Steps to Buying
- Get Pre-ApprovedThe first step in purchasing a home is to consult with a Loan officer to determine what you can afford and are willing to pay.
- The lender will take all pertinent information regarding your finances and perform and extensive check on your current financial status. This will also determine the amount of cash needed for a down payment and closing costs.
- This will ultimately give you the exact amount that you will be eligible for (depending on what type of loan you decide to go with).
- Being pre-approved lets the seller know that you have gone through and extensive financial background check and there should be no unexpected obstacles to buying the home.
- Determine Wants & NeedsBy analyzing your needs you will be able to get a clear picture of exactly what you want in your new home.
- First, you should write down why you are looking for a new home.
- Are you currently renting and would like to have a home where you can begin building equity?
- Are you recently married and have outgrown your current residence.
- Maybe you have just gotten a promotion which requires you to move to a new city. These factors will all have a bearing on how you approach your home search.
- Second, establish a time frame that you would like to stay within for buying your home
- Finally, have a mental picture of what you would like your house to look like.
- What kind of features it should have.
- How many bedrooms?
- Write these ideas down to avoid any ambiguity later in your home search.
- Create two lists: one should be a list describing your dream home and the other should list the features of the home that are an absolute must have in order to buy it.
- These are your “Want” and “Need” lists. In a perfect world, your new home would fulfill both lists. However, it is more likely that you will end up blending the two lists into a schedule of prioritized items as you progress through the buying process.
- Share the “Want” and “Need” lists with your agent. Your agent will be able to help you organize your wants and needs.
- First, you should write down why you are looking for a new home.
- Searching For Your New HomePeople don’t just buy a house, they buy the neighborhood the house is in. If you found the perfect house but it was in a neighborhood that was not to your liking, would you make an offer on it? Most likely the answer would be, “No.”
- Your Marcus agent can provide you with an up-to-date list of available properties that possible meet your criteria and your agent will screen these properties for you.
- When you find one that you like, your agent can arrange for you to view the property when it is convenient for you.
- Your agent’s experience in the local market will be an invaluable resource during this step.
- Making and Negotiating Your OfferNow that you have found the home you would like to purchase, it’s time to make an offer.Your agent will be able to expertly advise you on how to create an offer that will have the best chance of being accepted. The contract should protect your interests and should be comprehensive in nature. The purchase contract should include the following:
- The offering price
- Financing arrangements
- The settlement or closing date
- Any relevant contingencies
The key to successful negotiating is keeping in mind that the end result must make both of you, the buyer, and the seller happy. Your agent will represent your best interests and can negotiate on your behalf. He or she has the knowledge and expertise necessary to make sure that your offer is accepted at the best price and terms possible for you.
- Moving Towards ClosingAfter your offer has been accepted, the following contingencies may apply:
- Home Inspection
- Review of Seller’s Disclosure
- Review of Subdivision/Condominium Documents/Title Report
- Appraisal of the property
- Survey of the property
- Pest and termite inspection
- Final walkthrough
- Loan and Conveyance Document SigningClosing is where ownership of the home is legally transferred from the seller to the buyer, in Hawaii this occurs when the fully executed conveyance documents are recorded with the State Bureau of Conveyances.A minimum of three days prior to recordation, a couple of appointments will be scheduled. The first will be with the lender to sign your loan documents. The second will be at the escrow or Title Company’s office where the escrow closing officer will coordinate the document signing and the collection of funds (down payment and closing costs).
In order for the closing to go smoothly, the buyer will be notified in advance as to the amount he or she will be required to pay. The buyer will be advised to of the form of acceptable payment, which is either a certified check or a cashier’s check.
Your Marcus agent will be present at the closing to answer any questions or help to resolve any issues that may occur. Your agent will also be available to manage any last minute or unexpected details that come up.
- Moving InCongratulations on the purchase of your new home! Now that you have taken ownership of the property you will need to have your local services such as electricity, cable, and phone set up. Here’s a check list of items.Address Change For The Following:
- Post Office
- Charge Accounts, Credit Cards
- Subscriptions: Notice requires several weeks
- Financial Institution
- Friends and Relatives
- What is a Realtor®?A Realtor® is an individual licensed to list and sell real estate, one who is also a member of a local Board of Realtors®, the State Association of Realtors® and the National Association of Realtors®. As a member of these three professional trade associations, a Realtor® is bound by a strict Code of Ethics, the canons of professional behavior that guide daily activities in the real estate business.
A Realtor® pledges fidelity to clients, but also pledges to treat fairly all parties to a real estate transaction. A Realtor® is knowledgeable about various aspects of the real estate profession and maintains current information regarding market conditions. Realtors® have an affirmative obligation to serve property owners and prospective buyers to the best of their ability.
A Realtor® is the recognized professional in real estate. The distinctive Realtor® “R” is your guarantee that you are dealing with the elite of the profession, a member of an association of Realtors®, a professional who deserves your trust: a Realtor®. Marcus & Associates, Inc. and all of our agents are Realtors® and Realtor Associates®.
- Why Marcus & Associates?
- Your Marcus Realtor® has the most information in one place about what is on the market. You don’t waste time looking at unsuitable properties.
