RYAN HOFFMAN - Hoffman Home Realty

BUYING A HOME
F RO M ST A R T T O F I N I SH
A STRAIGHT-FORWARD GUIDE
WRITTEN AND DESIGNED BY
R YA N H O F F M A N
LICENSED REAL ESTATE BROKER
OWNER OF HOFFMAN HOME REALTY
BUYING A HOME
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Getting Started:
This guide is for any type of buyer. I’ve learned that even on their 2nd time around, buyers still have questions and concerns about the process and aren’t always up to date with
current regulations and conditions. If you aren’t ready to buy, this can help you no matter
what. And if you need to repair your credit before you can buy, be sure to give me a call so
I can point you to the best credit repair services.
The I t c h :
T h e b a t t l e of the search
Any real estate agent or loan officer would pick this guide up and immediately shout “why
aren’t we talking about pre-qualifying for a loan first!? While I have lost many hairs over
the years as a real estate agent and now broker, I have been known to lose a bit more when
trying to explain to buyers that I cannot ( or would rather not) show you any homes until
you have been qualified to purchase via a mortgage, often called a home loan.
But you’re a buyer, and you know that it’s free, easy and innocent to check out some houses for sale online all while dreaming away and hurting only your imagination in the process.
So why a need for a credit check and application process when searching on online is just
so free and easy!?
It all starts with a home owner…
People sell their home for a lot of reasons. Maybe they have outgrown the home and need
something bigger. Maybe they are an older couple and need to downsize. No matter the
reason, it all starts with a home owner.
When an owner is ready to offer their home to the local real estate market, they usually
hire a real estate agent to do so. If they employ a real estate agent to represent the sale
of their home, that agent will be compensated a fee to do so. This is very important to you
because, in mostly all real estate transactions, THE SELLER PAYS THE REALTOR FEES.
Why is that in CAPS? Because you are a home buyer, so hiring a real estate agent to
negotiate a deal on your behalf is FREE for you to use.
So how did you stumble upon that house on Zillow last night?
The MLS
The MLS is the acronym for the Multiple Listing Service, it is THEE database for real estate
licensed agents and brokers in the area (and the country). It’s the mother of all databases, it
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is the starting point of real life home selling and the slowly but steadily breathing giant that
is the real estate market. Yes, it is alive, the market has a pulse and once logged in that MLS
as a hot shot real estate entrepreneur you feel alive like never before…Sorry.
So while you search your Zillows, Trulias and Realtor dot coms endlessly through the night
you must understand that these sites are 3rd party sites. They are the Hotwires, the
Trivagos, and the Expedia dot coms of the real estate industry. These sites are simply feeding
from the main source: brokers, agents, we are the front lines.
The MLS is the official avenue to enter your home into the real
estate market. It is a legal agreement between home owner and
real estate broker, which states real estate broker will be paid a
fee to market and sell the home for a home owner.
Remember, the seller pays the fees….
So once home owner and agent sign the documents, and shake
hands, the agent if off to take photos of the property.
The same photos you saw last night on Zillow.
The agent takes all photos and property info (bedrooms, bathrooms, sq. footage, everything) and
submits it all in the local, Capital Region Multiple Listing Service.
As agents we subscribe to this service, it is part of our real estate association dues. Only licensed real
estate agents of the State of NY can access this gateway to the real estate market.
So now what?
S U BM I T
That’s it
Within 72 hours, that house will be automatically sent hundreds of websites. If you have sold a home
before, your agent may have said that “your home will marketed on 10 gazillion sites! “ That is
because they entered it into the MLS
While true to a point (your home on hundreds of sites), it only matters where buyers are looking, and
that was most likely Zillow, Trulia or Realtor.com. And of course yes you saw it on Facebook or
Craigslist but you ultimately ended up on one of the main sites. All the other “gazillion” sites are
usually low visited and unheard of.
So that’s it. Homes straight to your laptop, smartphone, tablet, thanks to Real estate agents
everywhere.
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So, you are browsing Zillow and Trulia and Realtor dot com and you are viewing homes that were
entered in by Real Estate agents, and those homes were pushed out to 3rd party sites automatically
from out MLS.
So what is a real estate agent and how does it work?
I will now attempt my next trick: Trying to get the general public to understand what I do and how it
works, as quickly as possible all while avoiding confusion and boredom…so how about an info
graphic?
