A Step-By-Step Guide to Buying a Home

A Step-By-Step Guide to
Buying a Home
Prepared for you by:
Stacey Saladin, REALTOR ®
Reece & Nichols Realtors
5000 W. 135th Street
Leawood, KS 66209
Mobile: 913-269-0900
Fax: 913-851-7301
[email protected]
www.staceysaladin.com
Stacey Saladin, REALTOR ®
Mobile: 913-269-0900
Fax: 913-851-7301
[email protected]
www.staceysaladin.com
Reece & Nichols Realtors
5000 W. 135th Street
Leawood, KS 66209
Buying a home can be an exhilarating experience! And while it may be one of the
most significant financial and emotional experiences you’ll ever take on, it doesn’t
have to be intimidating.
I start by listening. As your buyers agent, the only way I can help you is to take the
time to understand you and your family's goals, needs and wants. I don't believe
there is just one solution for you. However, the best one will reveal itself as we
work together. I will research market trends and help you understand the
negotiating power you hold. I will help you think outside the box as to what
alternatives may help you achieve your goals even though they may not be
obvious.
In this packet, you will find many resources that can help you through the home
buying process. Think of it as a road map we will use as we start your home
buying journey but know that I will be there as an expert to help you through each
step of the process. And don’t be afraid to ask questions. As your buyers agent,
the seller pays my commission but my fiduciary responsibilities and legal
obligations are to you.
I am honored to be a part of one of the most exciting and important investments of
your life. I am here for you with an experienced, professional staff that will make
this a rewarding and thrilling adventure!
Warm regards,
Stacey Saladin, REALTOR ®
MY PHILOSOPHY
I know and respect the fact that every person’s situation is different. I do not
subscribe to a one-size-fits-all approach to real estate and think beyond simply
closing the transaction to what is right for each client. I work to understand your
unique circumstances and work hard and smart to provide you a financially and
emotionally fulfilling experience.
REAL ESTATE TRACK RECORD
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Top individual agent in Reece & Nichols Leawood office
Recognized as one of Reece & Nichols Top 15 Agents – Top 1%
Reece & Nichols – Chairman’s Circle Award
Top 2% of all individual agents in Kansas City
Over $6M in home salesThe
in theoverall
past 12 months
financial picture
Average days on market for my listings = ½ the Kansas City average
50% sellers / 50% buyers so I understand both sides
Licensed in both Kansas and Missouri
MY BACKGROUND
! B.S. degree in Business Administration/Accounting – University of Nebraska
! Graduate of FastTracWhat
New Ventures
Foundation
of Kansas City
you can– Kaufmann
get for your
money
! Before real estate, I was a successful corporate executive at a Fortune 100 company
! I hold a Missouri CPA license (inactive)
! I serve on the Business Advisory Board at Blue Valley School District
! I have lived in KC for 20 years; currently reside in Overland Park with my husband of
18 years, two sons & two rescue dogs
! I love traveling, reading, fitness, movies & technology!
Many past clients referrals available upon request!
1
About Stacey’s team
Reece & Nichols Leawood
We are located at:
5000 W. 135th St
Leawood, KS 66209
Top selling office in Reece & Nichols
2011 sales volume: $340 million
2011 sales units: 1,181
If ranked against the top 25 real estate companies in
Kansas City, the Leawood office alone is #4!
Your professional support staff
George Burns, Broker
Barb Drew, Administrative
Support
Cherricy Cline, Office Manager
What’s Inside…
Page
GETTING ORGANIZED
!  Your real estate resource team
1
!   Importance of a buyers agent
2
!   Overview of the home buying process
3
THE PROCESS
!   Step 1 – Getting your finances in order
4-5
!   Step 2 – Shopping for your new home
6
!   Step 3 – Making an offer and negotiating a contract
7-8
!   Step 4 – Inspecting your new home
9
!   Step 5 – Getting an appraisal and title insurance
10
!   Step 6 – Scheduling services for your move
11
!   Step 7 – Closing the transaction
12
Your Real Estate Resource Team
Realtor
Mortgage
lender
Name:
Stacey Saladin, Reece & Nichols
Mobile phone:
913-269-0900
Direct office phone:
913-239-2044
Email:
[email protected]
Fax:
913-851-7301
Office address:
4811 W, 136th St, Overland Park, KS 66224
Company:
Loan consultant:
Phone:
Email:
Fax:
Office address:
Title
company
Company:
Closer:
Phone:
Email:
Fax:
Office address:
Homeowners
insurance
Company:
Contact:
Phone
Email:
Fax:
Office address:
Inspector(s)
Whole house - Name/phone:
Termite - Name/phone:
Radon - Name/phone:
Structural - Name/phone:
Other - Name/phone:
1
Importance of a buyers agent
Why do you need a buyers agent?
