Keep in mind that the seller pays the commission.
Knowing your budget up front helps to streamline the looking process. Reaching too far from the actual budget can be frustrating, especially with a properties that have few days on market and are priced within the strike zone for similar properties.
1. Do some due diligence on your own, to know the areas that you prefer – going to open houses is the most effective way to engage in the process – not only to find a location, or home, but to speak with real estate agents who are hosting the open house.
2. Know what you can afford by speaking with a couple of mortgage professionals.
3. When the timing is right for you, find an agent who has some experience, who has great testimonials, and interview 2 or 3.
4. Find a local real estate attorney. Your agent can make several recommendations.
5. When you find a home that you like, your agent presents an offer. The offer includes the price, everyone’s name and including the buyer’s attorney, all contingencies (financing, inspections) and dates for satisfying them, inclusions/exclusions and proposed closing date. The offer is often countered, and the negotiation either continues or it may be time to go to another property.
6. If/when an offer is accepted, the buyer then engages the attorney to represent his/her interest.
7. It’s time to hire an inspector(s) Inspections may include, financing, building, mold, pest, pool and any others that are relevant to the property.
8. The seller’s attorney draws the contract, and once accepted and signed on both sides, a 10% deposit is taken and held a separate escrow account held by the seller’s attorney.
9. The final walk through takes place on the day before of the day of the closing, usually with the hired inspector who will walk you through the workings of the home, and make sure that the home is the way it was at the time of the original inspection.
10. The closing is often now done electronically or it can be done in person. This is coordinated between mortgage personnel, attorneys and clients. Funds are sometimes wired or exchanged at the closing.
Here’s a step by step graphic for 1st time buyers from House Logic. It differs slightly from my timeline above, but a picture is more sticky than words for some.
Estimated Closing Costs
Costs on the Sale of a Property
|State Conveyance Tax||.75% x Sales Price (1.25% x Sales Price over $800,000)|
|Local Conveyance Tax||2.50 per Thousand|
|Realtor’s Fee||5% (varies)|
|Recording Fee – Release||$10 (1 page) – $15 (2 pages)|
|Real Estate Taxes||Unpaid Amount|
|Mortgage Payoff||Unpaid Balance|
Costs on the Purchase of a Property
Apprasial (often included in application fee)
|Title Insurance||$275 per $100,000|
|Recording Fee||$10 (1 page) – $15 (2 pages)|
|Tax Escrow (usually 6 months)||Determined by Lender|
|Tax Adjustment||Buyer reimburses seller for pre-paid real estate taxes|
|Interest Adjustment||Per Diem from closing date to end of the month|
|Utilities (oil, gas & water)||Varies (per gallon remaining in tank, etc.)|
|Common Charges (condominium)||Varies with complex|
|Association Fees||Varies with complex or neighborhood|
|Insurance||$800+ depending on the property|
Costs of Various Property Inspections
|General Building Inspection||$600+|
|Radon||$175 +/- placement & pick-up|
|Septic Cleaning & Inspection||$250+ depending on size of tank|
|Asbestos Check||$300-$500 per test|