Buyer's Information Package
- 7 Reasons to Buy a Home
- Buyer Agency Can Benefit You
- Why Use a Real Estate Buyer's Representative
- Search Criteria
- Lauren's Unique Selling Position
- Overview on the Process of Buying a Home
1. Pride of ownership is a key reason for wanting your own home. Decorate it to your own taste and enjoy all of the benefits while making a great investment.
2. Real estate has been considered a good investment because most of it has appreciated over time. The effects of leverage can multiply the increase when borrowed funds are used to purchase a home.
3. Qualified mortgage interest and home equity loans are deductible for Income Tax purposes.
4. Property taxes on a first or second home are deductible on for Income Tax purposes.
5. A homeowner can exclude up to $500,000 of capital gain if married, filing jointly or up to $250,000 if single or filing separately for homes that have been the taxpayer’s principal residence for the previous two years. There is no age requirement for taking the capital gains exclusion like the “over 55” rule in the past. It is not necessary to purchase a replacement home more expensive than the one sold. Homeowners can buy a more or less expensive home with no tax consequences assuming their gain is less than the allowable amounts.
6. Preferential tax treatment on gains that have been made from capital assets held more than one year are permitted by IRS. This is especially important for homeowners with gains in excess of the allowable exclusion.
7. Mortgage payments include the interest for the time that the money has been used and principal to retire the debt over a period of time. Each month part of the payment is for principal accumulation.
When a buyer agency relationship exists, you are entitled to special fiduciary client level services.
Loyalty – the real estate agent must act in the best interest of the buyer
Obedience – follow all lawful instructions
Disclosure – of all material facts such as relationships between agent and other parties, existence of other offers, status of earnest money, seller’s financial condition, property’s true worth, commission split with other brokers, and legal effect of important contract provisions.
Confidentiality – any discussions, facts, or information that should not be revealed to others but does not include responsibility of fairness and honesty in dealings with all parties.
Accounting in dealings – reporting of where any money placed in the hands of the broker is kept.
Reasonable Skill and Care – arriving at a reasonable purchase price and advising buyer of such, affirmatively discovering material facts and disclosing them to the buyer, investigating the material facts related to the sale.
With buyer agency, your interests will be represented in the purchase of your home. This is different from typical sub-agency transaction where the buyer is not technically represented. Agency is a legal relationship and a written agreement should be completed to explain all the duties and responsibilities.
A buyer’s representative is responsible for protecting the buyer’s best interests. Research by the NATIONAL ASSOCIATION OF REALTORS has shown that when a buyer’s representative is used, the prospective buyer found a home one week faster and examined three more properties than consumers who did not use a buyer’s representative.
A buyer’s representative will:
1. Evaluate the specific needs and wants of the buyer and locate properties that fit those specifications.
2. Assist the buyer in determining the amount that they can afford (pre-qualify), and show properties in that price range and locale.
3. Assist in viewing properties—accompany the buyer on the showings, or preview the properties on behalf of the buyer to insure that the identified specifications are met.
4. Research the selected properties to identify any problems or issues to help the buyer make an informed decision prior to making an offer to purchase the property.
5. Advise the buyer on structuring an appropriate offer to purchase the selected property. Present the offer to the seller’s agent and the seller on the buyer’s behalf.
6. Negotiate on behalf of the buyer to help obtain the identified property—keeping the buyer’s best interests in mind.
7. Assist in securing appropriate financing for the selected property.
8. Provide a list of potential qualified vendors (e.g. movers, attorneys, carpenters, etc.) if these services are needed.
9. Most importantly, fully-represent the buyer throughout the real estate transaction.
Try to get very specific about your needs and preferences -- you can always expand your search if necessary -- but it is important to give your Real Estate Agent a clear picture of your ideal property.
- How many bedrooms?
- How many baths?
- How many living areas?
- What size garage?
- What area do you want to live?
- What style home do you like?
- When do you want to occupy?
- What is the most important to you in a home?
- Are schools important? Yes No If yes, which ones and why:
- Where do you work?
- When is the best time to look?
- If we found the right home for you today, is there any reason that could keep you from buying it?
- Does anyone else have to approve of your purchase?
