Attempting to buy a home can be time-consuming and confusing. This includes purchasing a home directly from a builder. Before you drive through communities following roadside directories and directional signs for new homes, click here to learn of the hazards of buying a new home without the representation of an experienced Realtor. We have also documented our experiences as the real estate broker, and sales manager for a regional builder in Stafford County, Fredericksburg, King George County, and Spotsylvania County. It is a detailed article about builder contracts, and the sales process when purchasing a new home. It is a must read for anyone buying a home from a builder.
Here are the basics for simplifying the home buying process.
(1) Use an experienced Realtor. Contact an experienced full-time agent. With more than 1,000 homes sold we have experienced and worked through any roadblock which could occur for future clients. We cannot stress how important it is for your agent of choice to be a full-time real estate professional available to work around your schedule.
(2) Contact an experienced lender. After the first conversation with your agent, you should be pre-qualified by an experienced lender recommended by the Realtor you have chosen to represent you during the home buying process. It’s wise to get advise from your agent because they know which lenders have a proven track record of loan approvals using the right programs for their clients, and others. You should be given a list of homes for your review which match your living requirements, price range, and community expectations (schools, shopping, parks, etc.). If your buying a home you should always consider realistic commuting options to work (especially in Northern Virginia). Please do your homework for your commute.
(3) Home selection. You will then select the homes you would like to see in person and your agent will schedule appointments for you to see them. This is a time to be completely honest with your Realtor. If the homes you are reviewing are not suitable, it is probably time to conduct another home search using different search criteria (unfortunately an increase in price range usually cures this problem). We prefer to link our clients to Listingbook. It provides real time listing information directly from the same database used by agents in the Washington Metropolitan Regional Area. Once our clients find homes they want to inspect, we arrange viewings until we find the home of choice to begin the contract negotiation process.
(4) Contract offer. After finding the home of your choice your Realtor will complete the necessary paperwork behind a contract offer. This will be accompanied with an earnest money check (good faith deposit), and your prequalification letter. The regional contract we use has 25-35 pages depending on the number of necessary attachments. You will be required to initial and sign every page.
(5) Contract options. Your Realtor will then present your offer to the listing agent. The seller will then review the contract. There are 3 decisions that can be made by the seller after reviewing the first offer. The seller can: (1) accept your offer; (2) counter the first offer by changing one or more items; (3) completely reject the offer.
Your options for countering an offer: (a) accepting the counter offer which would ratify the contract; (b) counter the seller’s counter offer; (c) reject the seller’s offer which would end the contract.
(6) Submit required loan documents. You will then begin the process of supplying your lender with required documents for obtaining a loan. Such as: (1) photo identification (2) W-2′s for past two years (3) Three months of asset statements for 401K account(s), deposit accounts such as savings, checking, stocks, and bonds (4) account information on outstanding loans (5) pay stubs for the last 30 days (5) Self-employed or commission based applicants will be required to supply the last 2 years of tax returns, and the year-to-date profit and loss statement for business owners.
Your lender will remind you not to buy big-ticket items during this review period. It will impact your income-to-debt ratio and credit scores, and ultimately cause you to jeopardize final loan approval. VA loans need a DD-214 and Statement of Eligibility. After beginning the qualification process, the lender will give you a good faith estimate of closing costs. This will include all lending, title, and recording fees.
(7) Review of homeowners documents. While a loan package is put together for underwriting, you will need to read HOA documents (if applicable). In Virginia, you will have 72 hours to consider moving forward or void the contract based on your approval of HOA rules, regulations, and financials. This is a good time for you to start the process of obtaining hazard insurance as required by your lender.
(8) Home inspection and contingency. In most cases your Realtor will recommend a home inspection, and add it to the contract as a contingency for purchasing the home. If there are any material defects found during a home inspection which creates buyer’s concern the contingency will release your obligation of going forward if there is no agreement to complete the desired repair work. This is separate from lender required repairs which are required by contract on purchases requiring financing. If they are not addressed within 5 days the contract can be terminated. Once all agreed upon repairs are completed your agent will inspect the requested repairs for quality of workmanship prior to closing. If the work is satisfactory, your agent will schedule a walk-through.
When selecting a home inspector, we recommend our clients only consider using ‘Class A’ licensed contractors with home building experience. Like any other profession, all home inspectors are not the same. We recommend Patrick Conneen of Patrick’s Home Inspections LLC. His career has included project management of several large residential subdivisions. He can identify any problem in residential building . He is a member of the American Society of Home Inspectors, and a member of the National Radon Safety Board. He knows more about radon gas and inspections than anyone.
(9) Miscellaneous inspections and title transfer. The average time to close on a home from contract to final loan approval is 45-60 days if all required documents are submitted in a timely manner, and inspections and required repairs are completed as expected. Cash transactions can be completed outside of 2 weeks. During this time your Realtor, loan officer, & settlement agent will coordinate necessary inspections with the seller such as termite, well, septic, and appraisal. Assuming these inspections are favorable, you will now be permitted to conduct a final walk-through inspection to make sure the seller has completed all required repairs, and the home will be transferred in an agreeable condition. The title agency you have selected will conduct necessary title searches, coordinate with lenders, resolve existing liens, find the taxes and home owner dues owed between the buyer and seller, and record all required documents. Maryanne & I recommend using RGS Title. They have offices (20) located throughout Northern Virginia.
(10) Closing requirements and fees. Without addressing occupancy agreements before closing, rent back agreements, FHA/VA addendum, escrow money at closing, storage agreements, choice of a home warranty company, and many other issues, you should now be ready to arrive at closing with your Realtor standing by your side to check title and loan origination fees, and be ready to answer any accounting questions/problems in collections & payouts. You are required to present a cashier’s check (certified funds) for settlement costs due to Wet Settlement Act requirements of having all funds disbursed at closing. This payment will include your down payment balance, recording, and lending fees.
Fees affiliated with buying a home:
Lender’s Fees include: (1) Points (2) Document Preparation Fee (3) Tax Service Fee (4) Mortgage Insurance. Types of insurance will depend on financing.
Settlement Fees include: (1) Document Preparation (2) Title Examination (3) Title Insurance (4) Binder Preparation (5) Messenger (6) Government Recording Charges
This by no means addresses all problems or required steps a buyer may face when purchasing a home. But it is a guideline of what you can expect to face in the home purchasing process. All made simple by using a Realtor to find your next home. It’s important to remember the seller will pay all commissions due to your agent for bringing a buyer to the home. Feel free to contact us to receive a free comprehensive home buyers guide with no obligation.
When buying a home requires financing, we recommend these lenders:
(1) Kim Ramey of George Mason Mortgage. She is a Senior Loan Officer serving Northern Virginia since 1989. We consider her one of the best minds in the business. Click here for more information.
(2) Rhonda MacGill of Monarch Mortgage. She is a Senior Loan Officer with Monarch Mortgage. Working for a community bank she services all loan types including USDA, FHA, VA, VHDA, FHLB, reverse loans, second mortgage loans, investor, and jumbo loans. Click here for more information.
Feel free to contact us with questions, comments, or concerns. We are full-service Realtors available 7 days a week. We understand your next home will be the biggest purchase of your life.