Buying a home is one of the most significant financial and emotional transactions you will
ever undertake. As your buyers agent, the seller pays my commission but my fiduciary
responsibilities and legal obligations are to you.
As your buyers agent, you can count on me to:
!   Promote and protect your interests from beginning to end!
!   Sign an agency agreement saying I will represent you, the buyer.
!   Respond honestly, promptly, and accurately to questions.
!   Locate and show available properties, pointing out strengths and weaknesses to you.
!   Provide important information about the neighborhood, floor plans, and resale
characteristics.
!   Counsel you about market conditions and property values.
!   Assist in recommending other professionals for your real estate transaction, including
lenders, inspectors and title companies.
!   Keep your bargaining and financial position confidential.
!   Advise you on negotiating strategy and negotiate only on your behalf.
!   Promptly submit all purchase offers on your behalf.
!   Consult with you regarding counteroffers.
!   Disclose all known, material information about properties you are considering.
!   Assist you in arranging property inspections and attend inspections with you.
!   Follow up on inspection repairs and issues.
!   Disclose information about seller’s inability to complete the contract.
!   Provide you with information for any services requested as it relates to your purchase
or move.
!   Schedule and attend the closing with you.
!   Provide expert guidance and support throughout the entire transaction!
Always remember, the listing agent of a house represents the interests of the
seller and not you, the buyer.
The Fair Housing Act
Please do not ask me to discriminate in any way in the sale, lease, or financing of real estate
based on a person’s race, religion, color, sex, national origin, handicap or familial status.
I abide by the Fair Housing Act of 1968 with 1988 amendments and the Civil Rights Act of 1866.
2
The Home Buying Process
SELLER
BUYER
GETTING STARTED
•  Interview agents as necessary
•  Understand different types of
representation
•  Find a REALTOR ® you trust!
•  Agent prepares a comparative
market analysis
•  Establish a price for the home
•  Sign a listing agreement
•  Provide property disclosures as
necessary
•  Prepare home for listing (repairs,
staging…)
•  Sign a buyers agency agreement
•  Determine wants/needs/
priorities for your search
•  Obtain loan pre-qualification from
a lender you trust to know what you
can afford
FIND YOUR HOME
•  Obtain loan pre-approval
•  View properties that meet your
search criteria
•  Review comparable sales
•  Write an offer
MARKET YOUR PROPERTY
•  Entered in multiple listing service
•  Online /print advertising
•  Private showings (appts)
•  Public showings (open house)
PRESENT OFFER TO SELLER
Negotiation of terms
Seller
Buyer
Agent
Agent
ACCEPTED SALES CONTRACT
•  Open escrow
•  Earnest money deposit
Provide additional
disclosures as required in the
sales contract
Facilitate property inspections
Obtain property
inspections and
reports
•  Receive additional disclosures
•  Hold property inspections (mechanical,
termite, mold, radon, structural, etc.)
Complete loan
process
•  Property appraisal
•  Provide add’l
documentation
•  Underwriting
•  Obtain
homeowners
insurance policy
Title search & preliminary report
Inspections and conditions
removal
Inspection and conditions removal
Additional negotiations (if nec)
Seller
Agent
Buyer
Agent
Schedule services
•  Utilities at new home
•  Moving company
Buyer & seller sign documents
separately at Title Company
Receive cash
proceeds
CLOSING THE TRANSACTION
Move in!
Loan funding and transfer of title
3
STEP 1 – Getting your finances in order
Most homebuyers find that they need to finance at least a portion of their new
home. The home buying process goes more smoothly if you have taken some
preliminary steps toward securing financing before you begin searching for homes.
