Owning a home is a big part of the American Dream. Although the home buying process may seem complicated, with your real estate agent’s help you will soon be holding the keys to your new home! Here are the steps that will guide you in buying a home in North Carolina;
Before You Start Looking For a New Home;
• Check your credit rating. Before lenders approve your home loan, they need to determine the risk they will take and how likely you will repay the money they loan you. What are FICO Scores?
• Figure out how much you can afford. What you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate.
• Get pre-approval for a loan. Find a mortgage broker or a direct lender to determine the size of mortgage for which you can qualify. The pre-approval letter the lender issues you will help you to be taken more seriously by agents and sellers because they will recognize you as someone who is prepared to buy.
Select the best buyer’s agent
Hire an Agent You Trust.
• Hire an agent, particularly a Buyer’s Agent who can help you in numerous ways. A Buyer’s Agent must; promote your best interests, be loyal to you, follow your lawful instructions, provide you with all material facts that influence your decision, use reasonable skill, care and diligence, and account for all monies.
• Sign a Buyer Agency Agreement. With a signed agreement, the agent becomes a fiduciary and must act, by law, in your best interest. Until you make this agreement with your buyer’s agent, you should avoid telling agent anything you would not want the seller to know. You don’t have to worry about paying your agent’s commission because the seller pays the commissions of agents on both sides.
Make a List of Your Likes and Dislikes.
• Write down what you like and what you don’t like in a house. When you shop for homes, keep in mind what your price point, criteria are and share your thoughts and feelings with your agent. Determine the features of the neighborhood that attracts you the most. Is it in a waterfront community? Or in a golf community? Or close to your job and your child’s school? Having a clear understanding of what you want, your agent will work with you and take you to a neighborhood that matches your needs.
• With your price range and home requirements in mind, your agent will email you listings of home to look at before your actual visit. You will then let your agent know the homes that you’ve selected so he/she can make showing appointments. It is very important to keep a constant contact with your agent at this stage.
Showing of Homes.
• This is an exciting part of the process where you may be seeing 10 to 25 homes a day. You will be overwhelmed, but it’s best to take down notes on the MLS sheets that your agent has provided you. A second visit to the homes that made the first cut will help you in decision making.
• Although there are photos in the MLS, bring a camera with you to capture the best features of the homes that you like.
Making an Offer.
• After finding the right property, your agent is now ready to make an offer on your behalf. Be prepared to write a check for the earnest money deposit which is more or less than 1% of the contract price. The first thing your agent will do is to prepare a Comparative Market Analysis (CMA) to make sure that the property is priced right based on similar properties sold in the same neighborhood or area within the last 6 months.
• After the offer price has been determined, your agent is ready to fill in the blanks on the standard form of North Carolina Offer to Purchase and Contract (Purchase Agreement in some states) which will be submitted to the listing agent (Seller’s Agent) either by fax, email, mail or hand delivery (if local). This contract will be explained to you by your agent. Make sure that you have signed the Exclusive Buyer Agency Agreement with your agent before making an offer so that he/she will represent you in the transaction, otherwise, your agent will be a Seller’s sub-agent.
• It may take a while to get into an agreement. There could be several counter offers until the gap between the seller’s price and your price is closing in. The contract states the purchase price, personal properties to be included, earnest money deposit, financing, date of home and termite inspection, closing costs, name/s on the deed, closing date and other provisions. Be prepared to write two checks: one is for the Earnest Money Deposit (payable to the escrow agent) and the other one is for the Due Diligence Fee paid directly to the seller.
What Happens Before Closing?
• Due Diligence Period – Homebuyers in North Carolina have a period of time to investigate the property (and the loan process) and decide if they want to proceed or terminate the transaction. During the due diligence period, the buyer must complete all of the inspections, appraisals, surveys and the buyer’s needs to be satisfied with the documents regarding the home; the availability and affordability of home insurance; and the buyers ability to be approved for a mortgage. There is a non-refundable fee payable to the seller called “Due Diligence Fee”. If for some reason the buyer decides to terminate the contract before the end of the due diligence period, the Earnest Money Deposit will be returned to the buyer, but not the due diligence fee. However, if the transaction goes through both the EMD and DD fee will be credited to the buyer at closing.
• Get the loan underway. Once the contract has been executed, you must start following through your loan. If you have been pre-approved, much of the legwork has been done and your loan will process more quickly.
• Get the house inspected. For your protection, inspection should be done before buying a house to avoid problems, disappointments or lawsuits in worst case scenario. Your agent will provide you a list of inspectors; home, termite, radon, stucco, well and septic and structural inspectors depending on the situation. After you’ve picked the inspectors, your agent will make arrangements with them. You don’t have to be present for the inspection, but your agent should be. A brochure about home inspection should be provided to you by your agent. Sometimes, most of the items requested get fixed by the seller, sometimes, it could be battle. It’s not just the price that buyer and seller negotiate but repairs as well. Once a repair agreement has been reached, follow through to make sure that all repairs are done correctly by professional contractors or by the seller himself. Having a good real estate agent on your side is a life saver. Well, life is not easy, but after all the anticipated arguments people find ways to settle the disagreements.
• Your agent will contact a closing attorney and provide them a copy of the contract. You will then know the time and place of closing where buyer and seller meet for the first time. In some cases, seller can go to closing at a different time. Your agent will also contact a home warranty company if it’s in the contract.
• The house will be appraised. The lender will order an appraisal for the property. If the house did not appraise, you can go back to the seller to renegotiate the price. This is where your agent’s negotiating skill will be put to the test again. If the house appraised, there’s nothing to worry about.
• Walk-thru Day. Your buyer’s agent will inform the seller’s agent about the day and time of the walk-thru. Some agents conduct a pre-walk-thru just to make sure that all issues on repair have been addressed and to give ample time for sellers to make corrections, if repairs are not done well or if things have not been fixed yet. However, majority of agents do the walk-thru with their clients (buyers) a day or a couple of hours before closing. If there are other issues on the table, the two parties can settle their differences with the help of the closing attorney.
The day before closing, the closing attorney should send a copy of the Settlement Statement or HUD-1 to your buyer’s agent who, in turn, would explain to you the closing costs and the amount of certified check payable to the real estate attorney that you should bring at closing. At the closing table, the closing attorney reads the Settlement Statement line by line. If both you and the seller are present, the attorney discusses the seller’s part first, then have them sign the Transfer of Deed, IRS form and HUD-1 and let them go first because the buyer has more documents to sign than the seller.
• You get the keys! Congratulations! You are the new owner. However, you may encounter some picky seller who would not release the keys until the deed has been recorded in the county and until they get their check. Again, your real estate agent will come to the rescue.