- Your Marcus Realtor® helps you determine how much property you can afford, how you can acquire the down payment and what financing options are open for you.
- Your Marcus Realtor® can help you find the property best suited to your needs, like size, style, features, location, accessibility to schools, transportation, shopping, etc.
- Your Marcus Realtor® can supply information on real estate values, zoning, real property taxes, utility costs, insurance costs, municipal services and facilities.
- Your Marcus Realtor® has no emotional ties to a property, can be objective about it and can point out its advantages and disadvantages.
- Your Marcus Realtor® knows the real estate values in the surrounding neighborhood and can help you negotiate a good purchase price and good terms.
- Your Marcus Realtor® can help you through the many negotiating factors in buying a home, including price, financing, terms, date of possession, inclusion or exclusion of repairs, furnishings and an adequate time period for you to complete your due diligence.
- Your Marcus Realtor® helps you through the due diligence or the evaluation of the property. He can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports.
- Your Marcus Realtor® , title company and attorney can help you resolve issues that might cause problems at a later date. Sometimes a preliminary title report will indicate ownership of a property with a confusing status of past owners or rights of access.
- Your Marcus Realtor® can familiarize you with the closing procedures by explaining them in advance. He can make sure everything flows together smoothly.
- Your Marcus Realtor® is bound by a strict Code of Ethics and pledges to protect and promote your interest by providing honest treatment for all parties involved in your transaction.
- What does it cost to use a Buyer’s agent?It’s Free! The Buyer’s agent is generally compensated by the Seller’s Brokerage Company. Therefore, it’s in your best interest to have a Buyer’s agent represent you throughout your transaction.
- What is Fee Simple ownership?Fee simple ownership is probably the most familiar form of property ownership to buyers of residential property, especially on the US Mainland. Fee simple is sometimes called fee simple absolute because it is the most complete form of ownership. A fee simple buyer acquires ownership of the entire property, including both the land and buildings. The fee simple owner does not pay ground rent, but does pay real property taxes. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes – sell it, give it away, trade it for other things, lease it to others, or pass it to others upon death.
- What is Leasehold Interest?A leasehold interest is created when a fee simple landowner enters into an agreement or contract called a ground lease with a lessee. A lessee buys leasehold rights much as one buys fee simple rights; however, the leasehold interest differs from the fee simple interest in several important respects. First, the buyer of residential leasehold property does not own the land and must pay ground rent. Second, his use of the land is limited to the remaining years covered by the lease. Thereafter, the land returns to the lessor, and is called reversion. Depending on the provisions of any surrender clause in the lease, the buildings and other improvements on the land may also revert to the lessor. Finally, the use, maintenance, and alteration of the leased premises are subject to any restrictions contained in the lease.
- I’m interested in a property, how much should I offer?Now you’ve found the house you want, how much should you offer to pay for it? This can be a tricky puzzle, because there are no carved-in-stone guidelines. Some homes are overpriced, while others are a “real steal” at the full asking price.
Here are some tips:
- Ask your agent for comparables. To determine a fair purchase offer, ask your agent to prepare a written comparative market analysis showing the sales prices of similar neighborhood homes that sold recently and the asking prices of comparable homes currently on the market.
- Compare the details. To calculate your best offer, compare the features of the home that interests you with the features of similar homes that have sold recently in the same neighborhood.
Comparable sales information helps you to determine a base price range for a particular home. Adding in the various factors like property condition, improvements, market conditions, and seller motivation help determine whether a “fair” price would be at the upper limit of that range or the lower limit.
Although your agent may provide advice and guidance, you are the one who makes the decision. The price you put in the offer is totally up to you.
- What is the escrow company’s role in the transaction?The escrow procedure exists for the protection of all parties to a real estate transaction. Once a contract of sale has been agreed upon between buyer and seller, the placing of the responsibility for carrying out the contract terms in the hands of a neutral third party provides assurance that all of the conditions of the sale will be met. An escrow company is an impartial party, keeping contracts, documents and deposits safe and insured, while carrying out the mechanics of the closing. The buyer is assured of transfer of good title to him and the seller is assured of his money.
Escrow orders the title evidence, has the documents prepared, draws up closing documents, arranges for the signing of documents, records and disburses funds to all concerned. Escrow is responsible for being sure that no title defects have occurred since completion of the title search by ordering an update just prior to recordation. This is a significant protection for the buyer.
No matter how urgent the need, never expect escrow to close without a necessary signature. No funds are disbursed until all documents are signed and recorded.
- What is a contingency?A contingency is a condition on the sale put into the contract by either the buyer or seller to protect against specific eventualities. Examples of common contingencies are: a requirement that the buyer obtains financing or sells their current home; the seller has a home inspection done; or the seller must repair certain items before settlement. Contingencies can be removed by an addendum to the contract, or they can expire if a time limit is specified in the contract.
- What is Title Insurance?Real Estate ownership insurance, generally known as title insurance, is an insured statement of the condition of your “title” or ownership of a particular piece of property. It provides you, as the property owner, with peace of mind by protecting against certain existing title problems. A title policy guarantees that the home you purchase is free of liens, clouds against the title, or confusion in the prior ownership as to the date and time the policy is issued.
