Posts Tagged ‘steps to buying a home’

So you’re thinking of buying your 1st home? Step by step directions!

Tulsa home buyer's checklist

You’re already shopping online. I know that, because you wouldn’t be reading this blog if you weren’t.

You are going to need a good Lender and a good Realtor. You really should contact a Lender first, but if you’re unsure of where to go, choose a Realtor, and take his/her recommendation of Lenders. Realtors know from experience which Lenders are reputable and responsible.

You’re likely going to use FHA financing, which requires a 3.5% down-payment. This can be gifted from a relative, but the Seller can not pay it. You can ask the Seller to pay your closing costs, but they can not assist with your required down payment.

How much money do I need to have saved?

Your up-front out-of-pocket expenses will include (1) earnest money -typically 1% of sales price; (2) appraisal ($350-$400); and (3) inspections ($400-$500). For a $100,000 homes, that’s possibly $1900, PLUS your $3,500 down-payment, PLUS closing costs (unless you ask the Seller to contribute to your closing costs ($3,500 to $4,000).

You need to speak to a Lender FIRST to know how much home you can afford. No decent Realtor will take you house-hunting until you are pre-approved with a Lender. Plus, you don’t want to look at $125,000 homes, only to discover that you can only afford a $110,000 home. Trust me – there’s a huge difference in that $15,000 and you don’t want to begin this adventure with a disappointing start.

PLEASE DO NOT check your credit scores on the internet!! These scores are rarely accurate and will only adversely affect your score due to multiple inquiries. Your Lender can help you prepare if you provide all required information up front. You will not make it through the Lender’s Underwriter if you have had an insufficient check in the last two months, regardless of how high your credit score is. Your Lender can guide you and advise you so that you can prepare for a smooth transaction.

The $8,000 stimulus package is a great incentive to purchase your first home now, but it’s not worth it if you’re not ready. Is your job secure? Do you intend to use that $8,000 to buy new furniture for your home or can you set some of it aside for when your hot water heater unexpectedly breaks?

Once the Lender tells you it’s time to shop, select one Realtor to help you shop. Realtors can set up custom searches that are much more efficient than the searches you can do on realtor.com. We also know what to look for as far as homes being compliant with FHA guidelines. We are experienced negotiators and will walk you through the process.

I remember my first home purchase with the fondest of memories. It became my treasured money-pit and wonderful haven. Educate yourself, surround yourself with professionals, and have a great time!

Negotiating Repairs in Tulsa Oklahoma – compromise and compromise are key

In the state of Oklahoma, Buyers and Sellers agree to a “repair cap” when negotiating a real estate contract BEFORE inspections are done. I understand from real estate blogging that it’s not done this way in other states, but that’s how we do it here.

The amount agreed to in the real estate contract is the CAP that the Seller agrees to spend on repairs. After inspections, should the required repairs exceed the cap, the Seller has the right to back out of the contract or we re-negotiate which repairs will be completed and who will pay for what. I encourage Buyers and Sellers to divide the excess equally and sometimes I encourage the Buyer to be selective about which repairs really must be done.

When I’m representing a Buyer, I will look for things that I know will need to be repaired such as wood rot or a hot water heater that needs to be raised. We come up with a best guestimate as to what will be needed and determine the amount to request for repairs – all dependent upon how fair (high or low) our sales price offer is and whether or not we are asking for closing cost assistance from the Seller.

Typically, I will encourage my Buyer to ask for a low amount in repairs. If you ask for $1,000 and only $500 is needed in repairs, the Buyer is not refunded the unspent $500. The Seller is prepared to spend $1,000, but will net $500 more on the transaction if the entire $1,000 is not needed.

The majority of my transactions will result in a few plumbing issues that are inexpensive and easy repairs, perhaps some wood rot that is also easy and inexpensive or maybe the home inspector will identify a window that is not sealed properly. Everyone involved in the transaction sighs with relief when inspections yield such minimal results.

But let’s consider worse case scenarios.

The structural engineer discovers that piering is needed in one corner of the home and estimates that cost to be $3000 ($500 per required pier). Or the termite inspector discovers mold in the crawl space and recommends treatment in addition to a plastic vapor barrier and additional ventilation – that gets expensive.

If any result of the inspections CONCERNS the Buyer, they can withdraw from the contract and be refunded their earnest money, just as the Seller has the right to withdraw from the contract if the repair cost exceeds his repair cap.

At this point, the Seller has taken his home off the market for almost two weeks and the Buyer has spent $500 on inspections and another $375 on an appraisal, so both parties have a vested interest in keeping the transaction together.

Depending on the type of financing the Buyer has, some repairs may HAVE to be made prior to closing. Focus on the NEEDED repairs and give the WANTED repairs a lower priority if necessary. And if either party is short of funds, the Realtor can often recommend a repair person who will wait to be paid at closing.

Negotiating Repairs in Tulsa Oklahoma – compromise and compromise are key

We’re not opponents. One of you wants to sell your home and the other party wants to buy it.

The Seller really didn’t know about the needed piering – when you live in a home, you get use to creaks and groans – we don’t always notice when something begins sagging.

And Mr. Buyer, you knew the home was built in 1950 and you are buying a sixty year-old home – you didn’t really expect it to be perfect, did you?

Let’s compromise. If the Seller will pay for 75% of the piering cost, will you pick up the other 25% and wait to repair the dishwasher out of your year-end bonus?

Compromise allows us all to sleep better at night. Look for solutions, because they are likely right in front of you, waiting to come to light.

If you are interesting in buying or selling a home in the greater Tulsa area, please contact me!