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Here we see 2 sides to a real estate transaction. Buyers and Sellers. And their respective real estate
agents. Buyer’s agents and Sellers agents (often called Listing agents)
Now why are there two agents and does it matter and do you need one?
The answer is a resounding yes.
You want to sell your home? Ok, what do you want for it? The most money you can possible get
right?
That is the job of the Sellers agent (Listing agent)
So you want to buy a house eh? What do you want to pay for a house? Lowest possible price?
And you want the most out of the sale correct? Of course. We all want the perfect house, in a
great neighborhood, with good schools and better taxes and a yard and the list of wants is endless, and all for a low, low price.
How to you get the lowest price for a home?
By working with a buyer’s agent. The job of a buyer’s agent is to advise you through the process.
Show you homes, yes that means we meet there and go inside. Usually, we see A LOT of homes,
over time.
The buyer’s agent is there to help you with the purchase overall. Is the house in good condition?
How do you make an official offer? What happens next? What are my rights?
We negotiate on your behalf. We fight to get you the best price (if your agent is honest) on a
home and make sure you don’t get screwed. That is your buyer’s agent.
BATTLE WITH THE IDX KINGS
Zillow, Trulia and Realtor.com
are the tope 3 most visited
real estate search engines in
the country. Understanding
that they are just 3rd party
sites is key. It all starts with
real estate agents and the
MLS.
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Let me jump back to the MLS and how you found a house you liked on Zillow...
know, but it’s important.
I know I
Remember last night? It was late….someone was snoring (husband? Dog? …….wife? I won’t
tell) and you were lost in a search. House after house after house…. I’m sure you noticed all
the “mug shots” right? The real estate agents galore?
That’s us. Good old licensed real estate agents. So why are there 3 to 4 realtor heads shots
to the left and right of every home for sale on these sites?
You only need 1 agent to
buy a home.
So why are there 3
agents?
They all hope you click
on them to get more info
about a home.
Paid advertising
These agents have paid Zillow, Trulia, or Realtor .com a monthly fee to have their name, face
and contact info placed next to homes for sale in specific areas of their choice. Why? So
they hope you click on them, call them or ask them for help with your real estate buying
goals.
Why?
Because us agents work on Commission. 100% commission. That’s right, buyer agents and
sellers agent, both work on 100% commission (in most cases)
A home owner chooses a sellers agent to represent them in the marketing and sale of the
home. The seller’s agent charges a fee. Let’s say 6% of the sales price. The seller puts the
home in the MLS and buyers agents from around the Capital District show the home to their
buyer clients.
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If the home sells for $100,000, the home owner is obligated, per the contract, to pay the sellers
agent 6% of the sale. So 6% of $100,000 is $6,000. Great.
So you are the buyer and I am your buyer’s agent. You love the home, and want to make an offer.
I write up the offer with the best suitable conditions for you and we being the process. Let us fast
forward to the Closing (the part where you sign all the documents and get the keys to the home
and officially own it) and I receive my fee from the seller’s agent…
So basically the seller’s agent and I split the commission, also known as the fee paid by the seller.
So thanks for the lesson Ryan but why does this matter?
The answer is: One agent per side of a transaction, only one commission to be paid
Remember, you are the buyer, I am your agent. You only need 1 agent to represent you in a sale
of a home. You want to find one dedicated agent to show you all the houses you want to see, and
one agent to write an offer.
Are you a baseball fan? Maybe you aren’t but I will guess you heard of Derek Jeter. He was a
baseball player for the New York Yankees, and arguably one of the best baseball players ever.
Baseball players and pro athletes work with agents to negotiate contracts on their behalf for the
teams they play for, Casey Close a sports agent, happened to be Derek Jester’s agent.
Every time Derek Jester’s contract expired with the Yanks, Close would negotiate on Derek’s behalf
to get him the best terms for a new contract.
Same concept in real estate. You only need one agent
to represent you. So again, what’s my point? Those
“mug shots” on Zillow, Trulia, Realtor dot com.
So what happens?
You are online looking at homes and begin to inquire
for more info, or want to set up a showing.
You start to get more aggressive, you’re thinking “Yes, I would love more info on this home” or “Yes,
I would love to schedule a showing” You find 2, 3 even 4 homes you like and you do the same for
all of them “more info please!”