In a nutshell, you should:
!   Obtain your credit report. Your credit rating is a key factor in determining 1) your
eligibility for a mortgage loan, and 2) the terms under which you may get the loan. The
best interest rates and most flexible loan terms are available to those with the strongest
credit scores. You can request your credit report from one of the three main credit
reporting agencies for a nominal fee (or possibly without charge). They are:
•  Equifax – 1.800.997.2493 – www.equifax.com
•  Experian – 1.888.397.3742 – www.experian.com
•  Trans Union – 1.800.888.4213 – www.transunion.com
!   Get pre-approved for a loan. If you have received pre-approval from a lender, you can
shop for a home with more certainty and less risk that problems will occur later. Getting
pre-approved means you will know exactly how much a lender will loan you and by
extension, how much house you can afford. This way, you can feel confident that you are
shopping in a price range that is right for you and avoid disappointments later. Additionally,
a seller is more likely to view you as a serious, qualified buyer and this can be an
advantage if the seller is in a strong negotiating position or considering multiple offers. In
order to get pre-approved, a lender will require certain information to process your
application. Start getting together this information, as the lender may request it:
•  W2 forms and tax returns – last 2 years
•  Pay stubs – last 2 months
•  Bank statements – last 2 months
•  Investment account statements – mutual funds, retirement accounts, etc.
•  Balance information on all loans – credit cards, auto loans, etc.
•  Gift letters, if part of your down payment or closing costs will be a gift from family
•  Any other income
!   Determine your price range. Getting pre-approved and
understanding how much of a loan you can qualify for is just the first
step to determining your price range, and many choose to stay well
below their maximum. With the constant fluctuation of interest rates
and a variety of loan options, an experienced lender can suggest a
loan and range that best suits your situation. Remember that in
addition to the principal and interest of a loan payment, you will likely
need to factor in a monthly escrow payment for property taxes and
homeowners insurance.
4
STEP 1 – Finances, continued…
!   Be prepared for some upfront fees. While making the down payment on a
home is certainly the most significant and obvious time at which you will be
required to pay cash, there are some other milestones throughout the home buying
process where you should be prepared to get out your checkbook. Here are some
you may incur:
•  Earnest money deposit – When you make an offer on a new home, you
will be required to write an earnest money check to accompany the offer.
This is a good faith gesture that you are serious about buying the home
and it is held in escrow until the transaction closes. A good rule of thumb is
1% of the offer price.
•  Inspections – Once you have a binding contract, you will have a certain
number of days to conduct inspections if you choose to do so. You will be
required to pay the inspectors at time of service. Whole house inspections
generally run between $250-400 and termite inspections can usually be
done for around $75.
•  Appraisal – Once you have a binding contract, your lender will order an
appraisal of the property. Some lenders require that you pay for the
appraisal upfront, while some will allow you to pay for it at the time of
closing. The cost varies by lender but is typically several hundred dollars.
•  Down payment – This is the most obvious but probably the most
significant payment you’ll make. Depending on the type of loan, you can
expect to pay, at a bare minimum, 3.5% of the purchase price. It is paid at
the time of closing and is generally required to be in the form of a cashier’s
check (no personal checks).
•  Closing costs – Paid at the time of closing, this includes lender and title
company costs to process your loan and closing activities. Costs vary by
lender and title company and this is one of the things you should research
and understand before choosing a lender.
•  Pre-paids – Also paid at the time of closing, you will be required to pay a
prorated share of property taxes and homeowners insurance to establish
an escrow account. Your lender can tell you how much is required for each.
Additionally, you will pay interest on your loan through the end of the month
of your closing.
Note: In most cases, you can expect to not make a mortgage payment for the
month following your closing. For example, if you close your transaction on April 20,
your first mortgage payment will be due June 1.
5
STEP 2 – Shopping for your new home
How will you know when you’ve found “the one?” You might think you’ll just know it when
you see it, and that’s true, you might. However, it’s a good idea to spend some time
upfront defining what you need and want in a home. Home buying and can an emotional
experience and gaining clarity before those emotional moments hit can help you make a
well-informed decision. Some important, overall considerations and questions to ask
yourself are:
!   Geography
•  Are you interested in urban, suburban, semi-rural, or rural areas?
•  Do you have a preference as to natural features such as woods, trees, hills, or
lakes/ponds?
•  If you work away from the home, what is the proximity to your place of
employment and how far do you want to commute?