- New Construction/older charm & character
- Location/country/city/near beaches
- Good condition/needs cosmetic work/fixer
- View/ocean or mountain
- Neighborhood – consistent or eclectic
- Weather/sunny or foggy
- Yard/ large, small or low maintenance
- Near bus lines/shopping
- Schools Noise – freeway or traffic
- Number of bedrooms and baths
- Kitchen – gourmet or gas stove
- Closet and storage space
- Pool/Spa/Hot tub
- In law quarters/ legal rental
- Acreage/room for horses
For more help organizing your priorities please see Sorting through your Want/Wish list.
There are a lot of agents available and willing to help you with your home purchase. To make a solid case for allowing me to assist you, I provide a higher-level of services both before and after the sale. I want you to consider me as your real estate professional for life, this is just the beginning of our relationship. My goals are to exceed your expectations and that you would refer all your friends who may be looking to buy or sell a home. See my resume.
As a member of the Multiple Listing Service, I can show you any property that is for sale no matter which real estate firm it is listed with. If you should see an ad in the paper or a sign in a yard, call me to find out the information. If you want to see it, I’ll show it to you.
For Sale by Owner
Many times a homeowner will work with an agent, even though the home is not listed with a real estate broker. With a Buyer Broker Agreement, I can represent you even though the seller is selling it himself. A homeowner trying to sell his home himself is usually doing so in hopes of saving the commission. If you want to see a home offered by the owner, please let me contact the owner and set the appointment.
Most builders are more than willing to work with agents who accompany the buyer to the property on the initial visit and can get all the information you need to make any decisions. By working through me with builders, you get all the services offered by me in addition to those offered by the builder. You’ll get more, but won’t pay more for it.
Having been a Santa Cruz County resident for over 36 years, I’m intimately familiar with every neighborhood, beach, school district and shopping spot from Boulder Creek to North Monterey County. That has equipped me in my 19 years as a real estate professional to understand the community and its diversity.
Appropriate Houses to Consider
I’ll look for what you want and can afford in an area you want to live. I’ll show you all the homes that are available not just the ones that I have listed. I will look for homes that are not yet on the market.
Good Financial Decisions
Every buyer needs basic financial information to make a good buying decision. You’ll know that you qualify for the home and what the payments and the closing costs will be. I’ll also make additional suggestions like making extra principal contributions with your regular payment and suggest an alternative type of mortgage to allow for the least expensive cost of housing.
Work Diligently to Find Your Home
I’ll work hard to find your new home. I understand that finding a home is a priority. I’ll screen and preview homes so as to not waste your time and when I find one that I feel will meet your needs, I’ll show it to you as quickly as possible. My attention to detail, my negotiating skills, my clear communication and enthusiastic nature are why so many of my clients are pleased with their transactions. And I think many of them learn a great deal, not just about real estate, but about themselves, in the process.
During the initial interview, you’ll share your expectations and learn about the process of buying a home. You’ll obtain valuable market knowledge about areas, prices, financing, your qualifications, and normal procedures. Considering your wants, abilities, and needs, you decide on price, size, style, and area. At this point, we will begin the search to find your new home.
A strategy for a successful purchase is to apply for pre-approval prior to finding a home. Negotiating a contract with a loan commitment can be advantageous to you. There are specific things necessary to make a loan application and assembling them can take some time. I recommend that you organize the required information using a pre-approval list.
Formulating an Offer
When you find the right home, you will want to make an offer to purchase it. This is done in writing specifying every detail that is part of the agreement. There are standard forms that your real estate agent can provide you.
Usually, the seller will provide a property disclosure for interested buyers prior to writing a contract. This will declare the material facts about the physical condition of the property. The property disclosure does not take the place of a buyer’s inspection that is usually made after a contract is completed. A provision for a home inspection can be added to the sales contract identifying the areas to be inspected by a professional inspector. The purpose of the inspection is to find major defects in the home before the sale is completed.
The areas of concern include but are not limited to:
- Mechanical – heating, air-conditioning, appliances.
Plumbing – fixtures, lines, water heaters, sewers.
- Electrical – wiring, out of date systems.
