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BUYERs guide
Assess your Budget and Finances
Terminology Tip: “Conventional” just means that the loan is not part of a specific government program. Conventional loans typically cost less than FHA loans but can be more difficult to get. FHA loans include Fannie Mae’s HomeReady loan and Freddie Mac’s Home Possible and HomeOne loans. Each program has slightly different income limits and requirements, but all offer 3% down loan options.
Prepare yourself for the buying journey by assesing your budget and finances, checking your credit and savings to determine purchasing power. This phase establishes your buying buyer and provides your agent and seller agents more confidence you are ready to make a move. It also helps manage your personal expectations, reducing any disappointment of finding that perfect home only to realize it is not within your budget.
We recommend you meet with a local lender as you progress in your home search. Having a pre-approval is essential in this market. While you may choose to work with whomever you wish, a local lender offers hyper-focused knowledge on our Austin market and all of the unique aspects. They have the tools and connections to ensure speedy close to win offers in a competitive or complex market. It has made a nice difference with our clients in getting their new Austin home.
Click here to go to our current list of recommended local lenders.
Relevant articles from our “Market Perspectives” Blog:
Find a Trusted Real Estate Partner and Advisor
You can search on your own, but a Realtor® can help guide you through every step of the process. And we may also share off-market options. A qualified agent serves as an advisor in your corner, preparing you for every move in a competitive and often unpredictable real estate market. Although you’re not legally not required to work with a real estate professional to buy a home, there are various reasons why you should for a better homebuying experience.
From the best type of mortgages to steps to buying a home with bad credit, you can approach buying your first home with confidence by having a trained professional guide you through each step. According to the National Association of Realtors, homebuyers (especially those 30 years and younger) in the past year have benefited from hiring a Realtor since they were able to better understand the purchase process.
Should your agent be a REALTOR®? Yes! Click here for more on why.
Pro tip: Choose a Realtor specialized in helping first-time homebuyers to ensure your needs are met from the beginning.
Timothy Powles and Adam Stanley work together on the Adam Timothy Group at Realty Austin. We are about building communities. We believe a real estate transaction is an important and extremely significant event but relationships last a lifetime. Our clients trust us to get to know their story and what is most important to them. And we work tirelessly to retain that trust.
Relevant articles from our “Market Perspectives” Blog:
Frame Your Search
Prepare wish list with must-, should-, and nice-to-haves outlined. There is no such thing as a perfect home, but there is a perfect home for you.
MUST HAVES. You should have no more than 3-4 of these critical requirements. Your real estate partner will use them to filter out properties so if you are not careful, you might miss out on a great place because you were overly conservative in your must have list.
SHOULD HAVES. Think of these like tie-breakers and next level filters and keep them to a half dozen or so. Out of 20 properties that appear to meet all of your must have criteria, how should you and your agent narrow things down to a manageable search. With our clients, we use “Exploratory Collections” to get a good sense of the should haves. Often we find there are very important factors that our buyer clients did not even realize were so important. But if they rule out 4 houses because of one factor, most likely that is a SHOULD HAVE.
NICE TO HAVES. Ok, this is where you have fun. Nothing is too strange or inappropriate. Well …. almost nothing….there are laws. But be open and honest with your agent about what tickles your fancy. This is where a great agent will shine. The nice to have list is what make a great home your perfect home. This list can be long as you’d like. Do you want a game-room large enough for a few pinball machines and a miniature golf course? Do you want to be able to build an underground shelter to protect you from zombies? Have you dreamed of having a closet you could turn into a Harry Potter style guest bedroom or a luxury dog apartment? Are you terrified of yard work? Let your agent know.
Relevant articles from our “Market Perspectives” Blog:
– Reasons To Consider Condos in Your Home Search
– Balancing Your Wants and Needs as a Homebuyer This Spring
– Could a Multigenerational Home Be the Right Fit for You?
Search, Search, Search
Write an Offer
Work with your agent to craft an offer that works. Crafting a winning offer is much more than just the right offer price. We provide all of our clients with a guide to writing an offer and discuss all elements of the offer during the process.