Next thing you know that mouse is clicking all over the place and you have inquired about 5
different homes and are awaiting a response……
But who will respond? One of those mugshots of course.
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There are over 3,000 licensed real estate agents in the Capital Region area of Albany
NY.
There are a lot of different agents out there representing all types of homes, and seek to
represent new buyers and sellers all the time.
They pay for advertising in hopes that you click on their mug shot, that “More Info” area.
Once you do, the calls and emails will start coming…
TIME TO PICK A REAL ESTATE AGENT
So maybe you have a friend or family member in the business or there is a good chance
you can get a referral for an agent from friends and family, but keep in mind the main
two points made so far: You only need 1 agent and Your fee to a buyer’s agent is $0 (you
pay me nothing).
If you have chosen an agent online and decided to stick with them, then great. If you
unknowingly clicked around various sites and find your email full and phone ringing off
the hook, it can be overwhelming.
Fact remains, if you are seriously wanting to buy a house, you are going to need a buyer’s agent.
Now if you are reading this, I hope you pick me, but regardless, you are serious and want
to narrow an agent down by mainly trusting your gut.
These days sites have past sales data and review history of mostly all the agents, and
you can also Google agents and check out their website and learn more about them.
If you have done this, plus have even meeting agents in person, you pretty much can get
a good idea of who you will be comfortable working with.
Screenshot of my
review section on
Zillow.com
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Working with one agent is not only the standard practice of real estate it is also helpful to the
agent themselves.
Since we work on 100% commission, we find ourselves in a competitive environment
constantly. Nothing is more frustrating to a real estate agent then having to compete for a
buyer client. (That’s you)
The point of this guide is to make you understand the process and the standpoint of the real
estate agent and get the best representation possible.
For example, you call me for more information on Zillow, after asking you the basic questions
such as “Do you need help with financing” and “Are you committed to any other real estate
agent?” I will schedule a showing for a home you are interested in and meet you at the property.
A lot of times I soon find out that you have made appointments to see 4 other homes with 4
different real estate agents. This is where the frustration comes in.
Yes, it is not your fault nor your problem, that I work on 100% commission and that I chose a
competitive industry to work in.
But, I blame this same industry for lack of education towards consumers. have often met prospective buyers at a home in an effort to establish a rapport and try to convert them to being
my client exclusively.
Yes, not all people like me, and I am sure some folks simply didn’t want to work with me, but
the fact remains that, most of the time, the buyers are new to the real estate game and do not
understand the fact that they are about to run 4 to 5 agents around and unfortunately all but 1
is going to have their time wasted.
THE BUYERS CONTRACT
Remember when that home seller signs an agreement with a seller’s agent to market and sell
their home for a 6% commission?
Well, the buyer’s side of real estate can practice contracts as well.
Agency agreement.
This is called a Buyer
Personally, I don’t use them, and I probably should use them, or push them more. So what is it?
You will find agents trying to get you to sign this immediately upon meeting them, in most
cases. It protects them from exactly what I just described.
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Remember when that home seller signs an agreement with a seller’s agent to market and sell
their home for a 6% commission?
Well, the buyer’s side of real estate can practice contract
as well. This is called a Buyer Agency agreement.
Personally, I don’t use them, and I probably should use them,
or push them more. So what is it?
You will find agents trying to get you to sign this immediately
upon meeting them, in most cases.
It protects them from exactly what I just described.
By signing this Agency agreement, you are basically agreeing
to let Agent A represent you exclusively throughout the real estate process. To put it even simpler,
you are hiring that agent when you sign this document.
What strings are attached? Nothing of concern to a buyer really. Again, the seller pays our buyer
agent fee, so it is still free for you to use an agent. By signing this agreement, your now hired
agent is entitled to a commission from the seller of any home you purchase.
This means, if you buy a house, this agent you signed with is entitled to get paid a commission. It
locks in the loyalty if you will….
Now, I don’t use Buyer contracts. They aren’t necessary for agents, they just create a level of
protection for the agent’s time and potential money.
I personally have always figured that if people like me, they will use me. And once they have dedicated their time, and I have dedicated my time to show them 2, 3, even 20 houses, I don’t expect
them to wander off and sign a deal with some other agent they just met.
So think back to last night…browsing the internet for houses and clicking on one house after the
next….keep in mind that these agents have no guarantee to make a sale by helping you. Even if
they show you 1 house, it is a roll of the dice for us. We may never see you again. And while it is
your choice on who to work with, try to narrow it down sooner than later so you don’t have five
real estate agents clawing for your business.