- Structural – doors, windows, roof, foundation, drainage, ventilation, and environmental hazards.
I will be happy to supply a list of recommended inspectors. You are encouraged to accompany the inspector to ask questions and receive a written report itemizing any areas of concern.
Who Pays the Commission?
In most cases the Seller has signed a listing agreement with his agent specifying a certain fee to be paid for selling the home. It can include provisions for splitting that fee with the selling agent, regardless of agency representation. However, an argument can be made that the buyer indirectly pays the commission even if it comes from the sellers proceeds.
Home Protection Plan
Some sellers provide a Home Warranty or Protection Plan for the buyer. They cover certain items for a one-year period like:
- Heating and air conditioning systems
- Interior plumbing
- Built-in appliances
- Electric pool equipment
If a Home Protection Plan is not included with the home you purchase, you can acquire the coverage yourself. The price of programs and coverage will vary between carriers.
The Last Step
Assemble all of the loan papers at the escrow office. You will need to pay the balance of your down payment and your closing costs at this time. Usually, a cashier’s check is required for these funds.
Good Financial Information Leads to Good Decisions
Better decisions are made when they are based on good financial information. Below are some important options. Knowing there are alternatives, helps to determine the right choices. Speaking to a lender before beginning your search is an important first step.
Estimated Purchase Costs – It is important to know how much you’ll need to buy a home not only for the down payment but for all the fees that are charged in connection with getting the loan and conveying title.
Mortgage Qualification – Discover what size mortgage you can qualify for.
80-10-10 – There are savings achieved by eliminating Private Mortgage Insurance. Not only will you save money in the initial purchase costs but also in the monthly payment.
Alternate Financing Plans – Choices will help you to make a better decision as to how to finance your new home. You deserve to know what options are available and that is exactly what you’ll get.
Mortgage Accelerator – Discover the advantage of adding an additional amount of principal to your fixed rate mortgage on a regular basis to shorten the term and save tens of thousands of dollars in interest.
Pre-Approval Is an Advantage
Applying for a loan and obtaining approval before a buyer finds a home they want to buy is a distinct advantage. Making a loan application is necessary eventually anyway unless you are going to pay cash for the home.
Pre-qualification is a procedure where you get an opinion from a mortgage officer about how much you qualify for. In the process, any obvious difficulties hat might cause problems might be discovered. This process is always recommended but it doesn’t have the advantages of a pre-approval.
Pre-approval requires a complete application with credit reports and verifications. The Mortgage Company will issue a commitment subject to a specific interest rate and points and a satisfactory appraisal when the property is identified.
Time limits are usually placed on pre-approval commitments. It is recommended to be ready to look at homes and make a decision after you receive your pre-approval commitment.
The advantage of being pre-approved:
- Looking at the right-priced homes.
- Avoiding disappointment in deciding on a home that you can’t afford.
- Saving money with a seller who is confident about taking their home off the market with buyers who can have a definite loan commitment.
- One less contingency that the seller will be concerned with to get their home sold.
- Closing more quickly. The lengthiest contingency is usually the mortgage approval.
- Minimizing anxiety from not knowing whether you qualify.
- Names and addresses for two full years
- Gross monthly income
- W-2s for two years, if available
- Year to date pay stub
- Proof of income from rentals, investments, etc
- Proof of retirement, disability or Social Security
- Proof of child support or alimony paid/received
- If self-employment:
- Two years Federal Income Tax Returns
- Current year profit and loss statement
- Names and addresses of banking institutions
- Account numbers for each
- Monthly payments and approximate balances
- Amount of child care expenses
- Names and addresses of banking institutions
- Account numbers for all accounts
- Type of accounts and present balances
- List of assets in stocks, bonds, and property
- Life insurance cash value (documented if used as cash down payment)
- If applicant is selling a home, a copy of sales contracts
- Social Security numbers for all parties
Veterans – Certificate of Eligibility & DD-214
Cash or check to pay for application fee
Read our next section to learn Why Use a Buyers Agent?
If you have any questions about buying real estate in the greater Santa Cruz area, contact Lauren Spencer, Coldwell Banker Realtor at 1-831-662-6522 or Toll Free: 1-800-226-4717.