BUYING A HOME

Deciding on a Realtor

The first step in the buying process is deciding on a Realtor. Since buying a home is one of the largest purchases and most important decisions of your life, you want a Realtor working for you. Realtors can work with you in different forms. Mike Parker & Company Real Estate, L.L.P. can represent you as a buyer’s agent or as an intermediary in the buying process.

A buyer’s agent represents the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent.

Mike Parker & Company can act as an intermediary. An intermediary is when the broker is representing both sides of the transaction. The broker has to comply with The Real Estate License Act, which means the broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Real Estate License Act. A broker who acts as an intermediary in a transaction:

shall treat all parties honestly;
may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner;
may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and
may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property.

With the parties’ consent, a broker acting as an intermediary between the parties may appoint two persons who is licensed under The Texas Real Estate License Act and is associated with the broker. One person will be appointed to the Seller to communicate and carry out instructions given by the Seller. The other person is appointed to the Buyer to communicate with and carry out instructions given by the Buyer.

At Mike Parker & Company Real Estate, L.L.P., our policy is that a relationship be established through a written contract (Buyers Representation Agreement) so that it will clearly state the responsibilities and obligations that we have to our clients.

What Can We Afford?

There are a lot of factors that go into what you can afford: income, credit card debt, assets, child support, car payments, etc. For most buyers, there are three major concerns: down payment, qualifying for a loan, and closing costs.

Down payment is what you put down towards the principal cost of the house. The higher the down payment, the better the loan terms and a lower interest expense on the mortgage. It should also make your monthly payment smaller.

Qualifying for a loan requires a review of your credit history. A lender will usually ask for a 2 to 5 year financial history that contains, income (gross monthly salary), your most recent W-2 and tax return forms, assets (checking account), savings account, stocks and bonds, certificates of deposit, other property, insurance policies, pension funds, credit- debt on cars and appliances - debts on all credit cards, and a history of debt repayment. They may ask for a credit report, so you will want to take care of any negative items that might show up. Closing costs might run around 2% of the purchase price of the house. Closing costs include loan origination fee, loan discount, appraisal fee, credit report fee, title insurance fees, miscellaneous title charges, documentation preparation fee, lender fees, prepaid interest, PMI premium, and the beginning of the escrow account.

Your Needs and Wants List

It is important to make a needs and wants list after finding out what you can afford. This will allow Mike Parker & Company to narrow down the search and get closer to finding your home. It may seem tedious but it is a great way to getting started and can be a fun way to start your search. On this list you want to have items like, one-story home, three-bedroom, two-bath, back-yard with privacy fence, and 30 minute commute to work. On the want list you would want to put items like a pool, master bedroom must be down stairs, tile in the living room, deck in back-yard, etc. Mike Parker & Company suggests looking into mature vs. new homes. Mature homes usually have an established yard, the neighbor hood or subdivision is usually built out, and the homes may require more maintenance. New homes still have their problems but may require less maintenance in the first few years, may have to put in landscaping, and have the builder correct any faults that are covered in your warranty. If the area still has some building going on, you may have to endure the construction. With this list and with your price range, this will help you separate homes that do or do not meet your requirements.

Looking/Finding

When looking for your home you need to look into more than its appearance. First, look at its location. Does it meet the needs on the proximity to job, shopping, restaurants, schools, and recreational areas. You also want to look into the traffic. Is the home located in a cove-a-sack, on the main street in and out of the neighborhood, is it safe getting in and out of the neighborhood, are there speed bumps to slow driver down. Remember, you can’t fix the location of the house. Mike Parker & Company would also want to see if there are any proposed changes in land use such as commercial shopping centers, roads, and potential hazards such as flooding and noise from nearby airport or highways. Once you get into the home, you want to look for foundation/ structural problems, A/C and heating – how old are the units are they leaking, have the previous owners done any up-grades, termite damage, or any drainage problems. Mike Parker & Company would not put all of this in your hands. These are things to look for and keep an eye out for. When Mike Parker & Company finds you a home, we suggest strongly to get an inspector. The inspector will check the house out “before” you buy it. Mike Parker & Company has a list of inspectors that you can choose from.

Making the Offer

Once Mike Parker & Company have found your home, it’s now time to make an offer. You are the only one who can decide on how much you are willing to offer. Mike Parker & Company are at your service and will put anything in the contract that you feel is important to you. Mike Parker & Company is here for you to give you as much information and options as possible in order for you to make the best offer. Mike Parker & Company will help you by running a Competitive Market Analysis (CMA) on the home that you are making an offer on to make sure the price of the home is going for market price. Mike Parker & Company want you to be happy with your purchase so trying to get you the best deal is in our best interest.

When putting an offer on a house Mike Parker & Company want our clients/friends to know what the Seller has three options as to what they can do with the contract. The Seller can accept, reject, or make a counteroffer. First, the Seller can accept the offer as is. The contract from there out is now binding on both parties. You will have the option to get out of the contract if the inspection detects items that we did not foresee. Second option for the Seller, they can make any adjustments to the contract by making a counteroffer. You will then have the three same options. It would then be up to you to accept, reject, or make a counteroffer. Last of all, the Seller can reject your offer with or without any reason. It is important to know that the Seller can do anything they what to our offer. The best thing that we can do is to make the first offer the best offer that satisfies our needs and their needs. We want to make this a win-win situation. The contract becomes binding once both parties, you and the Seller, agree to the written terms. With this offer, you will offer to deposit earnest money with the escrow agent (usually the title company), showing your sincerity in making a reasonable offer and abiding by the terms of the written contract.

In the contract Mike Parker & Company wants to take precautions to protect you against unforeseen defects in the home. An inspection by a qualified inspector can provide you with an unbiased opinion about the conditions of the foundation, mechanical systems, plumbing systems, appliances, etc. Mike Parker & Company suggest accompanying the inspector at the time the inspection is conducted. It’s also a good idea to get a termite and other wood destroying insect inspection. An inspection is great but we also recommend a one-year home warranty. Mike Parker & Company will request that the Seller furnish you with a one-year residential service contract as part of the deal but if they don’t, we suggest that it would be a good investment. If you buy a new home, the builder may offer a warranty as well.

The Closing

The closing could last less than an hour but may take longer depending on the complexity of the transaction. It is usually held at the title company’s office. The title company’s escrow officer will explain each document before you sign. You may want your attorney present as well. On a strictly cash transaction, you would simply hand over the money and receive the deed. In most cases, however, you are borrowing money for the home, which means, that you are actually making two transactions: acquiring the loan and buying the home.

As a borrower, you will sign a note promising to repay the loan and a deed of trust (also known as a mortgage) pledging the home (or other collateral, ex.: assets) as security for the note. You will also sign numerous other papers including acknowledgements, disclosures, surveys, certificates, etc. If you have a question on anything, please do not hesitate. There is no such thing as a dumb question. You can’t do anything about your question after you sign the papers.

As the home buyer, you will present a cashiers check (or other funds) to the Seller, sign a document that itemizes closing costs (the lender will have given you a good faith estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you.

Here are some types of closing costs you may incur on your loan. Most are one-time fees while other will re-occur over the live of the loan. They are: loan origination fee, credit report fee, appraisal fee, loan discount, miscellaneous title charges, PMI, premium, prepaid interest, title insurance fees, lender fees, and document preparation fee.