Before we offer (or see any more homes) you got to have the dough.
Usually I won’t show many homes to anyone unless they can buy one. I mean let’s be honest. Why
are you looking at six-figure homes if you cannot purchase one? And since we are commission
based, agents won’t show you a dozen homes you cannot buy, we have other clients on both sides
of the game (buyers and seller clients) so our time is valuable.
I am going to move through this as quickly as possible. Not going to bore you with loan jargon. I
will explain the important stuff, things that matter to you, such as how much money you will need
to buy a home, based on different loan options.
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LOAN TYPES
There may be 12 creative ways to buy a home, but mostly purchases run through these loan types.
FHA – (Federal Housing Authority) the most popular loan type
out there, an FHA loan requires only 3.5% down (so a $100,000
home requires $3,500 in your bank account) With an FHA loan
the house you want to purchase is required to be in decent
working order.
What does this mean? Turn off “Flip this house” because it’s
not happening with FHA. FHA requires the heating, plumbing
and electrical to be all in working order. Apart from that, there is lead paint issues and other safety
items that could be flagged and required to be repaired before a loan is issued.
In other words, if you come across a home with “potential” that is a vacant, neglected home, this
will most likely not be a home that qualifies for a FHA purchase, unless you are paying cash, or using a rehab loan.
An FHA loan does allows you to borrow the closing costs to ease your burden at closing. 6% of
the sale price can be borrowed to help with these costs. So if you purchase for $100,000, you can
borrow the closing costs of 6% or $6,000. Your loan now becomes $106,000 thus borrowing the
closing costs. The alternative is to come up with that money out of pocket.
While you can borrow the 6% on top of the loan, you still need the 3.5% at closing ($3,500 of
$100,000)
So basically, an FHA loan requires that you have 9.5% of the purchase price. Most don’t, and if you
did, you may go with a Conventional loan, that is why you borrow 6% of the 9.5% on top of the
loan.
You still just need $3,500 instead of $9,500…
VA – A VA loan is a FHA loan, except it is for veterans of the military. It allows you to borrow all of
the closing costs (6%) into the loan just like an FHA loan.
The difference here is the 3.5% down. An FHA loan will let you borrow 6% but still requires an
additional 3.5% down.
With a VA loan, no 3.5% is required and buyers can come to the table with $0 out of pocket.
You have the same hoops to jump through with a VA loan as it is treated like an FHA loan.
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Mechanicals need to be in working order and homes need to be in decent, working condition.
You have to be a veteran of the military and provide proof of that. VA loans are very good loans, it
literally requires no money due at closing and sometimes buyers get money back at closing with a
VA loan.
VA Loans are available to
military veterans only.
100% Financing means $0
closing costs required
Conventional loans are less restrictive than the government issued loans. 20% down is usually
the case, but with good credit scores and good credit history, you can do a conventional loan for
as little as 5% down.
The good news here is no mortgage insurance and no FHA guidelines to jump past. The drawback
is that with all loans, mortgage insurance is required when less than 20% is put down. So while you
can do a 5% down Conventional, you will have to pay the extra mortgage insurance on top.
If you want to save on that monthly payment, 20% down will eliminate mortgage insurance, thus
lowering your total monthly payment.
Other types of loans are out there, but less popular.
FHA offers a rehab loan made for properties that are neglected and run down. These are basically
those “flip” houses you see but don’t have the cash like an investor to purchase it.
203K allows you to borrow $30,000 on top of the mortgage for repairs to the home.
FHA provides a list of what repairs actually qualify for this loan. Cosmetic upgrades like granite
counter tops and all the bells and whistles are not on the list. 203K loan is more for important
repairs like the mechanicals of the home such as heating, plumbing and electrical.
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The 203K process is supervised by an FHA rep. You must hire a state licensed contractor (not your
buddy) to do the work, and FHA will conduct periodic inspections of the home to make sure
monies are used correctly.
If you can pull it off, it could be something worth taking on. It is a longer process and with all the
regulations, it can be tough to accomplish this.
USDA loans are government backed loan like FHA loans provided by the US Dept. of Agriculture.
These are for homes outside of the city limits, pertaining to the suburbs and hill towns.