ELEMENTS OF AN OFFER
Earnest Money
1% of the sales price is customary, but earnest money is a negotiable term. During the heat of the panedmic real estate boom, we saw earnest money offers of 3% and higher. The earnest money is credited to the Buyer at closing as a portion of the down payment or closing costs. Earnest money is refundable if the buyer backs out during the option period or for any of the agreed reasons outlined in the contract.
Option Money
The amount is negotiable, but generally ranges from $500 – $1000 in a “typical” market. We wrote an offer for a client with a $10k option during the boom. The option period gives you time to have the property inspected and negotiate any repairs/credits. It also gives you the right to terminate the contract and receive your earnest money back for no other reason than you changed your mind. You do not get your option money back if you do not close. If you do, it is treated like earnest money.
Inspection
During the option period it is recommended that you hire an inspector to look at the property. The majority of the time on a home under 2,000 square feet, an inspection will run around $350 while a larger home will cost more. You should also have a pest/termite inspection completed, usually around $100 but included with some of our inspection partners.
Appraisal
An appraisal of the property typically costs between $450 – $550 and is part of the costs included in your loan estimates. You will need to pay your lender/appraiser for this prior to the completion of the appraisal. This gives you, and the lender, a sense of comfort that the home is worth what you are offering. If it turns out significantly less, you could be forced to bring cash to cover the difference or walk away from the property.
Survey
If the Seller does not have a usable survey, the survey is typically purchased by the Buyer. A survey will typically cost around $500-$700. This is rare.
Closing Costs
Closing costs consist of mostly loan items, title fees, and sometimes taxes. The total amount generally falls between 2-3% of the purchase price. These costs will be paid at closing along with your down payment. A strong agent will advise you on whether there are opportunities to negotiate some of these cost to get paid by the seller.
The Closing Process
The average time it takes to close on a house, if there are no home closing delays such as low appraisal, is less than 30 days. However, for first-time homebuyers, particularly when you require help via loans/grants to make your down payment, it can take 35 to 45 days to close.
Finalizing your mortgage, getting an inspection, negotiating repairs and working with Title all require attention. You will get TONS of emails. ANd response time will be very important. This is when attention is really critical.
Some of the most important activities during this period include:
Underwriting & Appraisal – Underwriter reviews files for loan acceptance. Appraiser establishes value of property.
Title Commitment Issued – The Title company prepares and presents to the buyer and seller a document in response to application for title insurance.
Negotiate Repairs – if critical issues are discovered in disclosures, inspections, etc., as permitted by contract, your agent might negotiate with the seller for repairs to be made or closing credits to be provided in lieu of repairs.
Insurance – Buyer needs to confirm an insurance provider and confirm coverage
Funding – Confirmation of funding, answering tons of questions from your lender, and making sure that pre-approval turns into a “clear to close” full approval.
And more! Your agent will help and Adam Timothy Group has an AMAZING experienced Transaction Coordinator that will guide you every step of the way.
Closing on your new Home
You will do a final walk-through typically the day before and sign loads of paperwork to close. Then, once the transaction is funded, GET YOUR KEYS!
Key activities:
Sign loan documents, escrow documents, typically at the nearest office of a Title Company attached to the deal but sometimes via mobile notary. You also eiher bring a cashier’s check or confirm wiring of funds for downpayment.
Record/Transfer Deeds – This is often transparent to the buyer as the Title COmpany handles much of this. But deeds are recorded at County Recorder’s office.
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We don’t just buy and sell homes. We build community by helping clients find their place in the world.
Timothy Powles and Adam Stanley work together on the Adam Timothy Group at Compass RA and manage AT Real Estate Group LLC, a rental and vacation property investment business. We are about building community. We believe a real estate transaction is an important and extremely significant event but relationships last a lifetime. Our clients, partners, and friends trust us to get to know their story and what is most important to them. And we work tirelessly to retain that trust.
INFORMATION ABOUT BROKERAGE SERVICES
INFORMATION ABOUT BROKERAGE SERVICES
