Buyer's Guide from Jeff


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Buyer's Guide from Jeff

  1. 1. The Home Buyer’s Guide Written and Edited Jeffrey Shapiro Buying a home is a major undertaking. Before taking the plunge, make sure that youvethought it through and are ready to proceed. I have put together this manualto help you better understand the process of buying a home. Jeffrey “Jeff” Shapiro Realtor® Sales Associate Accredited Real Estate Professional© Certified Negotiations Expert® Senior Real Estate Specialist© Circle of Excellence - 2011 Coldwell Banker Residential Brokerage® 15 Vervalen Street, Closter, NJ 07624 201-767-0550 (office) 201-519-1600 (cell) 201-884-1061 (E-fax)
  2. 2. Prepare and Plan - Buying a home is a major undertaking. Before taking the plunge, make sure that youve thought it through and are ready to proceed. Deciding to Buy Consider your motivations for buying to help determine if you are really ready to enter the market. Personal Considerations Think about your personal reasons for moving. Do you need a larger home to accommodate a growing family? A shorter commute to work? Dont forget to consider the difficult aspects as well. Are you emotionally attached to your present home - will it be painful to leave? Being mentally and emotionally prepared is the first step toward a well-conceived and well-executed move. Do You Feel Pressure to Move Now? Do you feel that youll be priced out by a rising market if you dont buy now? Or are you afraid youll miss bargains in a troubled market? Rising mortgage rates cutting into your budget? These are all understandable reasons to act quickly so let’s ask the following…. Assess Your Financial Condition Do you have enough cash to fund the down payment and closing expenses? Can you comfortably afford the mortgage payments as well as taxes and insurance? Do you have any credit problems? Ask Jeff to recommend a mortgage agent or financial planner. Homeownership as an Investment While markets can be turbulent and values occasionally decline, owning a home remains an attractive investment over the long term. Additionally, dont forget to consider the tax advantages of homeownership - mortgage interest is deductible and the Federal government allows us large capital gains deductions. Prepare and Plan - Assemble all of your information and develop a good idea of what you want before you begin shopping.
  3. 3. Getting OrganizedYour house hunting will be more efficient and less stressful if you take the time toorganize yourself. Make sure you know what you can afford, where you want to live,and what features you want in your new home.Where Do You Want to Live? Think about the communities in your area and decide which ones you likeand why. Consider schools, recreational facilities, and access to work and shopping.Write down the various features you like and dislike about each community; then reviewthe list to decide which areas are right for you. Its important to know where you want tolive from the start - otherwise its too easy to get excited over a great house in the wronglocation. Dont forget to consider price range when narrowing down your choice oflocations - youll want to spend your time looking where youll have a good chance offinding something appropriate. Spend some time preparing with your agent who will beable to give you information for each area.Make a Features List List the features you need in your new home which will includenumber ofbedrooms, kitchen size, architectural style, access to schools, recreation, etc. Thencreate a second list naming it thewish list, which will includes items you don’tabsolutely need but would like such as a pool.Share these lists with your agent to makethe home buying process easier. Remember that needs are different than wants or wishes. Pre-qualify for Your Loan Many lenders allow you to apply for a mortgage before you even find a home.Once prequalified, the only major requirement for your loan is a satisfactory appraisal ofthe property to be purchased (once you find it). Prequalifying can not only give youpeace of mind while shopping; it can really give you an advantage in a tight market -where a seller may preference a buyer who has funding secured.
  4. 4. Ask Jeff for a list of qualified lenders that have come through in the past and haveproven reliable. Finding the right mortgage is almost as important as finding the righthouse.Shop for a Home - Finding a good agent — one who knows and understands the local market — is the next step in your home search.Selecting an Agent A good real estate agent is a partner in your home search, someone withwhom youll be working closely. Spend the time to develop a strong relationship.Advantages of Using an AgentYour agent can give you valuable insight into the market and provide access to a largenumber of available homes through the Multiple Listing Service. Working every day inthe local housing market, your agent is an invaluable source of advice on pricing,features, and trends.An agent can put you in touch with lenders, home inspectors, attorneys, and any otherprofessionals you need to complete your purchase. Dont hesitate to ask forrecommendations - chances are your realtor knows qualified professionals in all ofthese areasChoosing an Agent A good agent is experienced, with a strong knowledge of the local market anda willingness to put in the time required helping you find the right home. If an agentdoesnt have the time, interest, or commitment to develop a thorough understanding ofyour needs, look for one who does.A GOOD AGENT IS HAS A SUCCESFUL TRACKRECORD AND WORKS AT THE PROFESSION FULL TIME. Shop for a Home - Its a good idea to do some fact-finding before you startlooking at homes — before you get caught up in the excitement and stress of the shopping process. Hopefully youve gotten to know the communities youre considering during the organizational phase. Now its time to narrow the search and find your new home.
