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Prospect Power Moves

Educate yourself on the homebuying process.

AUSTIN'S OFFICIAL HOMEBUYERS' GUIDE

Step 1

Know Your Finance Options

Unless you are planning to pay with cash, the most important step before beginning your home search is to get pre-qualified by an experienced reputable lender or mortgage broker. Why is this so important?

EXPLAIN FURTHER


  • It allows you to determine how much your monthly payment will be.
  • It helps us to determine what price range to shop within.
  • It gives you an estimate of how much money you will need to bring to closing.
  • It allows you to select the best loan package without being under pressure.
  • It helps us to negotiate from a stronger position because sellers will find your offer more attractive knowing that you can secure a mortgage loan. This may help your offer beat the competition in a multiple offer situation!





Prospect-Power-Moves-Homebuying-Process-
Prospect-Power-Moves-Homebuying-Process-

Step 2

Loan Approval Process

If you require loan financing, meet with a lender or mortgage broker to determine how much you can afford. Obtain pre-approval for the loan amount you need. This will save time in the home search, and improve your negotiating position with home seller 

EXPLAIN FURTHER


Pre-qualification vs. Pre-approval?
Getting pre-qualified for a mortgage is an increasingly popular practice among buyers who don’t want to worry about going through the approval process until after they’ve found the home they want. It is a verbal exchange in which the lender tells you in advance approximately how much money you are able to borrow, based upon the information you provide the lender about your debt and income.

Getting pre-approved goes a step further than pre-qualifying. Most lenders require you to furnish documents (tax returns, check stubs, etc.) to pre-approve your loan. A pre-approval is an actual commitment to lend you money, provided that, when you are ready to buy, you still meet all the qualifying conditions that were met at the time of conditional approval.

TIP: Many sellers do not accept offers from buyers who are not pre-approved. Lenders may issue either a pre-qualification letter or a pre-approval letter that can be sent with your purchase offer.





Step 3

Start Your Home Search

Decide which neighborhoods you want to live in and whether you want a new or existing home. Consider requirements –such as the number of bedrooms or price range, and preferences – such as whether you would prefer a 1- or 2-story home. I will set up a property search on RealtyAustin.com to show you homes that will fit your needs, and we can view the homes you save as favorite.

EXPLAIN FURTHER


EXPLAIN MORE: I will evaluate your home buying needs during our first meeting so that I can be better prepared to assist you in your home search. I am committed to locating the ideal home for you, whether it’s a resale home in MLS, a For Sale by Owner, Foreclosure, or new construction. In almost every situation, our fees are pre-negotiated so that the seller is responsible for my commission, not the buyer. Refer to FIND YOUR PERFECT HOME for home purchase types.





Prospect-Power-Moves-Homebuying-Process-
Prospect-Power-Moves-Homebuying-Process-

Step 4

Make Your Offer

When you find the right home, I'll provide a market analysis, and we'll review market conditions together and decide whether to present an aggressive or competitive offer. I will explain all documentation and negotiate terms that are in your best interest. The process may go back and forth a few times between you and the seller.

EXPLAIN FURTHER


EXPLAIN MORE: This is an exciting and busy time, and home ownership is very near. Contact me if you have any questions, and be sure to complete the list of tasks below:
● Get estimates and arrange for moving company or truck rental.
● Submit your Change of Address Form online at https://moversguide.usps.com.
● Contact utility providers to have the utilities transferred from the Seller to you.
● Select a date for the Final Walk-Through of the house.
● Schedule a closing date and time with the Title Company.





Step 5

Going Under Contract

After final acceptance of the contract from both parties, you go “under contract.” At this time, you’ll provide an “earnest money” check for the title company to deposit so they can open escrow, and provide an “option check” to the seller guaranteeing your right to terminate the contract for any reason within the option period. Both checks will be deposited. 