While there should be no risks in transferring property, risks do exist. Many “hidden” hazards to property ownership may show up unexpectedly in connection with your property. Any one of them could mean a costly loss or require time. Title insurance can help eliminate these risks. It protects you from damages and expenses incurred because of possible title defects such as: confusion from similarity of names, forged documents, signatures of minors or mentally incompetent persons, mistakes in recording legal documents, undisclosed or missing heirs, fraud, invalid divorces, misrepresentation of marital status, unpaid taxes, clerical errors in public records, or wills not probated.
Before a policy is issued, the title company conducts a search of public records, maps and documents concerning the real property in question. Once the facts about the property and people affecting ownership are collected, examined and interpreted, the company issues a title policy insuring the condition of title. When a title insurance company issues your policy it is saying that you are assured that your property is protected by their policy subject only to its terms. If a flaw in title should be discovered, the title company should defend the title as insured at its own expense and should correct or clear the title, or should pay any loss incurred.
A one-time only premium covers the entire cost so long as ownership remains in your name or that of your heirs. The policy is issued in an amount equal to the purchase price of the property. Of course, the greater the coverage given under a policy, the higher the premium charged.
There are two kinds of title insurance – a lender’s title policy and an owner’s title policy. To protect their interest in your property, mortgage lenders require buyers to purchase a lender’s title policy. But a lender’s title policy doesn’t protect your interest as the homeowner.
Protection of your property ultimately rests in the financial stability, professional integrity and responsible management of the title insurance company that you request to insure your property. Protect yourself against loss due to title defects by insisting on an owner’s title insurance policy.
- Should I hire a Professional Home Inspector?We highly recommend that you use a professional home inspector. Generally, a home inspection is a comprehensive investigation of a home to find out if there are any defects. A home inspector generally would look at but not be limited to the following areas:
- Electrical – Check receptacles in all rooms for proper grounding, and note the hazards found.
- Roof – visual inspection of roof covering condition and defects. Inspect skylights, flashings, gutters, chimney shaft and damper operation. Inspect chimney spark arrestor, cap and hood.
- Attic – check accessible underside of roof covering for water penetration, visible wiring hazards, ventilation, insulation and skylight chutes.
- Water Penetration – check all interior ceilings, walls and baseboards.
- Plumbing – shower, bathtub and sink drains, commodes and components, hot and cold water plumbing, tiles, grouting, water penetration and faucet operation.
- Air Conditioning – check all central A/C systems and wall units for function and operation; check all supply and return vents for correct operation. Checking of wall or window units are usually not part of the inspection.
- Appliances – thoroughly check each built-in appliance for component operation, proper electrical grounding, major defects in operation and control.
- Hot Water Heater – inspect for lower cabinet leaks and signs of rust.
- Swimming Pool/Spa – filter and circulation pump, surface plumbing leaks, sweep, pump, ladder, diving board, lighting and gauges. (Usually, not done by home inspectors, but by swimming pool specialists.)
- Sprinkler Systems – Check sprinkler heads and pump operation.
- Security Systems – This is not included in the home inspection.
The cost of a home inspection varies depending on the square footage and amenities and not on the sales price of the property. This inspection is based on the professionalism of the individual inspector and may vary from one representative to the next. You should call the inspector to confirm exactly what he will be checking during inspection. The protection you gain from a home inspection is merely another layer of support that can prevent you from making a mistake when purchasing real estate.
- How long will it take to purchase my home?
- The timeframe usually varies when searching for your new home and securing an accepted contract. Factors that may affect this are available inventory, market conditions, and your specific needs.
- Upon receiving an accepted contract, the process usually takes 30 to 60 days to close.
- What is Closing?As defined in the Hawaii Association’s Standard Purchase Contract, closing is when the transfer of title is filed and recorded with the State Bureau of Conveyances.
Often times the appointment for the signing of the conveyance documents is mistakenly referred to as closing.
Typically you will be working with an escrow officer who will coordinate the details for you. The escrow officer will begin with information in your contract and will have a search done on that property. It will cover things such as outstanding mortgages, liens, restrictions and easements as well as the rightful owner of the property. The title commitment or preliminary report will also show what kind of documents will be needed for the title to pass to the buyer properly.
The escrow officer will arrange to get the necessary information needed to prepare the closing papers. If a new mortgage is being obtained, the escrow officer will work closely with the lender to meet the lender’s requirements as well as the requirements to assure proper transfer of title to the buyer. In addition, things such as homeowner’s associations, condominium associations, termite inspections, surveys and homeowner’s insurance policies will be considered.
The buyer and seller will both be advised of things they need to do during the time of this processing. If the seller needs to make his home available for an appraisal or an inspection, he will be required to respond. The buyer will need to be sure to get everything to the mortgage company that they request, or there could be delays.
Prior to closing, the buyer will be advised that a Hawaii drawn cashier’s check, or wired funds in a certain amount will be needed to pay off closing costs associated with the transfer of ownership. The seller will be advised of the amount of his proceeds from the sale of his property.