!   Surrounding areas
•  Are there any shopping centers, entertainment, restaurants, grocery stores, or
drug stores nearby?
•  How close are emergency services – hospital, police station, fire station?
•  Are there public parks, golf courses, or country clubs nearby?
!   Neighborhood
•  What is the general appearance of the neighborhood? Is it well-maintained?
• Are there many visible property enhancements such as decks, pools, fences, or
extensive landscaping?
•  Are vehicles parked in garages and driveways or along the street?
•  What are the local ordinances in regard to pets, parking, and property
maintenance, and homeowners restrictions?
•  Do the neighbors socialize regularly? Do they hold block parties/picnics?
!   Schools
•  What is the teacher/student ratio?
•  How do children primarily get to school? What is the bus route?
•  Are there after-school programs offered?
•  What sports programs are offered – during the school year and summer?
•  How well do children perform on standardized tests? What is graduation rate?
• Are public and private schools equipped to handle special needs if needed?
!   Inside your dream home
•  What style of house do you prefer? How many levels? Any mobility restrictions?
•  What features are important:
ü # bedrooms?
ü # bathrooms?
ü  Finished lower level?
ü Kitchen features?
ü Closet size? Walk-ins?
ü Master features?
ü Fireplace?
ü Garage size?
ü Yard size / fence?
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STEP 3 – Making an offer
& negotiating a contract
Now that you’ve found your dream home, what’s next?
It is important to understand the possible scenarios that can present themselves while
negotiating with a seller. One of three things can happen: the seller can accept your offer,
the seller can reject your offer, or the seller can respond with a counter offer. Don’t be
surprised if you and the seller do not see eye-to-eye on everything right away. The most
common scenario is for the seller to counter offer so be prepared for negotiations to
continue back and forth several times before you reach an agreement.
When you find “the house” here’s what you can expect when working with me:
!   Perform market research on the property and neighborhood to put you in the
strongest negotiating position possible. Reviewing recent market activity for that
particular subdivision and surrounding area will help determine a fair market price for the
home. Remember, the seller’s agent has access to the same market information and
making a low-ball offer that cannot be supported by market data can taint the negotiating
process and leave the seller unwilling to compromise on other issues.
!   Write the offer. In making an offer on a home, you will decide your initial terms on more
than just the price. Some of the things you will need to decide on are:
!   Offer price – based on the market research we have done
!   Closing and possession dates – based on your timeframe and when you need
or want to be out of your current property
!   Amount of earnest money – typically around 1% of the offer price, you will need
to write a check for this amount that will be cashed (once you have an agreedupon contract) & held in escrow until closing
! Inclusions or exclusions – you may decide you want to ask for additional items
to be included (e.g., refrigerator) or excluded (e.g., swing set if you have no use
for it and don’t want it in the yard)
!   Inspection timeframe – depending on your overall timeframe, you may decide
you want to accelerate the standard inspection timeframe
!   Home warranty – you may ask the seller to purchase a home warranty for you
!   Closing costs – you may ask the seller to pay for certain closing costs, as
allowed
!   Negotiating strategy. As we go into the offer process, know your limits. What is your
maximum price that keeps you in your comfort zone? Are different closing dates possible?
Know what you are willing to do from the start so you are not caught up in the emotions of
the process.
7
Congratulations!
Once you and the seller reach an agreement on all issues and have
signed the offer or counter offer,
you are both under a legally binding contract.
Now what? What do you need to do to keep things on track and close on your new
home?
!   Ensure sufficient funds.
Your earnest check will be cashed and held in escrow. Make sure
there are sufficient funds in your account to cover it.
!   Schedule inspections.
In the contract, you and the seller agreed to a certain
number of days to hold inspections and communicate back
to the seller of any unacceptable conditions. I strongly
encourage you to be present at the inspections which
usually take 2-3 hours. I will attend the inspections as well.
They may include whole house, radon, termite, or structural.
!   Complete loan application. You may most likely be
required to submit additional or updated documentation to
your lender. One of the most significant parts of this step,
however, is the appraisal. The lender will order an
appraisal of the property to ensure it is valued fairly in your
contract. You will also be required to arrange for
homeowners insurance to take effect on closing day.
!   Schedule services for moving.