Borrowers can plan on 110% financing like a VA loan, where little to no money out of pocket These
loans are a bit more stringent and the home location itself is a factor on whether or not they can
be approved.
These loan types require decent credit and you still need to inspect and make sure the home is in
working order.
Boredom over.
While I could go more in depth on loan types, the fact remains, you’ll need to get pre-approved for
one in order to shop for homes in person.
So what loan type is right for you?
Start with your bank account. How much money do you have right now? Let’s pretend your
credit is good and you’re not worried about that…
Remember, FHA requires 3.5% down, and this is the most popular loan type out there. 3.5% of
$100,000 is $3,500. And what about $200,000? Just double it. $7,000. Do you have it?
There are other costs not associated with the loan when you buy a home. Get ready to pay some
money out of pocket.
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HOME INSPECTION
This is something you’ll want to opt for. When we sign a contract to purchase, you will elect what
you want to inspect. A home inspector is a service provider, like a carpet
cleaning service. The home inspector shows up, does a complete inspection and you pay him on
the spot.
Mostly every home inspector charges the same amount of money for a home inspection. This
allows the industry to remain competitive. If Inspector A charges $600 and Inspector B charges
$300, who do you think will get the most business?
Inspector rates are around $325 base.
$50 to $75.
If you want to check for Termites and other insects, add
How about a Radon test? Add another $100.
At the time of a home inspection, plan on having $400-$500 ready to pay the inspector.
But it doesn’t end there. I know I know. Buying a house in the outskirts of town? This is where
extra costs come in
.
In the city or suburbs, homes are most likely on Public utilities. Public sewer, Public water. You pay
a water bill and / or sewer tax every year for the convenience of not having to worry about issues
to the systems in place.
Buying a home outside of public utilities means added inspections of the Well water and Septic
tanks.
FHA loans may require that the water quality (bacteria) be tested, and you may want to do it
anyway for peace of mind. Also, you would be wise to have the septic tank inspected (pumped)
by a professional septic service to make sure the septic is operating properly.
The drawback? Septic company’s charge $400 for a basic septic inspection.
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As you can see, buying a home in the city or suburbs means less money to inspect a home you
want to purchase.
If you are buying a home with private well and septic, then you’ll pay
extra to inspect these
elements.
ESCROW DEPOSIT
Money Money money. Trust me, this is the last frustrating fact I will
make about money up front. This is something I should have gone over
first, but it doesn’t matter, it is what is it, the escrow deposit.
An escrow deposit is a “good faith” deposit. It says “I am so serious
about buying this house, and I love it so much, I am going to put down $1,000 deposit in escrow”
In NYS, money needs to be exchanged for a contract to be valid. It also needs to be reviewed by
an Attorney (we will get to that)
You could technically put $1 down in escrow. But will that show the home seller you are not a
serious buyer.
Typically 1% of the sales price is put down in escrow. So $200,000 offer? $2,000 deposit.
The good news is, like the appraisal, this comes off your total at the end. So…
Purchase price: $200,000
Escrow deposit $2,000
Due at closing $198,000
You see? The deposit comes off your total at the end. But it is necessary to secure a home
under contract.
Basically this means nobody else can buy it but you. You now have control of the home and we
will try to get through the process to close it.
Now you should have a better idea of what is required out of pocket, while it can be intimidating,
once you do some basic math and consult with your loan rep and real estate agent, you’ll know
exactly what you’ll need to plan accordingly.
A good side note is that in all my years of experience, closing costs are usually always lower than
quoted. The industry does not want to make you upset, so they (loan officers) usually quote you
a high dollar amount due at closing.
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HOME INSPECTIONS AND THE $1500 DEFECT
I am not going to bore you again, but I want to re-visit
Home Inspections (yes Septic Inspections are included in
this topic). Mainly because it is really important but also
because you may be thinking about that escrow deposit
you are putting down. What if you have to back out of
the deal? What happens to that $2,000 deposit check?
Let me put it this way. Home Inspections are your
security blanket.
So what if the home is a money pit? What if we find out
major issues with the home?
You have to back out of the deal and you want your deposit back right? Of course.
Hiring a certified, state licensed, home inspector is for your protection and your piece of mind.
There is a small catch however.
$1500 issues.
What does that mean? Well this means that if the home inspector finds “major defects”
totaling $1500 or more in repair costs, you can opt out of the deal and get your deposit back.
You can also ask the sellers to fix these times that were found.
