realistically afford. A good rule of thumb is no more than 25-35% of your monthly budget should be allocated to your mortgage. Of course, this percentage varies for everyone.
Selecting a Lender
I can help you find an honest, legitimate mortgage banker or mortgage broker. I encourage you to be careful about choosing a lender and to be wary of online lenders. My personal experience has not been favorable with online lenders. I would encourage you to select a lender in the community where you are buying.
By law, the lender will provide you with a good faith estimate, which is the best way to compare lenders. One final piece of advice on lenders – never sign a loan that has a pre-payment penalty.
Searching for Homes
One of the best tools for searching homes for sale is what is often called the Multiple Listing Service (MLS) or the Broker Listing Cooperative (BLC). In the Indianapolis area, the Metropolitan Indianapolis Board Of Realtors (MIBOR) uses the BLC. Since I am a MIBOR member, I have access to this list and I can customize your home search in great detail.
I can begin searching after you share your needs and wants such as the amount of money you want to spend, area(s) where you want to live, number of bedrooms, number of baths, size of garage, school preferences, age of home and foundation preferences (slab, crawl space or basement). If you desire a basement do you want it to be finished, daylight window or a walkout? Other items can be added to the list to help find the perfect home.
Once I have this information I can send you a list of homes that meet your criteria. After the initial list is sent then I can set you up to receive an automated email every time a new home is listed that meets your criteria.
Now that we have a list of potential homes, let’s go find the one that’s right for you!
You will find that I am not a pushy salesman. I’ll help you sort through your list of needs and desires. I’ll show you all the homes on your list until we find what you want without pressure selling, no matter how many homes you want to see. You can be comfortable knowing that I want you to be happy with your new home and future investment.
How many homes you’ll see depends on you and what’s on the market at that time. I have had clients buy the first home they see and other clients look at more than 40 homes before making a decision. On average, most buyers look at 12 homes. Searching for a home can be stressful and tiring, but the more homes you visit, the more time we’ll have together. This will allow me to get you know you better and make a new friend.
Making an offer
We found it – the perfect home! Now it’s time to make an offer. The offer is made to the seller on a purchase agreement. At that time, you’ll need to write a check as earnest money. Earnest money is generally $500 or up to 1% of the purchase price offer.
I will thoroughly explain the purchase agreement to you so you will be comfortable with what you are signing. At this stage, you’ll begin to understand the flexibility that a Realtor has to ensure that you are asking for exactly what you want. This includes terms of financing, purchasing of appliances, inspection, closing date and time, earnest money and any further considerations that you may have.
The seller is customarily given 24 hours to respond to the purchase agreement. If a bank owns the property, the response may take several days. The seller can do one of three things: 1) accept the offer; 2) reject the offer; or 3) counter the offer. A counter offer is the most common response.
The Counter Offer
If a counter offer is received we will work together to decide if we want to accept the counter, reject the counter or make another counter offer. As a certified negotiation specialist, I will work with you to write a reasonable counter offer. I have rarely walked away from a deal because the two parties are not able to achieve a final agreement.
The Home Inspection
After both parties have agreed to purchase terms, you should order a home inspection. You should select who you want to inspect the property, but I can help you find an honest inspector if you desire. I recommend selecting an ASHI-certified home inspector.
You will pay the cost of inspection upon the time of inspection. Inspection fees are based on the size of the home and range from $250 up to approximately $500 for a larger home. If possible, you should plan on being at the inspection and following the inspector through the home. This will help you in determining if there is a problem that causes you concern.
Following the inspection, we will prepare a buyer’s response to the inspection and send it to the seller. The response contains the items that the buyer would like to have repaired or replaced. Note: When buying a lived-in home, you are making a request for major defects, not for minor repair items.
The purchase agreement will contain the appropriate language speaking to the handling of repair issues. The seller can accept and fix or repair the items on the inspection response, or they can decline to fix the items or part of the items you have requested. Finally, they may write another counter offer to the inspection response request. You, as the buyer, can accept, reject or counter the offer. Again, as a certified negotiation specialist, I will help you through this process.
Other Details and Closing
As your Realtor, I will review the title commitment to determine if there are any preliminary title issues. In Indiana, the seller normally pays for the commitment or an abstract of title showing marketable title to the property in the seller’s name. The mortgage company will also require title insurance from the buyer. The buyer’s cost is usually around $150-175.
I will remind you to contact the utility companies and give you the names and phone numbers of those that service the area where you are moving.
Before the closing we will do a final walkthrough to ensure that the home is in good condition and agreed-to repairs have been completed.
The day before the closing we will receive the HUD statement, which will include the buyer and seller’s costs and the money due at time of closing. I will review those numbers with you to make sure you understand the numbers. I hold an accounting degree from Southern Methodist University and you can be confident that I’ll review these details carefully.
The final step is the closing and yes, I will be there to make sure you understand the process and the papers you are signing. In Indiana, closings are generally done by a title company and not by an attorney. The paperwork is pretty standard and the closer will explain each document that requires your signature. If I have any doubt about the title company’s ability, I will ask the seller to choose another company.
Strange things often happen after the closing. I want you to feel free to call me with any problems. If there is any way I can help, I will.