Buying a Home Explained
The everything guide to buying your first home
You are about to embark on an exciting journey of finding your next home!
This in-depth guide offers home buyers a detailed overview. Throughout the entire process, your Dudum Real Estate agent will support you every step of the way and will even continue to serve you long after you move in.
Let’s explain the process and help you familiarize yourself with the various activities, documents, and procedures that you will encounter while purchasing your home. This purchase is a very important decision and one of the biggest financial decisions you will make in your life. In fact, most people only buy a few homes in their lifetime. We have the tools to make sure that you are well-equipped with up-to-date information to aid in your decision. We hope you find this guide a valuable resource on your journey to home ownership.
The more prepared you are at the beginning, the less overwhelming and chaotic the buying process will be. From the initial planning to selecting the home that’s right for you, there are many steps throughout. At Dudum Real Estate Group, we are here to guide you every step of the way.
Here is an overview of the process:
Selecting the right lender to navigate the loan process
Forming a “wish list”
Implementing a home search
Homework (studying the neighborhoods)
Making an offer and explaining the complexities of a contract
Discussing the importance and risks of your earnest money deposit
Negotiating throughout escrow process (purchase price, repairs, timelines, etc.)
Inspections / appraisals
Contingency removals
Moving preparation and relocation assistance, if needed
Close of escrow
Your big move!
After close / getting settled follow up
Finding the right REALTOR® for you
Working with the right agent to find and buy your perfect home is crucial. At Dudum Real Estate Group, you have a partner who will work diligently and effortlessly with you to ensure your best interests always come first. Your agent will help begin your search by narrowing your preferences to determine which homes fall within your particular parameters (affordability, size, and neighborhood). We will enlist all of the resources available to us including the Multiple Listing Service (MLS), off-market properties, new construction, Realtors In Motion Marketing Meetings, agent-to-agent networking, open houses, as well as HUD and bank-owned properties. Your agent will also offer you the opportunity to be included in daily listing alerts, notifying you of properties that meet your criteria as soon as they hit the market.
Get pre-approved before you start looking
For buyers financing their home, planning is crucial. This is one of the very first steps in home buying. Your agent can recommend several reputable lending institutions from which you may obtain pre-approved financing. Several factors should be considered to assure the loan process goes smoothly.
The Application Process: You will sit down with a lender or mortgage broker who will ask you to complete a mortgage application and provide copies of your income and asset verification. Various fees and down payment will be discussed at this time and you will receive an estimate for your closing costs.
Pre-Approval for a Loan: An offer is not considered strong if it lacks a pre-approval letter from a reputable lender or mortgage broker. A letter of approval or proof of funds assures the seller that you will be able to obtain the proposed financing and will not tie up the property needlessly.
Lenders will inquire about the following six critical factors:
Income
Savings / capital / investments
Credit history
Debt level ratio
Employment history
Value of the home you wish to purchase
QUICK TIP - YOU WILL NEED:
Two years of tax returns
Two recent paystubs
Two recent W2s
Two recent bank statements
Know your wants, needs, and deal breakers
Each time you view a property, compare that property’s characteristics to your search parameters. If a specific home falls short on your desires, consider whether you can alter the home to make it acceptable. Some features are impossible to change, such as location, but other features can be changed or modified by painting, remodeling, or possibly making structural alterations.
Is your home currently on the market? How long has it been on the market? What is the asking price?
Do you need to sell your home to buy a new one?
Do you need to be near public transportation or highways?
Do you prefer to live in a location with close proximity to amenities?
Are you the sole buyer or do you have partners?
What features are you looking for: detached, condominium/loft, multiple units (flats), bedrooms (#), baths (#), square footage, separate dining room, eat-in kitchen, pool/no pool, etc.
When would you like to move?
How long have you been looking?
What do you like most about your present home?
What do you like least about your present home?
What neighborhoods do you like?
Are schools a factor? If so, which ones?
What style of home would you like (i.e. traditional or contemporary)?
What property condition are you looking for (i.e. fixer-upper, new construction)? If interested in new construction, please ask your agent about that specific process.
Making the offer
Several factors should be considered in your offer:
Purchase price. Having viewed other comparable properties, you will have a good idea of the value of your prospective home. Your agent can provide you with information about similar properties (comparables) in the neighborhood that have sold recently. This information will help establish fair market value and guide you to the right price.
Loan contingency. If you are obtaining a loan to finance the purchase of your home, your agent will structure a contract to allow reasonable time to obtain a loan from a lender of your choice and at terms which are acceptable to you. It often takes 2-3 weeks to obtain a loan commitment.
Inspections. In the majority of transactions, offers are made contingent upon obtaining and approving inspections on the property by licensed professionals. This is to inform and protect the buyer about known and unknown conditions. We generally recommend that two major inspections be conducted at a minimum: pest control and home, but some homes may warrant a sewer lateral, roof, chimney, pool, soils, drainage, well, etc.
Personal property. It is important to clearly identify all personal property that will be included or excluded from the sale.
Your offer was accepted, now what?
What to expect during a home inspection
Inspections are important!
Once an offer is accepted and the transaction is officially in contract, the contingency period begins. A home inspection is an all-encompassing examination of the condition of a home and is an important step in this process.
While property inspections provide no warranty, they will educate you as to the current condition of the property. Inspections are usually requested on the purchase agreement and if inspection results are unsatisfactory, you have the option to request repairs, renegotiate price, or withdraw your offer prior to removing any contingencies.
In addition to the professional inspections listed below, you should take a close look at the property yourself. For example, inspect cupboards, doors, windows, flooring, counter tops, bath and kitchen fixtures, built-in appliances, stairways, and banisters. Even spend time in the neighborhood and get to know the community. Your personal diligence is just as important as your professional inspections!
Physical inspection: Usually done by a General Home Inspector, a physical inspection is a thorough inspection of the house. The inspection results in an overall assessment of the present condition of the property.
Pest report: The pest report will indicate any type of wood-destroying organisms that may be present. This includes termites, wood fungus, dry rot, etc. The seller usually provides this report, but if not, the buyer is highly encouraged to obtain one.
Additional inspections you may want to obtain:
Pool (if applicable)
HOA document review (if applicable)
City / county permit history
Neighborhood factors and noise (personal diligence)
Roof
Chimney
Sewer lateral
Structural / engineering
Drainage
Closing costs: Who pays what?
THE SELLER CUSTOMARILY PAYS:
Real estate commission
Document preparation for deed
Documentary transfer tax
Payoff of all loans against property
Interest accrued on loans being paid off, reconveyance fees, and pre-payment penalties
Home warranty (if specified in contract)
Any judgment or tax liens against seller
Property tax proration
Prorated HOA dues (if applicable)
HOA fee for providing all updated homeowner’s documents (if applicable)
Bonds or assessments
Delinquent taxes
Notary and recording fees
Third party Natural Hazard Disclosure Statement & California Tax Disclosure Report
Pre-sale inspection fees
Negotiated credits / repairs to buyer, if any
THE BUYER CUSTOMARILY PAYS:
Title insurance premiums
Escrow fee
Document preparation (if applicable)
Notary fees
Recording charges for all documents in buyers’ names
Tax proration (from date of acquisition)
All new loan charges (except those required by lender for seller to pay)
Appraisal fee
Interest on new loan from date of funding to 30 days prior to first payment date
Assumption / change of records fees
Beneficiary statement fee
Prorated HOA dues (if applicable)
Inspection fees (roof, pool, property inspection, pest, geological, etc.)
Home warranty (according to contract)
City transfer tax (according to contract)
Fire insurance premium for first year