So, you’re at the Home Inspection and everything looks good. He says you’ll have to fix a couple
outlets and may run a new electrical wire to one of them. Maybe it will cost you $500.
Time to run?
Not really, and since it does not total $1500, you may be hard-pressed to get your deposit back if
you want to walk away. While you can certainly walk, the sellers could keep your deposit.
In all honesty, I haven’t seen many sellers fight to keep a buyers deposit. But it HAS happened
and it is very real and very present.
In real estate, I think we all realize that a home will always need work. That is how it goes. Things
always need fixed. Understanding that is key. There is no such thing as a maintenance free home.
With this being said, let’s say the Home Inspector says the furnace is broke, no heat. Cost for a
new furnace? $4,000.
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Time to walk? Maybe. You can easily opt out and get your deposit back, or you can ask that the
sellers to fix this item.
Depending on how badly the sellers want the deal to work, they could be willing to flip the bill for
you. You could move in and have a brand new heating system, or have a check cut to you at
closing to repair it yourself. Many options are available, and if you don’t like the vibe overall, you
can walk away and go back to searching for a new house for sale.
If you walk away, your inspection costs are gone. You paid the inspector $400 for his or her
services and you know where you stand with the house. If you back out, you lost the $400 fee
and if you find another home you want to buy, you’ll have to pay $400 all over again (or $800 if
you pay $400 for a Septic inspection)
The most I’ve seen clients deal with is 2 deals total. They find house A, go through inspections, get
bad news and back out. They then find House B a month later, go through inspections, no issues,
close the deal.
It happens. That is why Home Inspectors are there. For your protection. Always remember, you
need to hire a licensed Home Inspector, not your buddy who is a handy man. You cannot legally
back out of a deal without a certified home inspectors report.
So what do you do when things are looking bad and you want to walk away?
Consult your attorney.
LEGAL REPRESENTATION
In NYS, 2 things make a contact binding. The escrow deposit and the attorney approval of the
contract.
The good news is, attorney fees in real estate are not that much ($500-$600 total) and they are
included with closing costs, so you don’t need to pay up front.
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Once we have a contract accepted for you to purchase a home, not only do you submit the
deposit check but we also send the contract off to an attorney for review.
This means, the attorney has reviewed the contract and he/she either accepts it or declines it.
Contracts are declined rarely and usually based on additional terms in the contract that were
added in.
We used pre-written contracts in the industry. Each state and each demographic area within each
state may use different forms, but just know that we use standard forms.
This means attorneys and agents, already know what these contracts say. We fill in the blanks to
these contracts and most often the contracts are put together clearly and quite simply. Attorneys
are used to dealing with these contracts and know what to expect in most cases.
They will review the terms and the dates of the contract and make sure it all makes sense.
Once we get that approval, we continue onto to those home inspections we went over, and your
attorney representation has kicked in.
The attorneys will now be at your disposal throughout the deal. Bad inspections? Attorneys will
handle the process of releasing you and getting your money back. Of course, we agents actually do the leg work, but the attorneys will be there to issue formal letters for release of the deal, if
necessary.
Good inspections? Now the bank has to make sure the home had value.
THE APPRAISAL
Some additional up front costs do exist. The appraisal fee is required up front as
well. What is an appraisal? This is an inspection by the bank representative.
Yes, you paid a Home Inspector to see if the home checked out OK, but
remember, the bank is investing in your new home via the loan process. An
appraisal is required to see if the homes purchase price is comparable to the
active real estate market. Basically, the bank wants to make sure the home is
worth what you are about to pay for it.
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Remember, Inspections and Appraisals are happening because you offered on a home for sale and
the home owners accepted your bid. You are under contract to purchase and these are the steps
involved.
The bank appraiser will visit the home and take photos to create a report and a perceived value of
the home.
If you bought a home for $150,000. We want the bank appraisal to come in at $150,000.
Why? Because if the bank doesn’t believe the home is worth what your about to pay for it, then
they won’t loan you the money. The deal will be dead at that point.
The bank appraiser will basically research the local market to find homes that are For Sale and
homes that have recently sold that match the home you are buying.
These comparable homes will validate the purchase price of the home you are buying.
So what’s the point?
Not only is the appraisal required and is an important part of the process, it will also cost you $400
up front.