You will need to arrange for utilities to be turned on at your new
home beginning on the day take possession. Also, you will need
to make moving arrangements. Contact moving companies to get
estimates and book a date well in advance to ensure you have
either movers lined up or a rental truck reserved.
8
STEP 4 – Inspecting your new home
I want you to make an informed decision about your new home. I highly encourage
you to conduct inspections. You should feel confident in your home’s condition and fully
understand the price of possible repairs down the road. Bringing in qualified inspectors
can help minimize surprises and problems later.
You will have a limited time in which to conduct your inspections, usually 10-14 days. I
strongly advise you be present at all inspections and ask questions of the inspector as you
go through the house. This is a great way to get to know your new home!
In hiring an inspector, ask about their experience, education, insurance and references. In
Kansas, some real estate companies will only allow you to use inspectors who are
certified by the state. Be sure to ask me if you are unsure if an inspector you are
considering is on the approved list. If you need help identifying some inspectors to
interview, ask me. I can help.
Below is a lists of the most frequently requested inspections. You may choose to conduct
all, some or none of them, depending on your unique situation.
Other possible but less common
inspections include:
!   Asbestos
!   Lead paint
!   Air quality
!   Water quality
!   Chimney sweep
!   Swimming pool, hot tub, sauna
!   Sprinklers
!   Alarm system
!   Zoning
!   EIFS (synthetic exterior stucco)
!   Electromagnetic fields
!   Carbon monoxide
!   Hillside stability
!   Underground storage tanks
After your inspections are complete, we will need to put together a list of items found by
the inspector that you would like to renegotiate with the seller. You list should include
safety, structural, environmental items, or those currently causing damage to the
property.
Most common inspections:
!   Whole house – includes major
systems, interior and exterior of house
(most common)
!   Termite (some lenders require this)
!   Structural
!   Radon
!   Mold
Remember, a seller does not have to agree to fix anything. At this stage, there may be
another round of negotiating that can involve fixing the items, reducing the purchase
price or crediting closing costs.
9
STEP 5 – Getting an appraisal and title
insurance
Title insurance
Title is your right to own, possess, use, control and dispose of property. When you buy a
home, you are actually buying the seller’s title to the home. A deed is the written legal
evidence that the seller has conveyed his or her ownership to you.
Before closing on your new home, a title company will conduct a title search. The purpose
of the search is to discover any problems that might prevent you from acquiring clear title
to the home. Generally, title problems can be cleared up before closing, but in some
cases, severe title problems can delay or even cause you to consider voiding your
contract with the seller.
Title insurance is the best way to protect yourself against title defects that have occurred
in the past, which may or may not appear after you have taken ownership of the property.
If such a defect is discovered later, your title insurance policy will cover you.
The seller will be required to purchase a title insurance policy for you, to protect your
interest, and you will be required to purchase a title insurance policy for your lender, to
protect its interest in the home. This will be charged to you as a closing cost.
Property appraisal
Once it is determined there are no defects on the title and all inspection items have been
resolved, your lender will order an appraisal. Many lenders will require you to pay for the
appraisal at the time it is ordered vs. at closing with the other loan costs.
An appraisal is an estimate of the value of the house, made by a qualified professional
appraiser. The appraisal is important in determining the size of the mortgage your lender
will approve, as its primary purpose is to justify the lender’s investment. It is as important
as your credit history in obtaining a mortgage.
An appraisal also protects you from overpaying. Your contract will be contingent upon
whether the property appraises at or above the purchase price you and the seller have
agreed on. If the house appraises for less than the purchase price, you may cancel the
contract or see if the seller will renegotiate the purchase price to reflect the appraisal.
10
STEP 6 – Scheduling services for your
new home
Utilities
A week or two before the closing date, you will need to contact the utility companies that
service your new home and arrange for them to be moved into your name. There are
various utilities that serve the Kansas City area, so you may have to do some research to
determine which one services the property. I can help you with this.
The services you’ll want to schedule might include:
!   Gas
!   Electric
!   Water
!   Telephone
!   Cable
!   Broadband
!  Security
!   Trash/recycling
Moving arrangements
Depending on your unique situation, there are various options to consider as far as
moving your belongings to your new home. They are:
!   Hire a moving company – Contact several moving companies well in advance of the
move date to inquire about costs, insurance, and general services. You will want to
reserve a date and time with the moving company well in advance and confirm it once or
twice before moving day.
