The Home Buying Process
The Home Buying Process
So you’ve saved up a down payment, met with the mortgage broker and are ready to buy a home! This is exciting stuff- but what do you do next? How do you find your dream home? When you’ve found it, how to you make it yours? There are a few steps in this process and we’ll take you through them one by one. In some ways, the home buying process here is quite different than in the UK, so we’ll point out what the major differences along the way.
1. Searching for a Property
The obvious first step in buying a property is to find the property in the first place. Where do you look? Unlike in the UK, there’s no need to trudge from estate agent to estate agent looking for that perfect property. Most properties for sale are listed on the MLS (multiple listing service), which you can access at Realtor.com. This is a live, updated list, so it reflects the most up to the minute information, unlike other real estate websites like Zillow and Trulia.
As you’re reading through the listings, keep in mind that Florida is a large state (larger than the UK, in fact!). What you think is close by, might actually be a hundred or more miles away. If you can, narrow your search down to a specific area. Do you want to be close the theme parks? Or would you rather be as far away from tourists as possible? Are school districts important to you? Where do your friends live? What kind of amenities would you like to be close to? All of these are important questions to ask yourself when you’re thinking about the location of your dream property.
Another question to consider is what you want to use your property for. If you are planning on using it as short term rental, as one of my recent clients did, you will have to keep in mind that each county and city has it’s own restrictions on renting. The property my client found and loved was in an area that didn’t allow for rentals of less than a month. He had to choose an area a little further out that allowed for short-term rentals. But it pays to do think about what you want to use your property for before you contact your agent. Which leads on to…
2. What an agent does and how to find one
Okay, if it’s sounding daunting, don’t worry! This is where your Realtor comes in to help, like a knight (or lady) in shining armor. We’ll get to how to find one in a moment, but let’s talk about how they’re here to help you for now. Your Realtor will have knowledge of the area and be able to give you input on a location. He or she will know which areas are good, which are not so good and which to totally avoid. In addition, he or she can help you navigate any city or county restrictions on the use of the property.
While looking searching the web is a great way to come up with a preliminary list of properties, a Realtor can do the searching for you. He or she will help you figure out what you can realistically afford and give you a list of properties that meet all or most of your criteria.
As you can probably see, having a good real estate agent can really be beneficial and make the whole process a lot less painful. So how to find one? First, ask around; ask your friends, family and coworkers if they have anyone they would recommend. This can be a great starting place to finding someone to work with. Another idea is to drive around the area you live in or the area you want to move to and look at the agents selling the houses. If there is an agent that keeps coming up, they may be experts in that area, which means they’ll be able to give you extra info on the area.
If you’re not able to find a Realtor that way, we have a list HERE of agents who have helped other international buyers find their dream homes.
Once you’ve found a couple of agents that sound promising, you’ll want to meet with them personally to get to know them. Trust your gut on this one- buying a house is a huge investment, so you should only work with people you instinctively trust. That being said, here are a few pointers on what to be on the look out for when choosing an agent:
First, they need to be licensed. Here in Florida agents have to complete a course and pass an exam to get a license (which is different than agents in the UK); it goes without saying that you only want to use a licensed agent.
Second, not all real estate agents are Realtors. Only agents who have joined the National Association of Realtors (NAR) are able to call themselves Realtors. This is a benefit to you because the NAR hold agents to stricter code of ethics and higher standards of practice than the state licensing body does. When you choose to work with a Realtor, you’re choosing a higher level of protection.
Third, you want them to be responsive to your needs. If you’ve called them and they don’t call you back in a reasonable amount of time, then it’s an indication that they won’t be as responsive as you need them to be.
Once you’ve found your agent, hopefully you’ll be well on your way to buying your dream property!
3. What to do when you find the property for you
So you’ve found it- it ticks all the boxes (whatever they may be!) and you’re ready to go. What happens next? How do you move from just looking to moving in?
Enter your agent. You and your agent will discuss making an offer. From there, your agent will type up the offer, which will include how much you’re offering for the property and how much money you’re putting down as a deposit or “earnest money” (this is usually paid within three days of the offer being accepted.)
Once the offer is accepted and the contract is signed, both buyer and vendor are legally bound to comply with every aspect of the contract, even if situations change. The contract is the layout for the final sale including all the relevant details of the sale, including:
The agreed sale price
The address and legal description of the property and home.
The terms of sale, including all the agreed down payments (including “earnest money” and deposit) and subject to the buyer’s mortgage application being granted.
A promise by the seller to legally hand over the title of the land.
A target date for completion of the sale.
It is important to note that until all parties have signed the contract, and it has been delivered, the seller can still take offers on the property.
Contingencies are often put in place on the contract. Essentially, they are things that are deal breakers for you if they’re not fixed before you close or deal breakers for the seller. While a contingency can in theory be anything from fixing leaky pipe to re-landscaping the property. Your agent will be able to help you figure out what realistic contingencies are for your specific property.
After the contract has been signed, you’ll have the opportunity to inspect the property and get an appraisal, usually within 15 days. The inspection is an essential step that you do not want to skimp on. This will tell you what the condition of the house is and what will need immediate attention. It’s important to do this so you don’t have any surprise expenses, like buying a new roof or exterminating termites, right after you’ve moved.
The appraisal is usually organized through your mortgage company. Basically, they need to make sure that the property is worth what they are lending you. If you default on your loan (let’s hope not!), they won’t be losing money when they resell it.
4. Closing the deal
You’re almost there! Once the appraisal and the inspection are done, you’re just a couple of steps away from getting the keys and moving in.
The last step in the processing is the closing, real estate speak for finalizing the contract.
Before you get to the closing though, you’ll meet with your Realtor who will go through all the forms and lay out what the costs are to both the seller and the buyer. This will include the Realtor commission (paid by the seller), the insurance (more about that in moment), the taxes, and some miscellaneous fees, like re-keying the doors.
Now about insurance- most of the time, if you have a mortgage, you’re required to have homeowner’s insurance. You can shop around for this to make sure you’re getting a fair price, but ask your lender what they require both of the insurance and the insurance company (companies are rated and many lenders require an insurance company with an excellent rating). Whoever you go with, you’re usually required to pay for the first year of insurance up front at the closing.
The actual closing is a powwow of all the agents and the buyer at the title company and supervised by a lawyer. The transfer of money is complete (in the form of certified or wired funds) and the title company records the exchange of property and you get walk out with the keys to your new place!
Hopefully, the home buying process doesn’t seem quite so mystifying or daunting now. It’s a big purchase, but with the help and guidance of a Realtor and a few of the tips that we’ve shared, hopefully you’ll come out with the property of your dreams!
Have a Comment on this?