The good news is, the closing cost total you were quoted in the beginning, includes this projected
$400 bill, so while it is required out of pocket up front, it will come off your final total cost at the
end.
So now what?
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Title Work
We will assume the home appraises for the contract price. This is the last main hurdle besides the
The bank will officially commit on the mortgage and this locks in the deal pretty tightly.
Now that the bank sees value in what we won the bid for, it is time to wrap up the deal and get
clear title and get to a closing.
The attorneys will be present and at your disposal throughout the entire process to make sure we
meet deadlines, get clear title and make sure you are protected.
Clear title means, simply, nobody else in the world claims to own the home you are purchasing.
So after you close, nobody sues you and says that land was theirs and shouldn’t have been sold
to you in the first place.
Don’t worry, it’s very very very rare. I’ve never encountered a problem with title.
Be advised that you will be pitched
on Title Insurance at the closing.
Your attorney will give you a sales
pitch about buying a Title
Insurance policy. It is around $500
or so. It basically protects you
from a title issue if one were to
arise. This is not mandatory.
If someone comes out of the blue and claims ownership to the home you just bought, the title
insurance is there to cover the expenses to fight it.
This is a one-time fee for life, not per year. I would say half of all buyers say Yes to it at closing.
You will have to cut a check on the spot if you want it.
Like any other type of insurance, it is there to protect you, and in the case of Title Insurance,
chances are you will never need it.
Let it be known overall, your attorney is there to make sure you don’t get screwed.
We as real estate agents coordinate with the attorneys throughout the enitre process and make
sure everything goes smoothly.
You are protected and while being paranoid when buying a home is common, know that there is no
way to really get burned when buying a home.
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Again, this is not a used car sale lot. Everything is a process and proper procedures and
paperwork are in place to ensure all parties involved are
protected.
So.....
Let’s see. You’ve searched online for homes. You found
out all those mugshots online are of agents paying for ad
space hoping you click on their face for more info…
If you clicked on my head, you probably received this free
report soon after. And you want to buy a home.
So now you realize, you only need 1 agent to go through
the entire buying process and that it’s FREE to use me
because the seller pays my fee.
This is why you have 5 agents calling you asking if they
can represent you. But you don’t need them now ;-)
Now we get you qualified for a mortgage, if you already
are qualified then kudos to you!
We can start looking at homes in person and hopefully
you and/or your spouse/family find something you love.
The rest of the transaction will follow as describe in this guide.
You’ll know the money you’ll need to close the deal and you understand some up front costs and
your rights to back out if necessary.
You know you’ll have legal representation and all sorts of protection.
Let me and the attorneys take on the technicalities and stresses and you can just plan on what
color paint you’ll want.
KEY NOTES
• I am not a salesman -
This means I won’t push you to buy a home just so I can make a
commission. There are a lot of agents out there that do this and frankly I never understood it.
It will be very obvious to you once you see 3, 4, 5 homes with a particular agent and they think you
should buy each one you visit. There is no way you’ll considering purchasing 4 homes.
If an agent tries to “sell” you on each one you look at. Run fast.
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• Getting you the best price – I am here to advise you on the right price to pay for a home.
Too high? Just right? A steal? We will be able to determine that once we visit homes for sale
on the market. I operate on a blunt, straight forward approach. If a home is too high, you will
realize it as well because it won’t sell and will sit on the market long after we see it.
Remember: Working with me cost you $0. Nothing. I am at your service.
If it is priced to sell fast I will let you know and most likely if you are interested in it, we will
probably face competition from other buyers offering on the home as well. Bottom line is, each
home has a price and that price is based on condition, asking price, time on the market, etc. Just
know you will get straight answers with me.
• Don’t go shopping! - I have seen buyers get past inspections and closer to finalizing their
new house and they head out to Taft or Old Brick and start looking for some furniture. Looking
is fine, but financing? No way.
When you are in the process of shopping for a home and when you are under contract to buy a
home, DO NOT open up any lines of credit anywhere. Don’t get a credit card, don’t get a car loan,
don’t go to Best Buy, and don’t buy furniture on credit. Never.
Want a good tip? Head to the furniture store directly after closing. Literally. They hand you the
keys to the home, we shake hands, and you walk out of the closing office and drive to the furniture
store. Why? Your credit score is still good until the mortgage is recorded. It could take a few days
to a few weeks for a home loan to be recorded and attached to your credit.