!   Rent a moving truck – Contact various rental companies to find out about availability,
rates, mileage, sizes, restrictions and penalties. Reserve a truck well in advance and
confirm before moving day.
!   Move yourself – If you have friends or family and access to a vehicle that will hold your
belongings, you may decide to move yourself. If you choose this route, be sure to line up
help well in advance and be certain you can count on them to help on the big day.
Homeowners insurance
Your lender will require this for your loan. Contact your current insurance company or shop
around to find a homeowners policy that will meet your needs. You will need some detailed
information about your new home in order for them to give you a quote. You can often get
discounts if you insure at the same company that holds your auto insurance.
Change of address
Be sure to put in a “change of address” form at your current post office so your mail will be
forwarded. Contact those you do business with to change your address in their records.
11
STEP 7 – Closing the transaction
Your last step to owning your new home is closing the transaction.
Closing is the legal transfer of ownership of the home from the seller to you, the buyer. It is
a meeting that is usually held at a title company with a “closer” from the title company who
will walk you through all the paperwork. The closer will coordinate all the signing of
documents and handle the collection/disbursement of funds. The closer works closely with
me as your buyers agent and with your lender to ensure all is in order and there are no
surprises at closing. You will typically meet with the closer separately from the seller, who
often signs his or her portion of the documents a few days earlier. I attend your closing
meeting with you.
To help prevent last minute surprises and make the process as smooth as possible, there
are a few things to do to prepare for the big day:
!   Conduct a walk-through of the property. It is a good idea to go back through the
property after any inspection items have been taken care of by the seller and prior to
closing. This will give you an opportunity to make sure the property is still in the same
condition as when you were there for the inspections. We will be able to make sure the
seller has resolved any outstanding inspection requests that were agreed upon. You may
also choose to have your inspector come back and re-inspect any repairs that were done.
!   Review your settlement statement (HUD-1). A day or so before closing, your title
company will provide you with a settlement statement that details all costs associated with
the transaction, including an exact dollar amount you will need to bring to closing. This
amount will cover your down payment, pre-paid items, and any outstanding closing costs.
!   Go to your bank and obtain a cashier’s check. Based on your HUD-1 from the title
company, you should obtain a cashier’s check or certified check to take to closing. The
title company will not accept a personal check.
!   Coordinate any other transactions. If you are also selling a home and need those
proceeds in order to close on your new home, you will need to coordinate the transfer of
funds so that you will have access to them for your purchase.
!   Bring necessary documentation. You will be required to show a valid form of ID, such
as a driver’s license. If you have been recently married or divorced, you may need to bring
additional documentation as well. We will confirm this with your closer in advance.
You will sign a lot of documents at this meeting. This is also where you will
be given the keys to your new home. Congratulations!!
12
I hope you have found this guide to be useful in preparing for the purchase of a
new home. While it includes a lot of information, there are always unique
aspects to every transaction and as your buyers agent, I will not take a one-sizefits-all approach. I will focus on your transaction as unique and represent you
with all the professionalism and skill you deserve.
Remember, I can help you buy…
!   ANY home you find listed on the internet
The term “exclusive listing” does not mean you have to contact the listing agent for
information on a home or for a showing. As a member of the Multiple Listing Service, I am
able to work as a cooperating agent with listing agents to act as your representative in buying
the home.
!   ANY listed home you may see at an open house
If you are out looking at open houses and see one you are interested in, you may give my
card to the hosting agent at the open house and let him or her know that you are working with
me as your buyers agent. I can contact the listing agent with additional questions you may
have that cannot be answered by the hosting agent, set up additional showings or help you
write an offer on the house.
!   For Sale By Owner (FSBO) properties
If you see a FSBO home that interests you, write down the address and contact information
and I can call the owner to arrange a showing. Many FSBOs will agree to pay the buyers
agent commission in order to sell their home.
If you have questions about these materials, the overall process, or about how I work,
I welcome your call. I truly enjoy helping people through the home buying process and
will do everything I can to ensure your experience is financially and emotionally
fulfilling.
I appreciate your considering me as your buyers agent and never forget that you have
a choice!
Call me anytime at 913-269-0900.
My best,