Home Buyers Guide
There are a lot of details and steps that we will handle in order to meet your goal. There are many factors that are important parts of a successful transaction. With K & O Realty, we make your needs our priority to learn about things that will affect the purchase of your property. We believe that open communication and honesty are essential to building a relationship of trust with you. With K & O Realty, you'll have a partner answer your questions and guide you through the entire selling process.
We are your local experts! Give us a call to find out about current market conditions or if you have any other real estate questions.
Services We Offer
What is your home buying style? Do you know what you want? Maybe you know exactly what your next home should be and you need a real estate agent who can take care of every detail for you.
We know that everyone is different in how they approach buying a home. We work with each buyer individually to consider all the options, and ensure your are set up for success.
Services we offer:
We negotiate on your behalf or equip you to be in the best position for negotiations.
We will provide qualified and trusted resources when needed such as lenders, builders, or inspection specialists.
We explain contracts and disclosures while navigating you through all aspects of the home buying process.
We answer all your questions before, during and after the purchase of your home.
Steps to Purchase a Home
Loan Application process. Provide lender with all necessary paperwork for your purchase.
You must have a Lender Letter at the time the offer is submitted.
Broker will send listings with your criteria to the email address on file. Broker can also assist with listings that the buyer may find, possibly even "for sale by owners".
Buyer will select homes and Broker will set up showings. When the Buyer finds the home they want, the Broker will contact Listing Agent and write up an offer. The Lender Letter must be presented with the offer.
Ernest Money Delivery: Once the home is under contact, Buyer will need to deliver the Ernest Money to the Title Co. or Listing Co., whichever is listed.
Buyer will also start receiving Title work approximately a week after being under contract.
Buyer will need to set up an inspection as soon as p ossible. Broker will provide some inspector names or Buyer can use an inspector they know. It is not mandatory for Buyer to be at the inspection, but it is highly recommended. Broker will not be at the inspections. The inspection is made so that the Inspector and Buyer can go through the home without interruption. Also, Buyers find this a great time to measure and visualize their belongings in the home.
Once the inspection has been completed, a Report will be sent over. Buyer and Broker will discuss what Buyer is wanting to have the Seller repair and then write up an Inspection Objection Report. This report is signed by the Buyers and emailed to Seller's Broker.
Note: Sellers are not required to repair these items and can terminate the contract at this time or come back with a resolution stating what they will repair or replace.
Your Lender will be in charge of ordering the appraisal. It is best to wait until after the inspection is done before ordering the appraisals so Buyer won't incur a charge if they are not happy with the home after the inspection. In faster closings, this isn't always possible. Please speak with the Lender about this process, so they do not order the appraisal before youare aware of it.
The Lender will contact Buyer once the appraisal is in. If the appraisal comes in at purchase price or above, we will proceed with the purchase. If the appraisal comes in lower than the purchase price, Buyer wiould then have the option of terminating the contract or inquiring if the Seller would consider lowering the price.
The closing is scheduled with the Title Co. It takes approximately 1 hour to close the property. All parties will be notified of when and where the closing will take place.
You will need to bring your driver's license and the amount of money you will be given by the Lender. That amount will need to be in a cashier's check. They will usually not allow personal checks at the Title Co., especially larger checks.
10 Things Home Buyers NEED to Know
Whether you are buying your first home or you've been around the block several times before, Beware of these pitfalls that can be avoided.
1. You didn’t get pre-approved.
A pre-approval is basically a promise from the lender that you’re qualified to borrow up to a certain amount of money at a specific interest rate (under certain circumstances). A pre-approval aids you in several ways in your home purchasing process:
It lets you know what your financial limits are in your home search.
When you are ready to make an offer, this pre-approval will support your offer because it proves you are a serious buyer and you have funds ready for the home purchase.
It will speed up the lending process in case a quick closing is necessary.
