Buying Overview

Your Rights When Purchasing a Home

Basic Rights

• You have the right to shop for financing, real estate agents, insurance, etc. Don’t let anyone discourage you from shopping around. It’s important to shop – a house is probably your biggest purchase. It’s a good idea to a get a second opinion or bid so you can compare costs.
• Make sure you are given a full accounting of all expenses before you sign anything.

Federal Fair Housing Act

The Federal Fair Housing Act prohibits taking any action or making any decision in the sale of a house based on race, color, national origin, religion, sex, familial status (generally children under 18) or handicap.

Things that are prohibited:

• Refusing to sell to someone who has made a bona fide offer
• Refusing to negotiate a sale
• Making housing unavailable
• Discriminating in the terms, conditions or privileges of the sale or in providing the services connected with the sale
• Any notice, statement or advertisement that indicates a preference, limitation or discrimination or the intention to do so
• Saying the dwelling is unavailable when it is available
• "Block-busting" inducing, or attempting to induce, owners to sell property quickly or at a reduced price by suggesting a minority is moving in.
• "Steering" directing certain groups to certain parts of town
• "Redlining" denying a person who qualifies for a loan or insurance because of the neighborhood in he or she lives.
• Discriminating in residential real estate transactions or brokerage
• Discriminating in residential real estate transactions or brokerage services
• Refusing to make a loan
• Refusing to provide information on loans
• Offering different terms or conditions for the loan
• Discriminating in the appraisal of the property
• Refusing reasonable accessibility modifications to the property made at purchasers expense (Does not exclude you from negotiating to have seller pay for them.)
• Refusing to make reasonable accommodations in rules, policies, practices or services that would afford a handicapped person better use or enjoyment of a dwelling.

Benefits of Owning Your Own Home

Income Tax Savings

• Interest paid can be tax deductible

Stable Monthly Housing Costs

• Monthly payments remain stable

Forced Savings

• You are building equity in your home, whereas paying rent builds no equity

Freedom and Individuality

• Freedom to make your home your own with decorating and remodeling

More Space

• More space of your own to do with what you want

Important Things To Avoid Before Buying A Home

Don’t Move Money Around

Do Not Change Jobs

• Salaried Employees: Mak sure to remain in the same line of work
• Hourly Employees: Make sure to remain in the same line of work
• Commissioned Employees: Do not change jobs before buying a home. Doing so creates uncertainty about your future earnings. As a result, there would be no track record from which an average of your earnings coud be done. Changing jobs would negatively impact your ability to buy a home
• Part-Time Employees: Do not change jobs. There would be no way to tell how many hours you will work each week on the new job. By remaining on the old job, the lender can average your earnings.
• Self-Employed: Do not change before buying a new home. Lenders like to see a two year track record. Even considering a change from a sole proprietorship to a partnership or corporation should be done after the home is bought.

No Major Purchases of any Kind

It's the House for You, What's Next?

• Go back and look a second time
• Take a list of things the inspector looks for: look critically at all systems
• Review your wants and needs, and make sure you are meeting enough of them
• Estimate expenses for repairs, replacements, new appliances and furniture
• Estimate utilities and maintenance

• How old are the appliances, furnace, water heater and roof?
• When will they need replacing?

Double check the neighborhood.

• Is it well maintained?
• What are property values doing?
• Does it have the services you want? Sewer, lights, trash, etc.
• Go by it at different times of the day

Deciding what to offer

Appraisal Value-Appraisal will be required by lender, buyer pays for it at closing. The assessed value will be used for property taxes. This value may be different than market value.

Houses have lots of different prices and values

• Listing or asking price - Price seller would like to get
• Buyer's price range - What buyer can afford.
• Sale price - Price the house actually sells for.
• Market Value/ Appraised Value - Established by a certified appraiser.

Balance what you can afford and best guess of what seller will accept.

Submitting the offer and counteroffers

• Purchase offer is a legally binding contract.
• Usually done through real estate agents who have standardized forms.
• Buyer and seller do not negotiate directly.
• A Sellers Agent cannot help you negotiate, but can fill out contract.
• Sellers Agent must get the best deal possible for the seller.
• Transaction Agent cannot help you negotiate, but can fill out contract.
• Transaction Agent acts as a mediator.
• Buyers Agent works to get the best deal for you, the buyer and can help you negotiate.

Purchase offers include the following:

Contingency clauses describe conditions that must be met for sale,common contingencies include:

1. Buyer obtaining financing
2. Inspections that must be done
3. Agreements about who will pay for problems found in inspections
4. Sale contingency - if buyer has a house that must sell to pay for the deal
5. Kick-out clause - (Sale contingency) applies if seller gets another offer on the house, then first buyer has a certain number of days to remove sale contingency and go forward with the purchase.
6. Move-in Dates if different than closing date
7. Response time - the seller must answer the offer by a specified time
8. Earnest Money - An amount of money from the buyer that goes with the purchase offer

• Sign of good faith that the buyer is serious.
• Is a deposit that will be applied to the closing costs.
• Is returned to the buyer if the contingencies cannot be met and the deal dies.
• Is kept by the seller if the buyer pulls out of the deal. Customarily $300 - $500

Seller Responses can include the following:

1. Seller may sign and accept your offer.
2. Seller may counteroffer:

• Change the price, or contingencies and return it for approval
• Buyer has limited time to accept the counteroffer or counteroffer
  again to the seller.
• Seller may reject the offer with no counteroffer

• Best to try to find out why and submit a new offer

Being a Good Client

• The agent gets paid only when a purchase is made.
• As a result, this person must spend time with real buyers .
• Be considerate of the agent's time .
• Make sure you tell your agent any "extra steps" that may be involved.
• Agents need to know anything that might delay contract signatures
• There is room for a lot of confusion.
• Tell any other agent you meet who your agent is .
• If you see a sign, have your agent call about the property .
• Stick with your agent unless something happens that is improper or offensive.

Factors That Influence Your Offering Price

Condition of the Property- Does the home need any repairs before you move in?

Home Improvements- Cost of improvements you will need to make to the property.

Market Conditions- Is it a Sellers Market or a Buyers Market?

Seller Motivation-Does the Seller need a quick sale? Is the Seller willing to help pay part of your closing costs? Other motivating factors of the seller.

How Financing Affects Your Offer

 Amount of Down Payment

 Interest Rates

 FHA and VA Financing

1. FHA and VA loans require the home to meet certain requirements. If the house does not meet program specifications, the Seller must agree to the improvements. The loans take longer to close than conventional loans.

 Extra Costs to the Seller

1. Costs for repairs, pest treatments or Buyers Closing Costs.

 Closing Costs

1. Closing Costs for the Buyer may include the cost of points to buy down the interest rate, mortgage broker fees, various inspections, or a home warranty plan.

 Seller Financing

1. Asking the Seller to provide financing to the Buyer. (Contract for Deed) This type of financing is not very common.

 Cash Offers