Home Buying Process StepsEnvironmental Issues
What Home Buyers Should Know
Purchasing a home is an investment, possibly the largest and most emotional investment an individual or family will make during their lifetime. With reasonable maintenance, you expect your investment to appreciate with the overall market. If you were going to purchase a $25 lamp, you may make this purchase without much research or expert consultation. However, if you were considering a $100,000 investment in a company stock, the amount of research would be considerably greater and you may even seek professional advice. Why then would you invest $200,000 or more in a home, with daily consequences on how you and your family live, without more forethought, research, and professional assistance? The following provides a basic primer on buying a new home; for more specific information, ask your REALTOR®.
Home Buying Process Steps
Determine your budget and what you can afford. There are several calculators and resources available on-line to assist you in determining your financial qualifications to purchase a new home. The scroll bar at the left will take you to an excellent source of this information. If you are currently renting, keep in mind the tax implications of home ownership. Mortgage interest is a deduction on your income tax calculation. Depending on your individual tax bracket, "after tax" mortgage payments, including insurance and property tax, may be less than your current monthly rent. Also, home ownership allows you to build equity and benefit from market appreciation, which does not happen when you rent.
Select a REALTOR® to assist you in the process. KNOW WHO IS WORKING FOR YOU. When you are driving around looking at homes, keep in mind that THE NAME ON THE SIGN REPRESENTS THE SELLER in the transaction. While the listing agent is interested in seeing that the home is sold, the listing agent has a legal obligation to protect the Seller's interests, obtain the highest price available, and the terms and conditions that are most favorable to the Seller.
Select a REALTOR® to work for you. First, the term REALTOR® indicates an individual that has achieved professional status through formal education and experience. A REALTOR® also is bound to adhere to professional and ethical standards in serving their clients. Obtain a Buyer's Agent agreement with the REALTOR® you select, this legally binds the agent to represent your interests in assisting you in finding a home. Normally, you do not pay your Buyer's Agent; the listing agreement between the Seller and the Seller's Listing Agent includes the commission to compensate the Buyer's Agent out of the proceeds of the home sale. Question your REALTOR® on the obligations of a Buyer's Agent verses the Listing Agent.
Define your new home needs. Somebody once said that "if you don't know where you want to go, any road may take you there, but it will probably take forever", this holds true in finding your next home. Spend the time working with your REALTOR® to define your needs before an aimless search of everything available. Define your price range, identify areas that you will consider, identify the style of home you would like, identify school needs, identify features you want (number of bedrooms, number of bathrooms, garage size, special features such as large lot, swimming pool, handicap access, golf community, close to shopping, etc.); the more specific your definition, the better your REALTOR® will be able to meet your needs and save you time in the process.
Obtain preliminary loan qualification. Preliminary Loan Qualification is important to the Buyer in many ways. First, it confirms that you are a qualified Buyer in a particular price range, this can help you in the negotiating process when you find the home you want to purchase. Some listing agents may hesitate to present offers to the Seller if the potential Buyer does not have a pre-qualified letter. If a Seller receives offers from two potential Buyers and only one has a pre-qualified letter, that Buyer has an advantage in being selected even if the offer is not quite the same. Your REALTOR® will encourage you to become pre-qualified with a lender to help you obtain the home you want. The scroll bar at the left will link you a website where you can initiate the pre-qualification process on-line.
Look at properties. You have defined your needs and you have obtained your pre-qualification from a lender, now you are prepared to inspect the real estate listings that meet your criteria. Your REALTOR® has the tools and resources to identify all properties that are available to meet your criteria. There may be hundreds available or only a few, using your REALTOR'S® tools, narrow the list to a workable number which are the most likely prospects, have your REALTOR® make the appointments, and start your inspections. During the inspection process provide honest feedback to your REALTOR® on your impressions and initial reactions, this may lead to a redefinition and a revised search as your REALTOR® learns more about your desires. Remember that your REALTOR® works for you and there is a level of confidentiality that exists between your REALTOR® and you as you discuss particular properties.
Make the decision, select a home and make an offer. Once you have found what could be your next home, MAKE AN OFFER. It is heartbreaking for a Buyer to find their dream home and have it sell to somebody else while they are thinking about it. When you find your next home, work with your REALTOR® to review all aspects of the market for that particular neighborhood and specific property, and develop an offer that meets your needs. Your offer may be accepted, rejected, or a counteroffer may be received from the Seller. Talk to your REALTOR® and understand each of these situations and what your options are depending on the reaction of the Seller to your initial offer.
Get the inspections done quickly. Whether an existing home or new construction, your REALTOR® will probably recommend that your offer and the final contract includes the provision for you to have a professional third party inspector carefully inspect the home for undisclosed defects. If defects are found in the property, then the Buyer has the right to require the Seller to correct the defect or financially compensate the Buyer for the defect as a condition of sale. Your REALTOR® will be able to provide you with a list of inspectors for you to contact and select the one you want. There is usually a time limit on the inspection and the negotiation of corrective action in the purchase contract; it is in the Buyer's interest to have this done quickly.