  5. 5. ●Research Markets Review your notes and decide where you want to conduct your home search.Talk with your Jeff and explore the differences in individual towns and neighborhoods.Take a look at the town and school tabs on to help you decideon the right location. Your agent can help you review recent sales activity in the area toget some idea of what you can expect to find in your price range.Gauge Market ConditionsReal estate markets are highly cyclical. The current status of the market can have asignificant effect on your home buying strategy. Try to develop an understanding of thestate of the market, so youll have some idea of the conditions to anticipate whenshopping - and a feel for how hard you can bargain when negotiatingDont listen to anecdotes about bidding wars and homes getting snapped up in one day.There is no substitute for accurate information. Check out the actual sales prices of areahomes, and try to get a feel for what is really happening in the marketplace. Again youragent can be an invaluable source for this information.Whats Best - Hot or Cold Market or a Time of Year? Unless youre a first-time buyer, youve probably got a house to sell whileyoure shopping for a new home, so its not easy to determine if a strong market ishelpful or harmful. As a general rule, if you are moving up - looking for a new homesignificantly more costly than your old one - you may want to act during a weak market,when the savings on an expensive, new property will more than outweigh the losses onthe older one. Conversely, empty nesters looking to switch to a smaller home may wantto plan their move during a hot market, when they can maximize gains on the sale of alarger home.In most markets there are two primary selling seasons - spring and fall. Spring is thestrongest, since many buyers want to move in before the next school year begins.Summer and winter are generally poorer selling periods.
  6. 6. Finding a Home There are two primary characteristics of a successful house hunting experience- staying focused on exactly what you want and exposing yourself to the maximumnumber of suitable properties. Your agent can help you find suitable properties, but itsup to you to remain calm and keep your wants and needs in mind.Working with Your AgentOnce your search begins, make sure to take advantage of your agents knowledge andexperience. Dont hesitate to ask questions or request market data to help in the search.There is no such thing as a “silly” question.Your agent should compile a selection of properties that match your general searchcriteria add your input and arrange for viewings. Do not see too many houses in oneday. Four to six is enough. Even for experienced agents; everything after three viewingsstarts to “run together.”FOCUS-FOCUS-FOCUSLook Around Yourself Your agent will find most of the available homes in the area, but you canhelp in the search. Check the popular internet sites. (See the attached list.) Drivearound any neighborhoods you find attractive looking for signs or open houses. Youragent can arrange a showing of any appealing properties.Get the Info You NeedMake the most of your home shopping time. Remember to bring your wish list. Takenotes. Dont forget to ask questions during showings - get all the information youll wantlater when youre considering each property.Dont forget to check out new housing in the area. New homes offer many advantages,including warranties, customization, and modern features. You can get a good idea ofthe new housing in your area from your agent or through ads in the local newspapers.
  7. 7. Should You Consider Building? Building a new house is stressful and time-consuming, but the reward can beconsiderable - the chance to have a home that is custom-designed to suit your familysneeds. If youre considering this route, Sit down and discuss the advantages anddisadvantages to building a home will give you an idea of what to expect. Your agentcan help you find a lot (and probably a builder as well).Buy a Home - Youve done your homework and seen what the market has to offer - now its decision time.Choosing a HomeChoosing which home to purchase is the critical phase of your search - make sure thehouse is right for you before deciding to buy. Consider your needs list, the location, andthe price when making your final decision.Check the DetailsYouve already researched the community (I hope!) in general terms - now its time totake one last look at the neighborhood to make sure its the right place for your family.Consider your route to work, the local shopping - anything that affects your lifestyle anddaily routine.Make sure the house is right for your family and lifestyle. Will your furniture work out? Isthe yard big enough? Does the layout work well for your familys routine? Check throughyour wish list and notes to make sure youre not forgetting anything.Dont Buy if Youre Not SureDont buy a home out of frustration or impatience - this is a major investment and itshould be treated as such. If the market is strong or your standards prove to beunreasonable you may need to revise your expectations before continuing the search.Buy a Home - Youve chosen a home — now its time to get the best deal you can.