So if you head into Best Buy, Home Depot, and Old Brick to apply for a line of credit, your credit
report won’t show a house loan for $200,000 yet, so you could get some much needed financing
to fill your home up with some necessary items, and yes those digital toys too.
The bank is going to pull your credit a day or two before closing. If they see new lines of credit
opened up on your credit report, you could lose the house just like that, on the final day.
Never open up a line of credit during the home buying process unless you’re stinking rich.
• Pick an agent – I can’t say this enough. You are Derek Jeter and I am Casey Close
(the agent). You need just 1 agent to represent you. Just 1 agent can show you ANY HOUSE
no matter what sign is in the yard.
Yes, sellers have their home for sale with all sorts of different agents from different companies. The
for sale sign in the yard you see when driving by is the sellers agent out to get the HIGHEST PRICE
FOR THE SELLER. That’s not you, so I wouldn’t call them.
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The mugshots on Zillow and Trulia are buyers reps out to help you (if they are good and not pushy
sales agents), but you only need 1, so stop clicking on More Info on every website because you’ll
have 5 agents calling you.
• Have some trust – One thing I notice with these frustrating sites like Zillow and Trulia is the
lack of consistent info. Remember the MLS. Homes for sale start with us.
have access to what is really for sale.
Real estate agents
Zillow and Truila have EXTRA homes on their site in an effort to show more inventory and sell ad
space. I can’t tell you how many times a buyer said “I saw 123 Main St on Zillow and I want to see
it” and when I looked it up on the MLS, it was NOT FOR SALE.
• Home Owners Insurance - One point I forgot to mention, locking in a home owners insur-
ance policy before closing is mandatory. You will have to pay for this policy up front, before
you close. This is another up front cost and plan on $500-$1000 up front for the year, but this
comes off of your total closing costs at the end.
* * UPDATE**
As of April 8th 2015, Zillow and Trulia will no longer be receiving homes for sale from Listhub.
Listhub was a “middle man” for real estate MLS organizations and the 3rd Party sites like Zillow and
Trulia.
As discussed in this guide, real estate agents input a home into the MLS. Listhub pulls the home
from our MLS and sends it to Zillow and Trulia automatically (as well as a lot of other sites)
This deal with Listhub is no longer!
This means if you are relying on Zillow and Trulia as your main source of “what is for sale” then
you are NOT SEEING EVERY HOME FOR SALE!
It is up to every agent in the Capital Region to input their listings on Zillow and Trulia manually.
If they do not do this, you aren’t seeing it.
You need to consult with a real estate agent to make sure you know about every home on the
market. There are currently thousands of homes on the MLS, for sale, that you are not seeing.
Zillow and Trulia are just 3rd party sites, they are not the official indicator of what is for sale.
Make sure you get a list of homes for sale weekly, if not twice per week.
New homes come online every day and you want to make sure you don’t miss them.
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Buyers will often see this as incompetence, like I don’t know what I’m talking about. They don’t
believe me because they saw it on Zillow.
Bottom line is this. If it’s not on the MLS, it’s not for sale.
WRAPPING UP
Buying a house can seem stressful mainly because of the unknown.
When people do not know what to expect with a process, no matter what it is, it can leave them
feeling venerable, especially when big money is involved.
I hope the break down here was clear and concise. I tried to get to the point quickly without
leaving anything out.
The one thing you can do as a buyer to make things easier is to get the total cost together before
and while you are looking for a home.
Your mortgage rep will be able to give you an estimated amount needed to close the deal, and
knowing the up front costs described in this guide will have you prepared for any transaction.
Keep this guide as a reference, and you can even share it if you know of any friends or family me
members that will be shopping for a home.
This final info graphic is meant as a quick reference of the process. Print that as a quick guide to
the home buying process.
Below are some testimonials of my very satisfied clients. You can get an idea of how I work with
buyers through the process.
Also, if you need financing, I recommend Rachael Angelini at Freedom One Funding in Clifton Park.
She is on the ball, communicative, and very knowledgeable and professional. I would seriously
consider her first.
See her contact on the following page.
Good luck!
BUYING A HOME
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R YA N H O F F M A N
518 - 951- 9951
LICENSED REAL ESTATE BROKER
www.hoffmanhomerealty.com
OWNER OF HOFFMAN HOME REALTY
Rachael Angelini
Loan Originator
Freedom One Funding
518 - 8 52- 4930