EXPLAIN FURTHER


EXPLAIN MORE: Upon acceptance of your offer, you will typically want to arrange for an inspection of the property. This must be completed during the option period so that if something is discovered during the inspection (that you cannot live with and the seller is not willing to fix), you can cancel the contract and have your Earnest Money refunded.
● I have provided a list of 4 home inspectors in this document, but you are free to choose your own inspector.
● The inspection will take 2-4 hours. Your attendance is optional; however we recommend you attend at least the last half-hour when the inspector reviews the findings with you.
● Most homes have a long list of minor and cosmetic repairs. You are mainly looking for major mechanical, safety or structural defects to the property.
Negotiate Amendment

Immediately following the Inspection, we will typically complete an amendment to the contract that will include items the inspector discovered that you want repaired by the seller, or a monetary repair allowance in lieu of repairs. Then we will negotiate on your behalf with the seller for the repairs you want completed. Once an agreement on repairs to be completed has been reached, you will typically forfeit your right to terminate the contract.





Prospect-Power-Moves-Homebuying-Process-
Prospect-Power-Moves-Homebuying-Process-

Step 6

Option Period

With an "Executed Contract," you start the negotiated Option Period, usually 7- 14 days. Final details are handled and you have an inspection performed to ensure the property is perfect for you. We negotiate contract details such as repairs. During this time, you’ll need to arrange insurance for your new home. Your title insurance company will provide a Commitment for Title Insurance for you to review. 

EXPLAIN FURTHER


EXPLAIN MORE: Once the option period is over, there are several important steps you need to take to ensure a smooth closing.

Obtain Homeowner’s Insurance

Your lender will require Homeowner’s Hazard Insurance to close on your new home. Ask your current insurance agent if you would receive a discount by having your car insurance and homeowner’s insurance with the same company. If you need a reputable referral, please let me know. Once you select an insurer, notify your lender of the insurance company you choose, and send me the information so I can provide it to the title company.

Select Home Warranty Provider (Residential Service Contract)

While new construction homes will typically offer a warranty from the builder, you can also purchase a home warranty – or "service contract" – for a resale home. The warranty usually covers your first year of home ownership, and helps protect you against the cost of unexpected repairs or replacement of major systems and appliances that break down due to normal wear and tear. In most cases, we will attempt to negotiate on your behalf for the seller to pay for most (if not all) of your Residential Service Contract. The basic programs start at around $350-400, and then you can add various optional items, such as certain appliances, pools, etc. If your total exceeds the amount paid by the seller, then the difference will be added to your closing costs. Property Appraisal Your lender will arrange for an appraisal of the property. This typically costs between $375 and $450, which your lender will ask you to pay in advance. The appraiser's report will describe the physical characteristics of the property and compare it to similar properties to determine the market value of the property so you don’t over pay. If the appraisal comes back lower than contract price, the bank will expect you and/or the seller to make up any deficiency. Remember that an appraisal is different from a home inspection. Appraisers do not report on damage or repairs needed; they only report on the market value of the home in its current condition, relative to other properties in the area. Property Survey The buyer usually pays for the survey as part of their closing costs. However, this is a negotiable item. A survey typically costs between $400 and $600, but it could be more on larger lots. The seller sometimes has an existing survey we can use so we don’t have to order one.





Final Step

Closing Day!

You will need to bring a certified check if you’re making a down payment and picture ID to the closing at the title company. Possession of your home will occur when your lender releases funds to the seller.

EXPLAIN FURTHER


EXPLAIN MORE: This is an exciting and busy time, and home ownership is very near. Contact me if you have any questions, and be sure to complete the list of tasks below:
● Get estimates and arrange for moving company or truck rental.
● Submit your Change of Address Form online at https://moversguide.usps.com.
● Contact utility providers to have the utilities transferred from the Seller to you.
● Select a date for the Final Walk-Through of the house.
● Schedule a closing date and time with the Title Company.