  8. 8. Making the Offer The offer is the first step in negotiating the purchase of your new home. Try toconsider all of the relevant facts when determining your offering price. Homes often sellfor negotiated figures that are below the asking price - sometimes considerably below,so give serious consideration to your initial offer.Meet with Jeff and come to aconsensus on a negotiating strategy. There are many different scenarios based uponpersonalities, offering price etc..Consider Market ConditionsHome pricing and sales activity is strongly affected by the strength of the underlyingmarket. In a weak market purchasers may be able to negotiate substantial reductionsfrom asking prices. Conversely, it is risky to make a low offer in a strong market -another buyer may appear suddenly and pay full price.Review the Specifics of the PropertyReview the comps. Does the home suffer from a lack of curb appeal or other problems?If so, you may want to be more aggressive in your negotiations - chances are there willbe less competition, even in a strong market. If the house needs renovations or repairsmake sure you know exactly what to expect so you dont have any unanticipatedexpenses after closing.How Badly Do You Want the House?Will you (or your family) be extremely disappointed if you lose the house? If so, considerbeing less aggressive in your negotiations — especially in a strong market. Conversely,if you are willing to take a chance you may be able to get a better deal.Evaluate the Sellers MotivationA homeowner who is under pressure to make a sale is more likely to accept a low offer.Recognizing a motivated seller is a major step toward making an advantageouspurchase. Common causes of pressure on a seller include financial difficulties, divorce,or the need to move by a certain date.
  9. 9. Consult with Your AgentYour Realtor is an experienced professional with deep knowledge of the local market,so make the most of this resource. Your agent can tell you how long a home has beenon the market and can provide comparable sales for review. Its even possible that youragent may know of a motivated seller.Writing the Offer An offer will be in the form of an actual purchase contract written by Jeff. Makesure that you clearly specify all of the required information and terms in the offer. If youare pre-qualified for a mortgage, provide a copy of your approval letter to strengthenyour hand.The contract specifies the terms of the sale and the rights and obligations of the buyerand the seller. A well-written document protects both parties, while a poorly draftedcontract can cause serious problems.Counter-Offer and NegotiationInstead of accepting your initial offer the seller will probably respond with a counter-offer. After reviewing the counter-offer you are essentially back to the beginning of theoffer process - but with a better idea of the sellers negotiability. Consider all of theinformation and decide if you are willing to increase your price. This offer and counter-offer phase of the negotiation is often done verbally - through the agents or even at ameeting of buyer and seller - with revised contracts signed after price and terms areaccepted by both parties.In this area it is standard practice to retain an attorney to handle the closing. When youdo hire an attorney (which is a good idea), I recommend choosing someone local andwho specializes in real estate closings. An experienced real estate attorney can helpyou move quickly to closing and sidestep any problems or oversights. Jeff can give youa list of approved local attorneys.
  10. 10. Attorney Review Once the contract is agreed upon, the signed copies will be delivered to bothattorneys. All contracts in New Jersey will have a clause that states, you will be giventime for your attorney to review the contract written by your realtor. During this attorneyreview period which generally lasts 3 business days you and or the seller has an optionto declare the contract null and void for no reason to be given. This gives you thechance to make sure all bases are covered before you are committed.Cover All ContingenciesMake sure that the contract covers all contingencies of the purchase and allowssufficient time for any required activities or testing (i.e. obtaining a mortgage, homeinspections, etc.). Reasonable contingencies are essential to protecting yourself in thepurchase - dont allow anyone to pressure you into skimping on due diligence.Know Your Deposit Obligations The contract should specify the due dates and disposition of earnest moneyand deposits. Typically a small amount is posted at the signing of the contract with thebalance of the deposit (usually 10% of the purchase price) due in 10 days. Dont agreeto a schedule you cannot meet - if you need extra time to line up the funds, specify thisin the contract.Close the Deal - Securing a mortgage is the first step toward closing - and moving day. Of course, if youre pre-qualified you are a step ahead.Getting a MortgageYOUR CONTRACT WITH THE SELLERS WILL PROBABLY INCLUDE THEPROVISION THAT YOU APPLY FOR A MORTGAGE WITHIN 3 WORKING DAYS OFYOUR CONTRACT BEING LAWFUL AND BINDING. (“UNDER CONTRACT”)The mortgage application process can be confusing and intimidating, especially to firsttime purchasers - but todays market still offers homebuyers many options.