2. Not considering additional monthly cost.
You have your pre-approval. Awesome! However, the purchase amount that your bank is willing to finance might not be the amount that you are actually comfortable with. Have you given thought to home owners insurance? How much are your local taxes?
Other cost to consider might be:
Monthly Home Owners Association (HOA) dues.
Home and yard maintenance.
Additional utility cost (water, heating cost) if your new home or lot is larger than what you had in your rental.
Benefits to consider are certain tax deductions for homeowners. Ask your local tax professional.
3. You can’t see “the good bones” of a home.
The location is great, the price is right, perfect number of rooms. Everything adds up but you just seem not to be able to see past the dated decor, the brass fixtures, maybe even some deferred maintenance. Maybe you really don’t want to do any work and move right in?
There is a price for updated, perfect and “move in ready”. Are you willing to pay the price? Take a step back and think about it: It is often cheaper to do some home improvements yourself to save money. Most likely you’ll still save some cash if you hire a contractor to do the updates.
If you have the vision, you will likely save money off the purchase price AND the chance of finding yourself in a multiple offer situation (which actually drives the price UP) is less likely.
4. You didn’t believe the mantra: Location, Location, Location.
Have you done your neighborhood homework?
Ask your real estate agent about home values in your neighborhood in the last 12 – 24 months.
Drive the neighborhood at night. Maybe you’ll see the neighborhood in a new -excuse the pun- light.
Chat with the neighbors. Ask them questions about previous owners and things that happen in the neighborhood. You’ll be surprised what neighbors want to you to know.
Take a look at your closest schools.
5. Being too picky or too swift in your decision.
Tell your real estate agent what you want in a house! Dream! However, when it comes down to it you might have to compromise. The choice might be simple but raw: either compromise or keep on renting until you can afford everything that’s on your list.
On the other hand, don’t be swept away by minimal but effective upgrades that you end up paying lots of money for. If this one particular house has what NO other property offers, by all means, go for it. Just don’t be impressed by ‘bling’. Real value is what you are looking for. Ideally, search for a home that you can add value to yourself.
6. Buying the most expensive house on the block.
If you have the home of your dreams you really don’t consider moving. In short, you’re are happy and you have the most expensive house on the block. Good for you. However, if you are like most homeowners you will sell your home within 5 to 7 years after the home purchase.
Your future buyers will want to buy a $500,000 home in a $500,000 neighborhood. Quite frankly, all the lower values will actually pull yours down.
7. You didn’t have a home inspection.
As a future new homeowner, you want to make sure that you get exactly what you are paying for. Get the home inspected to learn what condition the house is really in. A home inspection is also a negotiation tool to lower the price or to get out of the contract if the condition is completely unacceptable.
8. You used the sellers agent-what can go wrong?
As a buyer, you do not have to pay for any real estate agent services. The seller pays for that. A buyer’s agent will be your advocate and guide you through the home buying process. If the involved agent is the seller’s agent his interest lies in the seller only. If he is a transaction broker, then he basically just makes sure the sale/purchase is completed without recommendations, suggestions, or advice.
9. You forgot about closing cost…
…when you started looking for homes. Ask your lender about closing cost to help you prepare for what you might have to expect.
10. Spending big while you are on the house hunt.
While you are on the house hunt keep your spending to a minimum. No you don’t have to go hungry! Simply don’t buy a truck or run up a credit card bill. Even though a lender has pre-approved you, when your income to debt ratio has changed so will your lender’s opinion on your credit worthiness.
Questions Before You Begin
1. Should I talk to the bank before looking at homes?
YES! There are many reasons why you should speak with several banks, choose a lender, and get pre-approved for a mortgage loan to make sure you are looking at homes that are in your budget. There is no reason to look at a house listed at $300,000 if you can only afford up to $250,000. There are also many “first time home buyer” incentives that you will understand once you speak with a bank. Knowing exactly what is available to you is important and this is one of the most frequently asked questions!