Prospect-Power-Moves-Homebuying-Process-

More Buyer Resources

Why hire a Buyer's Agent


There are four ways in which you can be represented by a REALTOR ® during the purchase of a home. Unfortunately, some buyers often choose the worst form of representation because they are not aware that an agent can represent their interests exclusively and negotiate solely on their behalf. My goal is to be your Exclusive Buyer’s Agent and to assist you in making well- educated and informed decisions throughout the home buying process. 1. The Agent Represents the Seller When you work directly with the seller’s listing agent without a buyer’s agent representing you, the listing agent represents the seller. The listing agent’s fiduciary duty – meaning their primary obligation to protect legal and financial interests – belongs exclusively to the seller. As a buyer in this scenario, you should not tell the seller’s agent any information you do not want the seller to know, because the seller’s agent must disclose to the seller any important information that affects the home sale. This is also important to remember if you ever meet the listing agent at an Open House or call them directly to inquire about a property. 2. The Agent Represents the Buyer When you hire me to represent your interests, my fiduciary duty is exclusively to you. As your Exclusive Buyer’s agent, I must put your interests as a buyer first and foremost, and I must provide you with any important information I have that affects your home purchase. All information you share with me remains confidential, and my goal is to assist you in finding the right home for you at the best value. This is the best possible scenario, as both parties (buyer and seller) are represented exclusively by their own agent. 3. The Broker Acts as an Intermediary Although rare, an Intermediary Relationship occurs when one Broker/Company represents both parties in a transaction and assigns individual agents to represent each party exclusively. Each party of the transaction will acknowledge this relationship in writing. If the home you buy is listed with another Prospect Real Estate agent, then the other Prospect Real Estate agent will represent the seller exclusively. I will be assigned to represent you and I will still have exclusive fiduciary duty to you. Because the listing agent and I work for Prospect Real Estate, our broker is considered an Intermediary; however, I represent only your interests and cannot disclose any of your information to the seller or the seller’s agent. 4. Subagent/No Buyer Representation Agreement If an agent shows you homes without having you sign a Buyer Representation Agreement, by law they are acting as a subagent to the seller and have fiduciary duties to the seller, not you. As a buyer in this scenario, you should not reveal any confidential information to the subagent, because that agent must disclose to the seller any material information they know. In summary, the best scenario to ensure your interests are protected, your information remains confidential, and you get the best representation in all negotiations is to have a buyer's agent represent you exclusively.




The Life of a Real Estate Transaction


The life of a real estate transaction can take up to 45 days depending on financing and time of all the things throughout the process. In order for you to move into your home, a lot of coordination and cooperation will need to happen between you and me, the seller, seller’s agent, inspector, loan officer, escrow officer and closing officer. A successful Real Estate transaction is a team effort! I pride myself on having a great team! You will have the opportunity to meet some of these great people I get to work with on a daily basis. After we make an offer, there are possible negotiations before we contract, once we contract, we schedule the home inspection and then negotiate repairs if necessary. All this must be done before your option period expires. Once all amendments are executed you move into the approval phase. During this process you will be working with the lender more than me. You will be sending documentation to the lender for the final financing. The appraisal is typically ordered after the option period expires and takes 7-14 days to come in. The lender approval process goes through underwriting before receiving an approval with conditions. Once those conditions are met then the underwriting will provide a final approval and submit your file to the closing team who will then work with the attorneys to get your closing disclosures prepared. Once that time is complete then we can set the actual closing time and date. All the above process is going to take 30-45 days.