  11. 11. Have Your Records ReadyOrganizing your records ahead of time will help speed things along when yourecompleting mortgage applications. Our mortgage documentation checklist can helpyou keep track of everything you need.Shop for a Lender There are many types of lenders in todays mortgage market - review their loanterms to decide which offers the best package for your needs. If you have creditproblems or other difficulties, look for a lender specializing in this type of loan. Thereality of this is… Because your offer to the seller will include a pre-qualification letter,you’ll probably go back to that mortgage broker when the time comes.Consider Loan Types and TermsTodays mortgage market offers a bewildering array of financing options and loanprograms - each with different rates, points, and amortization schedules. Consider thedetails of each so you can select the one that best suits your needs.Choose the Right LoanAfter considering the various mortgage programs available its time to make yourselection. Dont forget to review all aspects of the loan, not just the interest rate - thepoints, fees, and term can be just as important.Watch Interest Rates. Keep an eye oninterest rates during (and after) your mortgage search. Many lenders offer the option oflocking in the interest rate before closing - a valuable alternative if rates are rising.Apply for Your Loan Carefully complete each section of the application and provide all of thedocumentation required by the lender along with the loan application fee. Maintainfrequent communication with your loan representative - if you havent heard anythingwithin 1-2 weeks call and ask about the status of your application. Respond promptlytoclose the Deal - Youre almost there — but there are still important tasks you have tocomplete before the closing.
  12. 12. Schedule Inspections A comprehensive licensedhome inspection is a must for any responsiblehomebuyer. A proper inspection should help uncover any defects in the home - beforeyou move in and get hit with unexpected repair costs. Depending upon your locationand the age of the home you may need additional inspections as well - radon, termite,septic, etc. Your realtor can help guide you through this process, so draw on theirexperience.The Appraisal Your lender will probably hire the appraiser, but you need to make sure it getsdone on time. A satisfactory appraisal is essential to obtaining your mortgagecommitment and moving toward closing. It is not necessary for you to be there. Usuallyyour agent will be on hand to answer any questions.Review ContingenciesMake sure that any contingencies specified in the contract are satisfied. If the seller isrequired to make repairs prior to closing, schedule a walk-through to insure that they areproperly completed - and dont hesitate to have your home inspector review the work ifyou are uncomfortable making the determination yourself.Finalize Your Mortgage Your lender should issue a mortgage commitment shortly after the property isappraised (assuming the appraised value is adequate). Contact your mortgagerepresentative to make sure things are proceeding as expected. Dont wait until the lastminute - if there is a problem you want to find out as soon as possible.Order a Survey Youll need a survey of the property. Contact the last surveyor who worked on thesite and make arrangements at least 2-3 weeks before the closing date. If you are usingan attorney, he or she may arrange to get the survey, so check and make sure beforeyou order one as well.
  13. 13. Order Title Insurance It is essential to make sure that the title insurance is ready for closing day. Thetitle company will need to do a search on the property to uncover any potential problemswith the transfer. Make sure to leave enough time before closing, not only for thesearch, but to deal with any problems that surface. If any title problems arise, dontpanic - usually these issues can be resolved fairly quickly. If you are using an attorney,he or she will probably arrange for the title work to be done. Generally your attorney willhire a title company on your behalf.Preparing to Close Theres a lot to do in the weeks leading up to the closing so goodorganization is a must. Proper scheduling can reduce your stress and prevent anymistakes or delays.Get OrganizedCreate a schedule of the items you need to complete before closing. Set up a file withall of your purchase and closing related documentation so you have it readily available.Prepare Your Purchase FundsYoull need to have certified funds available to cover the purchase price and closingcosts, so now is the time to cash out investments or make other arrangements to freeup the cash. Your attorney can help you determine the total amount youll need to bringto the closing.Purchase Homeowners InsuranceYoull need a binder from your insurance company to verify that you have properlyinsured the home - otherwise you may not be able to close on your mortgage.Get Ready for Moving Day You probably want to move in right after the closing (youll have to if youreselling your old home the same day), so now is the time to start preparing. You need tohire a mover (unless you plan to handle the move yourself) and start packing yourpossessions. Its also time to make arrangements for utility shutoffs and installations.