An additional important reason to speak with a bank AND a realtor is to understand all of the costs associated with purchasing a home. Sometimes home buyers don’t understand the difference between a down payment, pre-paid items, escrows, and closing costs. Those can all be thoroughly explained by a home mortgage professional.
2. How do I choose a lender?
Some basic guidelines:
Shop around and get offers from at least 3 different lenders.
The lowest interest rate isn’t always the cheapest option.
Consider your monthly payment and how much money you need to bring to the closing table.
Choose local lender who is invested in educating and guiding along the loan process.
3. What are the first steps in the home buying process?
Define your goals.
Determine your price range after meeting with several banks (see above).
Establish a cash reserve for earnest money.
Choose a real estate agent to guide you through the home buying process.
4. What are some of the most common home buying mistakes?
Not getting pre-approved. Pre-approval gives you an advantage in this seller’s market and gives you a realistic idea of your budget.
Overlooking additional monthly costs like HOA fees, yard and home maintenance, and utilities.
Using the seller’s agent. Make sure you hire your own agent to be an advocate for you.
Buying the most expensive house on the block.
Skipping the home inspection.
Spending big during the home buying process. Things like buying a new car or running up a credit card bill can make your mortgage lender reconsider their approval.
5. Should I buy or continue to rent?
This is a very personal question for each individual and family looking to purchase a house. There are many factors to consider: your current rent, what interest rates are available, what your budget looks like, etc. Ultimately, getting a clear and honest picture of your financial situation will help you make this decision.
6. I already own a home. Should I buy another home before selling my current home?
This question has lots of differing opinions so we will give you both sides here. The largest benefits to purchasing another home before selling is simply that you have another suitable property lined up. The benefits of selling your home before purchasing another? You will be in an ideal situation to negotiate on the purchase of your new home because you are not contingent on the sale processing of your old home. The risk here is that you may sell faster than you can find a new purchase and be in a temporary location for a bit.
7. Do I really need a realtor when I buy a home?
YES! To be sure YOUR interests are being looked out for, you should have a realtor representing you that is separate from the realtor representing the seller.
8. Who pays the realtor fees when buying a home?
There are never guarantees, but typically the seller pays the realtor fees.
Questions While House Hunting
9. What is a short sale?
The easiest way to understand a short sale is the sale of a home in which the proceeds of the sale are less than the balance of debts on the home and the owner cannot afford to pay the debts. A few things to consider before purchasing a short sale:
Foreclosure is still possible.
Many short sale properties are not well maintained and in disarray.
10. What is a foreclosure?
A foreclosure can actually be a much smoother process than a short sale. A foreclosure is a property owned by a lender and it’s important to know that most of these foreclosures are sold “as is.”
11. How are the neighborhoods, schools, average utility bills?
Unfortunately, by law, a realtor cannot steer clients into certain neighborhoods, school districts, homes, etc. But they can help you find websites and social pages that will help answer some of these questions. Check out the Community tab and the various town's websites for more information.
12. Where can I find new construction?
Northern Colorado is a great place to find new construction with plenty of great options to choose from. With many new subdivisions being developed we can guide you to what meets your criteria. Give K & O Realty a call for more information.
Questions While Placing An Offer
13. How low is reasonable for an offer?
It’s suggested you ask for your Realtor’s advice and thoughts, but ultimately you are the only person who can determine how much you should offer.
14. What is an earnest money deposit?
Also referred to as a “good faith deposit”, the buyer provides the seller’s real estate company with a deposit to hold in their escrow account. This is designed to show the sellers you are serious about purchasing their home. The amount deposited is subtracted from the final rate. The larger the deposit, the better the offer looks to the seller.
15. How long does a seller have to respond to our offer?
This can range from 12 hours to 3 or 4 days. Your realtor can recommend how long to give based on how long the home has been on the market.
16. What if my offer is rejected?
It’s not the end if this happens. If the seller says no flat out, you have the right to place another offer if you want.