Buying a Home
Home Buyers Guide
Choosing an Agent
Of all the decisions you'll face when buying a home, there's none more important than the person you choose to represent you.
The job of your Associate Broker is to support you in finding the right home with the best possible terms, and to aid you through the entire process. Your Associate Broker will explain the process of buying a home, and familiarize you with the various activities, documents and procedures that you will experience throughout the transaction.
Tips For Selecting an Agent
Your Real Estate Professional should be:
- Knowledgeable about the communities of interest to you.
- Aware of the complicated local and state requirements affecting your transaction.
- Effective in multi-party, face-to-face negotiations.
- Highly-trained, with access to programs for continued learning and additional certifications.
- Assisted by a fully-staffed marketing department.
- Supported by professional legal counsel.
Most real estate professionals and mortgage lenders recommend pre-qualifying for a loan before selecting a home to purchase. This process will help you:
- Determine the price range you can afford.
- Understand the types of loans you qualify for.
- Determine what your monthly payment will be.
- Estimate the down payment and closing costs.
The Loan Process
Your Associate Broker will help you to select a mortgage lender. Once you have made your decision, these are the steps of the process:
- Application - All pertinent documentation is obtained. Fees and down payments are discussed, and the borrower will receive a Good Faith Estimate (GFE) and a Truth-in-lending statement (TIL), itemizing the rates and associated costs for the loan.
- Documentation - You will be asked to provide certain documents to your lender in order that your loan can be processed in a timely manner.
- Loan Submission - Once all the necessary documentation is in, your completed file is submitted to a lender for approval.
- Loan Approval (Underwriting) - Loan approval, or underwriting, generally takes 24 to 72 hours. All parties are notified of the approval and any loan conditions that must be received before the loan can close.
- Closing - Once all parties have signed the loan documents, they are returned to the lender. If all the forms have been properly executed, the lender sends the loan funds by wire transfer. At this point, the borrower finishes the loan process and actually buys the house.
Finding and Choosing the Right Home
Based on criteria that you and your Associate Broker establish together, your Associate will help you find the perfect home. There are many factors to consider in selecting a property, including location, bedroom and bath count, schools and amenities.
Your Associate Broker will apply their extensive community knowledge and professional resources to research available properties, and show you the homes that best meet your needs. If you find a property that interests you through the Internet or your own research, let your Associate Broker know so that a showing can be arranged. As you view different properties, your criteria may change. Open and direct communication with your Associate Broker is a key element of a successful property search.
Making an Offer
Once you have found the home that you wish to purchase, your Associate Broker will apply their professional training and do all the necessary research to help you structure an effective offer.
This is where your Associate Broker's negotiation skills come into play. When an offer is made, the seller will have the option of accepting, rejecting or counter-offering.
Your Associate Broker will negotiate the best possible terms for you.
Your Associate Broker will draft the purchase agreement, advising you of protective contingencies, customary practices, and local regulations. Home warranty, title and escrow arrangements will be detailed in the offer. Although your Associate Broker will give you advice and information, it is your decision as to the exact price and terms that you wish to offer.
Managing the Escrow
When the purchase agreement is accepted and signed by all parties, your Associate Broker will open escrow for you and your earnest money will be deposited. The escrow is a neutral third party that will receive, hold, and distribute all funds associated with your transaction.
Prior to closing escrow, all of the contingencies of the Purchase Agreement must be met. Your Associate Broker will coordinate this process. Typical contingencies include:
- Approval of the Seller's Property Disclosure Statement.
- Approval of the preliminary title report.
- Loan approval, including an appraisal of the property.
- Physical inspections of the property.
- Pest inspection and certification.
- Acquisition of homeowner's insurance.
Closing Escrow and Moving In!
When all of the conditions of the purchase agreement have been met, you will sign your loan documents and closing papers. You will deposit the balance of your down payment and closing costs to escrow, and your lender will deposit the balance of the purchase price. The deed will then be recorded at the County Recorder's office and you will take ownership of your home.
Your Associate Broker is a valuable source of helpful tips for planning and coordinating your move.
Investing in Real Estate
- Turn on any financial news program and at some point you'll hear the experts extolling the virtues of diversification. Real estate has long been considered a conservative, long-term strategy to growing wealth.
- Learn all you can. Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment's notice. It could take days or months to sell a property, depending on the strength of the market.
- What are your financial goals? With each investment unit, you'll need to take into account cash flow, appreciation, equity, and depreciation. Talk with your accountant about tax liabilities and benefits.
- Consider cash flow. You'll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants, repairs, property management, taxes, mortgage, etc.
- Start small. Look into buying a single family home or a duplex. Leave large apartment buildings and commercial properties to the pros.
- Find a property that will be in demand when you are ready to resell. Look for a moderately priced home with three or four bedrooms, two bathrooms, and a garage.
- Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing vacant land.
- Get an independent home inspection, roof inspection and termite inspection. Unexpected repair costs can eat away resale profit. Because even the best inspection can't always predict problems, try to set aside some of the rental income for unexpected repairs.
- Spend time driving the streets of the community noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up?
- Be ready to make fixes quickly and respond to the renter's needs. If you're not prepared to be a hands-on landlord, consider hiring a property management firm.
Your Berkshire Hathaway HomeServices Taos Real Estate agent can help. He or she has experience in investment properties in your market. Your agent can pass on valuable information about rental prices in your market and the sale prices of other rental properties in the community.
Remember, investing in a property is much different than living in one, and while emotion and attachment can be prime motivators when it comes to homes, it is return on investment that counts when investing in real estate.
Owning a Second Home
Second home ownership is building momentum. Today, demographics and technology are converging to create what can be a historic opportunity for both buyers and sellers. And if you're considering Santa Fe as a second home location . . . it's no wonder. Where else can you ski in the morning and golf in the afternoon?
If you're like many of the baby boomers now entering their middle years, you may be thinking you'd like to have a getaway place not too far from home-a place to relax and recharge with your family and friends. You may want to use a second home as a place to work, as well as play. If it's something you've been considering, now is the time to get the information you need to make an informed decision.
How can I determine my return on investment?
No one can predict the future. But there are things you can consider to help ensure the property you choose is a good one for your lifestyle. For example, if you use it frequently, you'll enjoy it more-so be sure you can get to it quickly enough for spur of the moment getaways. Also, follow your bliss-ask yourself if it's a place you'll enjoy playing in today, as well as retiring in tomorrow. And finally, trust your knowledge about your local area-you're likely to make a better real estate investment when it's closer to home.
What's my next step?
According to the Wall Street Journal, "More than 200,000 people have moved into New Mexico since 1995-highly educated professionals, mostly from the Northeast, Texas, or California, who sampled a taste of New Mexico's lifestyle and felt compelled to stay." We can help you make the move that can turn the getaway spot of today into a second home for a lifetime.