Choosing a Lender


When you are ready to shop for a loan, you can work directly with a lender or with a mortgage broker, who represents many individual lenders. Direct lenders lend their own money, have in- house programs, and make the final decision on your application. Mortgage brokers are intermediaries who represent many lenders and loan programs from which you can choose. If you have special financing needs or want to shop the market for the best deal, an experienced broker may be able to find the best loan for you. Along with shopping for a loan source, you'll also have to compare the total cost of the loan, including the interest rate, fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, and a host of other items. You should be pre-approved for a loan before you search for a home. You are free to shop around for a different lender after you are pre-approved, but having a pre-approval letter is crucial when you are ready to make an offer. Whenever possible, you should choose a lender who works locally. Online lenders and out-of- state lenders are typically high volume shops that aren’t going to take a personal interest in making sure your loan goes smoothly. In some cases, they may also be prohibited from operating in Texas. Additionally, a local lender who wants to earn your repeat business and referrals is more likely to take good care of you. Choose your lender very carefully, because you are relying on him or her to close your loan on time. Loan delays and problems with financing are some of the most common obstacles in getting to closing; you won't want to lose your dream home if your lender makes a mistake.




Finding the Perfect Home


I will evaluate your home buying needs during our first meeting so that I can be better prepared to assist you in your home search. I am committed to locating the ideal home for you, whether it’s a resale home in MLS, a For Sale by Owner, Foreclosure, or new construction. In almost every situation, our fees are pre-negotiated so that the seller is responsible for my commission, not the buyer. Resale Homes I have access to any of the 10,000+ homes listed by any brokerage firm in the Austin area. However, I will help focus your search based on factors you define, such as location, schools, home features, and other criteria. My goal is to use my market knowledge to save you time and money. New Construction Many buyers are not aware that the representatives at new construction sales centers represent the sole interests of the builder, not the buyer. A common misconception is that a buyer can get a ‘better deal’ if there is not an agent involved. In fact, the opposite is true. Many buyers significantly overpay for new construction homes, because they don't hire an experienced agent and they take the builder's pricing and terms at face value. Having dealt with most local builders, I know first-hand which of them are over-priced, and in what areas they are most negotiable. My extensive knowledge of builder reputations, floor plans, and lots, as well as schools, neighborhoods, and amenities will help you choose the right home in the right place. I will provide a market analysis to show you what comparable homes sold for in the area so that you don’t overpay. Then, I will negotiate on your behalf to ensure that you get the best possible price and terms on your new home. For Sale by Owner At any point in time, there are a handful of For Sale by Owner properties on the market. Often, the sellers are upside down and cannot afford to sell at market value. Other times, they think so highly of their home that they decide to price it above what a REALTOR® deems feasible. In either case, you need to be very careful, as these homes are usually overpriced. If you happen to drive by a For Sale By Owner and would like to see the property, please call me first, so that I can work with the owner to schedule a private showing. In most cases, these owners are still willing to pay my fee, so I can still represent you throughout the transaction to ensure you don’t overpay and have the full resources of my team behind you. Foreclosures and Short Sales Navigating the sea of distressed properties is not for beginners. The process for buying Foreclosed or Short Sale Homes is vastly different from the typical purchase process, and varies depending on the type of distressed property you buy. You need an experienced agent on your side, but most of all, you need patience. When banks and government agencies are involved, you cannot dictate the schedule. Before we decide to pursue distressed properties, we should discuss your goals to make sure they are a good fit for you.





EXPLAIN FURTHER


EXPLAIN MORE: Upon acceptance of your offer, you will typically want to arrange for an inspection of the property. This must be completed during the option period so that if something is discovered during the inspection (that you cannot live with and the seller is not willing to fix), you can cancel the contract and have your Earnest Money refunded.
● I have provided a list of 4 home inspectors in this document, but you are free to choose your own inspector.
● The inspection will take 2-4 hours. Your attendance is optional; however we recommend you attend at least the last half-hour when the inspector reviews the findings with you.
● Most homes have a long list of minor and cosmetic repairs. You are mainly looking for major mechanical, safety or structural defects to the property.
Negotiate Amendment

Immediately following the Inspection, we will typically complete an amendment to the contract that will include items the inspector discovered that you want repaired by the seller, or a monetary repair allowance in lieu of repairs. Then we will negotiate on your behalf with the seller for the repairs you want completed. Once an agreement on repairs to be completed has been reached, you will typically forfeit your right to terminate the contract.