Complete your mortgage application. Immediately (if not before) upon reaching contract agreement with the Seller, the Buyer should complete the mortgage application and approval process. Many purchase contracts include protection for the Buyer as financing contingency, but this provision will only protect the Buyer if the Buyer vigorously pursues loan approval.
Insurance & Utilities. Your lender and/or the closing attorney will need a copy of your homeowners' insurance policy and a copy of a paid receipt for the premium prior to closing settlement. Talk to your lender about when this will be needed and in what form. Your lender and the closing attorney may require confirmation direct from the insurance company. Also, make arrangements with the local utility companies to change the service to your name so there is no interruption of service. Change over of utilities can be critical during cold weather when heating is required to prevent damage to the home.
Settlement Funds. You will probably require Settlement Funds to complete the closing settlement process. In most cases, these funds must be in the form of a cashier's check but in some cases the funds can be wired from your bank to and received by closing attorney prior to the actual closing meeting. Your lender can help you define the amount of Settlement Funds required.
Walk-through inspection. Immediately prior to Closing Settlement, you and your REALTOR® should plan a walk-through inspection to make sure it is in substantially the same condition as when you purchased the property.
Closing Process. A closing attorney will conduct the Closing Settlement meeting with the Buyer, the Seller, REALTORS®, and a representative of the lender. At this time, settlement funds will be collected from the Buyer, deeds, mortgage liens, and other documents required in the legal transfer of the property will be signed, and proceeds from the sale will be distributed. Parties attending the Closing Settlement Process should have current photo identification such as a driver's license or passport for this process to be completed.
Home Ownership. At the end of the Closing Settlement, the Seller gives the Buyer the keys to the property. Congratulations, you are now a homeowner.
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Radon is a tasteless,
It is a proven carcinogen
and ranks second only to cigarette smoking as a cause of lung cancer.
If you have a radon
problem, it is usually easy and inexpensive to abate.
There are a number of
radon sampling devices that you can buy, or you can have a professional company
Radon is measured in pico Curies per liter (pCi/L). The EPA recommends that remedial action be taken when a residence exceeds a radon level of four pCi/L.
Many older homes have asbestos
insulation in walls and ceilings, wrapped around hot water pipes or in exterior
Is it dangerous?
If you suspect there may be asbestos in your home, you should have a professional inspection. Generally, asbestos is considered a health hazard when the material is friable, that is, when it crumbles, releasing tiny fibers into the air.
Removal of asbestos can be an expensive process and must be conducted by trained and certified professionals. But the presence of asbestos may not be a health hazard, and in some cases, an asbestos hazard can be isolated without removal.
Approximately three-quarters of the housing in the United States built before 1978 (about 64 million dwellings) contain lead-based paint. When properly maintained and managed, this paint possesses little risk. However, 1.7 million children have blood-lead levels above safe limits, mostly due to exposure to lead-based paint hazards at home.
Lead poisoning can cause permanent damage to the brain and create reduced
intelligence and behavioral problems. Lead also can damage other organs and
can cause abnormal fetal development in pregnant women. People can get lead
in their bodies by breathing or swallowing lead dust, or by eating soil or
paint chips with lead in them.
Often Found in Pre-1978
Residential Lead-Based Paint Hazard Reduction ACT of 1992 directs the Department
of Housing and Urban Development (HUD) and the Environmental Protection Agency
(EPA) to ensure people receive information needed to protect themselves from
lead-based paint hazards.
New Rules Most home buyers and renters must receive information on lead-based paint and lead-based paint hazards when they buy or rent housing built before 1978. Some housing, such as efficiency apartments, dormitories, vacation rentals, adult housing and foreclosure sales are not covered. Under the rule, sellers, landlords, and their agents will be responsible for providing information to buyers or renters before a sale or lease. Home buyers will have 10 days to conduct a lead-based paint inspection or risk assessment at their own expense. The rule gives the two parties flexibility to negotiate key terms of the evaluation. The new rule does not require any testing or removal of lead-based paint by sellers or landlords and does not invalidate leasing and sales contracts.
Pamphlet Available For a copy of the Environmental Protection Agency pamphlet, Protect Your Family from Lead in Your Home, sample disclosure forms, or the rule itself, call the National Lead Information Clearinghouse (NLIC) at (800) 424-5323, or TDD (800) 526-5456 for the hearing impaired. You may also send your request by fax to (202) 659-1192 or by e-mail to email@example.com. The EPA pamphlet and rule also are available electronically and may be accessed through the Internet.
New concerns are being raised about the presence of mold in homes. Specialized testing methods are being developed and inspectors are being trained in the techniques to be used. As this is a fairly recent and evolving concern, ask your REALTOR for current information on the subject and a list of specialized inspectors in the area that focus on potential mold problems.
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