  14. 14. Schedule the Walk-ThroughYour agent will schedule a final walk-through inspection the day of or before the closing.The walkthrough allows you to confirm that the house is ready and that any requiredrepairs have been completed. If youre buying a new home the walk-through also givesyou a chance to identify any items that have not been satisfactorily completed.Close the DealYoure almost there. The preparations have been completed - now its time to finalizethe purchaseDo a Final WalkthroughMake one last inspection of your old home to insure that nothing has been forgotten andleft behind. Its OK to have a few minutes to yourself if you are feeling emotional at thispoint. Any concerns should be brought to the attention of your attorney immediately.Closing TitleCheck with your attorney day or two before the closing date to confirm that everything ison schedule. Remind the attorney or agent to complete the closing statements andother documentation in advance - this may seem obvious, but closings often becomeprotracted affairs because the professionals are unprepared.Bring Certified Funds You will need to bring a certified check to cover the down payment (less the fundsalready on deposit) and closing costs. Check with your attorney or review thedocuments to get an estimate of the total amount required. Its also a good idea to bringyour checkbook as well — small last minute costs (filing fees or photocopying charges)can often be paid with a personal check.Have Your Paperwork AvailableBring all of your documentation to the closing in case you need something at the lastminute. Your closing file should include the contract, inspection reports, and copies ofall correspondence relating to the purchase.
  15. 15. Understand the Closing DocumentsReview the closing statement (HUD-1) and other documents beforehand so youunderstand the purpose of each. Check with your attorney if you have ANY questionswith theclosing documents.Close Your MortgageYou will probably execute your note and mortgage just before the closing of title. Thelender should have provided a check to be released subject to the execution of thedocuments, the confirmation of clear title, and the satisfaction of any other conditions.Deal With Any ProblemsClosings frequently proceed without a hitch, but problems are not uncommon. Dontpanic if the closing hits a snag - most issues can be resolved by simple means, such asescrowing funds to cover a contingency or unfinished repair. Even if the closing has tobe postponed, dont overreact - chances are the matter can be resolved in a few days.Execute the DocumentsAt this point the parties should execute the closing statements and the seller shouldsign over the deed. The deed must be filed with the local recording agency - yourattorney or escrow agent should handle this but its a good idea to confirm that this wasdone. Congratulations, youve just bought a home!Collect the Keys and Other Items from the SellerIn addition to the keys, the seller should bring (or leave in the house) any relevantpaperwork - service records, warranties, instructions, etc. If these are not provided,request that they be forwarded as soon as possible.Close the Deal - Congratulations! Its done — youre a homeowner.Moving InIts finally moving day! Depending upon your arrangements with the seller, you will beable to move in either right after the closing or the next day.
  16. 16. Be Prepared for the MoversMake sure the moving van has room to park as well as easy access to both houses.Movers expect payment upon delivery, so youll also need to have a certified checkand/or cash available to settle the bill. Many movers accept credit cards as well, soinquire in advance if this is your chosen payment method. Tipping is customary - usuallyabout $20 per mover - though this is obviously highly variable with the length anddifficulty of the move.Work With the Movers Be available to answer questions about packing order and fragile items. Point outany items you intend to move yourself, and keep these things separated from those tobe handled by the movers. Make sure the movers have clear directions to the newhouse as well as a phone number to reach someone if they get lost or have anyproblems. Make sure someone remains at your old home until the movers are packedand ready to leave.Arrange for Mail to be Forwarded Youll actually want to make these arrangements a week or two before movingday. Go to your old post office and arrange for mail to be forwarded to your newaddress (if you had a P.O. Box you may want to retain it for a period of time). Send outchange of address cards with your new location.Get Settled into Your New Home Target the most important areas of your new home and unpack for these roomsfirst. Arrange to have someone available at the house during the first few days tocoordinate installations and deliveries. Have written instructions prepared for installersto make sure you get phone lines and TV jacks in the right places. If you have anyimprovement projects planned you can start scheduling the work if you havent done soalready.
  17. 17. Change the Locks Though many people dont bother with this precaution it is extremely advisable to do so — you probably know very little about the seller and even less about anyone to whom they may have given a key. Deal with Any Problems If you discover any problems with the home after you move in, stay calm. Have the problem checked out and documented by a qualified professional, and then consult with your attorney - the seller may be liable for any deficiencies that were not disclosed to the purchaser. Finish the Paperwork Store your purchase and closing documentation where you can easily find them at tax time (or whenever else they are required). Luckily you are working with a Coldwell Banker Agent so you are entitled to access your documents through their exclusive Home Base® system. Complete any paperwork required by local schools (if you have children who are enrolling). Dont forget to change your drivers license, automobile registration, and voter registration, if necessary. Lastly, confirm that the deed was correctly filed with the appropriate authorities. I hope this guide was of help to you and your family. If you have any questions, please don’t hesitate to give me a call. 201-519-1600 Thanks, JeffPlease note that this information is meant to help you in your decision making process, this information deemedreliable but not guaranteed and should be independently verified. Neither Jeffrey Shapiro, nor Coldwell BankerResidential Brokerage® shall be responsible for any typographical errors, misinformation and misprints and willbe held totally harmless.