HomeSmart Evergreen Realty
Tricia Ebert & Ernie Sheesley, Realtors¬ģ

7 Steps to Home Ownership

by Tricia Ebert, Realtor®, CSA®, ABR®, BPOR®, CDPE® 

 

 

So you’ve made the decision to buy a home. Congratula¬≠tions! You are about to embark on one of the most exciting and terrifying experiences of your life.  

 

As a Realtor® who specializes in helping first-time homebuyers, I know how nerve-wracking it can be to look for the “perfect” house and to take the huge financial leap in faith that you can afford a mortgage. So let me help you with your experience by giving you 7 simple steps to get from “renter” to “home owner”!  

 

(1)    Real Estate Terms to Understand: Before I list the necessary steps to buy a house, you need to understand some important terms.  

 

         Purchase Offer or Purchase Agreement: When you find your ideal home, your Realtor will help you make an offer to the seller. This is commonly called the “Purchase Offer” or “Purchase Agreement.” These forms have been created by attorneys who work for your state’s Realtor association (such as “CAR,” the California Association of Realtors). These forms include protective clauses for buyers and sellers called “contingencies.” See the next explanation for more information about these clauses.

 

         Contingencies: When your Realtor helps you make an offer on a house, there are “contingencies” built into the contract to protect you. The most important ones are the physical inspection, appraisal and loan contingencies. This means that when a seller accepts your offer, there is a “discovery process” you go through to decide whether or not to actually buy the house.  

 

         It’s vital you hire a home inspector who will go through the house and give you a report on its condition. You may find out the air conditioning unit is about to quit, the water heater is 20 years old, and there are leaks in the plumbing under the house. These are important issues that need to be addressed with the seller. If you want to have the seller make these repairs or give you money for the repairs, you need to put that in writing and see if you’re happy with the response. If you are, then you can remove the “physical inspection contingency.” If you’re not, you may want to cancel escrow. (FYI – Your Realtor can recommend two or three inspectors they have worked with if you don’t know who to hire. Please trust their opinion on inspectors who know what they’re doing.)  

 

         Your loan contingency includes an appraisal contingency. This means the bank where you’re getting your loan hires an appraiser who will look at houses similar to the one you’re buying in that area and see if the price is in line with current market value. If you are offering $100,000 more than all the other houses that have sold in the area, the appraiser will point that out to you and the bank. It’s most likely the bank will not approve your loan based on this information. In this case, you may need to renegotiate the price with the seller. Or you may need to pay the difference between the appraised value and the price you’ve offered (not recommended).  

 

         Also, the bank will require a long list of items they need from you to give final approval of your loan. This may include your last two years of tax returns, your last three months of bank statements for all accounts, information for the source of any cash deposits you’ve made, etc. The bank will check your credit report and FICO scores to make sure you haven’t made any large purchases and taken on any additional debt since you first applied for your loan.  

 

         If the appraisal shows your offer for the house is in alignment with true market value, and you meet all of their demands for paperwork and credit scores, then you will get approval of your loan. At that point, you can remove the appraisal and loan contingencies and go forward with escrow. If not, you may need to cancel escrow (more about escrow is coming up).  

 

         Title and Title Companies: When you buy a house, you need to know that the person who claims to be the owner is really the owner! Title companies do the legal research necessary to make sure an owner of a house has the legal right to sell it. These companies also verify that there are no lawsuits pending against the owner of the house you’re buying. If there are, the lawsuits have to be settled before the house is sold. This is very important information to have BEFORE you buy a house. Title companies also insure your purchase against “defective title.” So if the owner’s relatives contest the sale of the house, maybe claiming they had a partial ownership or interest in it, the Title company has to defend you in court and deal with the situation. (This can sometimes happen when the relatives of a deceased property owner sell the house.)  

 

         Disclosures: When you make an offer to buy a house and the seller accepts your offer, the seller is required by law to disclose to you everything and anything they know about the condition of the house and any details about the neighborhood that may affect the quality of life there. They have a limited amount of time to give you a list of disclosures and if they don’t, you can cancel escrow. Also, if you don’t like the information in the disclosures, such as airplane noise you didn’t know about or a toxic waste dump being under the house, you can cancel escrow. What is escrow? See the next term…  

 

         Escrow: Depending on which state you live in, you will either use an escrow company or a title company to hold your deposit when your offer is accepted by a seller. Escrow companies are neutral third party corporations. They work for BOTH the seller AND the buyer in a neutral capacity. They will hold your deposit until you have done all of your inspections of the house, obtained approval of your loan and are ready to move forward to purchase the house. When your bank is ready to fund your loan so that you can buy the house, the money will be wired to the escrow or title company. This company will then record the deed that gives you title to the house, and they will disperse the funds to everyone who needs to be paid, such as the seller and the seller’s lender (to pay off their mortgage), the title company, the escrow company, the real estate brokers representing the seller and the buyer, etc.  

 

NEXT WEEK: Now that you understand the most important terms involved in buying a house, we'll discuss THE most important detail of buying a house… FINANCING!

 

See you next week!

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What my clients are saying  

"When my wife and I separated, we of course needed to sell our house. It was a very tough time for both of us. But despite our stress and grief, Tricia was really great understanding our difficult situation, and was able to work with both of us to satisfy our needs. We had to sell the house as fast as possible and get the most possible from the sale. Tricia was able to accomplish both! She is VERY knowledgeable about the market, and treats each sale (both buying and selling) as if it is her own home. It made our difficult situation less stressful knowing she was taking care of us. We are both very grateful she was there for us. Tricia is the best!"

 

~ M., Burbank, CA

Tricia is a great person to work with. She was very familiar with the process, and she was very patient. Tricia did help us find the right townhouse for us. Highly recommended!

 

~ Aristos & Suzanna Theoharides, Burbank, CA

Tricia is AMAZING! We had to do a short sale with our property, and Tricia's expertise made the process so easy, and dare I say, even enjoyable! We will definitely work with her again and refer her to everyone we know who needs a knowledgeable, patient, and professional agent.

 

~ Bowe & Gina K., Burbank, CA

I love Tricia! She really helped me through everything. Very knowledgeable and thorough. So glad she was on my side!

 

~ Mari Helgeson, Hollywood, CA

I call Tricia my Angel. She genuinely cares about her clients and goes out of her way to help them. She helped my family do a short sale on our house, and we felt completely taken care of throughout the process. I highly recommend Tricia to all of our friends and family.

 

~ Fides D., Van Nuys, CA

Tricia is truly a hands-on Realtor whose attention to detail takes the stress out of house hunting. She has helped me buy two properties over the years, and I would recommend her to anyone looking for a real estate agent. Tricia is hard-working, caring, and guides her clients through the buying and selling process step-by-step. A consummate professional!

 

~ Kari Wahlgren, Burbank, CA

Tricia: Impeccable professionalism, humor and good spirits. Constant cheerleader and positive force of nature. Not only our Realtor but our teacher, our guide, our guardian angel. We feel so fortunate that Debi found you and led us to you. You encouraged us from the get go. From the bottom of our hearts, we thank you. It goes without saying but, we could not have done it without you! Hugs and Happy Dancing!

 

~ Sarah & Chad Wiley, North Hollywood, CA

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