10-Step Home Buying Process
The buyer process can be one of the most difficult emotional rollercoasters you will ever face financially. Your stress will be through the roof at times if you do not pick your team of advisors and professionals properly. Buying a home is long and arduous and you just want to be guided along the path reducing your stress at all costs while knowing you are getting a safe home for you and your family without getting screwed over by a seller. Thats pretty much what it comes down to right? Here we have the 10-steps of the buying process so you know exactly what you are getting in to before it happens. It is kind of like going through a haunted house with the lights on and someone telling you what is around every corner beforehand…that is what we are here for and this video series is that start.
Hey guys, Brandon here.
I want to talk to you about the pre-approval process and loans and all that fun stuff. So the first thing you need to do is get pre-approved.
So we have a handful of lenders that we work a ton with. Really a handful of really awesome, rockstar lenders from all different banks, different walks of the financial fields. So we have a couple of options that we’re comfortable with and that we’ve done a lot of work with. We know they get the job done and we know they close on homes. We know that they’re good with communication. We know that they’re good at working with our clients. They’re good at communicating with u, the real estate agents. So there are people that we really trust and that we’ve done a lot of business with.
So those are the people that were very comfortable with. Again, it’s up to you. You can choose whoever you want to work with just like any other vendor in this process. We, as your real estate team, we’ve put a lot of time and this is something we do every single day, so the people that we refer to our clients or people that we trust, we use a lot of them. I mean I use some of these mortgage providers. I’ve used throughout the process for myself. The inspectors, I’ve used them myself so I wouldn’t be sending someone who I didn’t feel comfortable with. Being the team leader of Mitten Made Properties, I would never do that to somebody and I would never send someone to someone who I wouldn’t use myself. So these are people that have all been vetted by me. They’ve worked, I’ve had sit down conversations with them, many of them and we’ve also used them a ton.
So these are people that you have to talk to you right away, the lenders, you had to get there for your approval. It’s the first thing, it’s you’re into the inside. Not a lot, but some sellers won’t even let you in the door to see a home if you don’t have a preapproval. So with our sellers, we try to get the preapproval before they even get to the home. So, you know, I know in our side we don’t want to waste our client’s time. We don’t wanna waste anyone’s time. We’re trying to help other people not waste their own time. So always get pre-approved first. We can walk you through those steps, but really the lender’s, they’re going to walk you through the financial stuff. They’re gonna get you that preapproval letter. It’s a sheet of paper saying, “Hey, we’re good for x amount or less.” You know where you’re at, what you can do financially. And then with that offer that we do eventually make, that’s what’s going to be handed in with the offer package. So we need that. We’re going to have a list of people for you. Like I said, that you could talk to you. I suggest, just like the insurance and all the different people we’ve talked to, all the different vendors go through the list of people go. Some people you know, go through them referrals and that’s the other thing I would, I would go with referrals. That’s why we try to stay away from Google searches and things like that. We want to go with people who were referred because they’re the people that we know the best. So if other people would refer to someone and the referrals that we give you, use those people, call them, do your vetting make a great selection.
So we need to get that preapproval done. We have a couple of quick things I wanted to touch on regarding loans, the loan process, cash as a strongest offer you can have. Then conventional loan, then FHA, VA, rural development loan, USDA loan and stuff like that goes down that that list is basically going in that pecking order. So the seller wants to see number one: the cash offer. Then it starts going from there, conventional, FHA, VA, and everyone asks, why is that? Well, the biggest reason people that have a ton of money stored up, that’s not most people, they usually go cash or conventional. They’re generally putting down more money. Their debt income is a better ratio. They have not as much debt to their income, so they go conventional or cash and sellers like that because it takes out some problems that could happen down the road, with FHA, VA loan, all those, those are awesome loans are great loans for a lot of our buyers. But what happens is the seller, sometimes the VA or FHA appraiser will come in and they’ll flag things. They’ll kind of nitpick the house. Things like handrails and smoke detectors and stuff like that. They’re missing. They’ll flag stuff like that. So it causes headaches a lot of times. Their seller is more than anything. Now in the grand scheme of life, isn’t that big of a deal usually? No, it’s not. Sellers just get kind of antsy and it’s kind of an old urban legend, old myth. They used to not be as good as conventional, those other loans, FHA and VA, etc, they weren’t as good before. But now they’re all very, very good loans and there’s a lot of myths out there now. So it’s combating that and that’s our job too. We try to combat that and fight people on that and negotiate especially if you’re up against other offers and there are other conventional offers. It’s sometimes tough, but we do all weekend and negotiate the best possible circumstance and outcome. But just wanted you guys to know that going into that the more you put down, it shouldn’t matter to the seller, but it does, it’s, the seller’s going to say, “Wow, this person has a lot of money to put down.” So they’re going to be a stronger buyer, are probably going to have fewer problems with them going through the process. So I just want you guys to know this is how they seller looks at things.
These are videos that are meant to open your eyes to the process and turn the lights on and like we’ve talked about and to make you aware of what’s going on so you’re not surprised with things. So I thought I was going to look at that stuff. And most people say, “Well, hey, why is that their problem? Why are they looking at that?” Well, you’re tying up their house and new contracts. So they kind of want to know. They’re looking at stuff like, okay, how strong is his buyer? What’s going on with it? Are they going to be a good buyer? Are they going to cause problems during the transaction? Our thing is going to arise that are unforeseen. So it’s something they’re going to look at and something to take into consideration and think about during the process. Again, cash, conventional, FHA, VA, Rural Development, USDA loans, that’s pretty much the pecking order. So the strength is at the top and then it starts going down from there. That’s really in the eyes of the seller. So remember that, that’s the eyes of the seller, is that necessarily the case? Well, that’s, and that’s any best for everyone else to argue, but in the eyes of a seller, that’s generally how it works.
So I just want you guys to know that and be prepared for that. But remember, get preapproved we’re gonna walk through that preapproval process. Obviously reach out to us anytime and we can get the people to you and do your due diligence. Get some good people on your side, on the financial side, because that’s gonna be super important. They’re gonna be working with you a ton. You need to get that done in order to get an offer in, to get it accepted and to get to the closing table. So it’s very, very important.
I’m super excited that we are able to be hooked up together, referred a family friend, whatever it may be. We’re super excited to work together. I’m excited to have you in our family now and help you out. And my team is super excited as well. All of our expert agents and showing assistants and admin and you name it, we’re all super excited to help you guys out. We are a true team. It’s a true team effort. It’s what a company and business are, this is a team, a group of people coming together for a common goal when our goal is providing a better product and a better service for you. Getting you more money for your home when you’re selling and helping you get a better deal for your home when you’re buying.
And that really is our ultimate goal. So we have the systems and the people in place to do those things and do what’s necessary to be able to help you at any time. That’s why we have a team so we can help you if someone for some reason is gone because some may need the break or they’re on vacation or they’re sick or whatever it may be, someone else is here to take care of you and help you out and that’s exactly what Mitten Made Properties is all about. It’s all about the team. It’s all about family. So we’re super excited to have you here. This is gonna be the start of a little educational series that you’re going to get now that you’re part of our team. Hopefully, it’s something that would provide a lot of value to you. I mean, obviously, we have Google and all that kind of stuff you can search now. But you might as well have it right from the source and you can start to see how Mitten Made Properties operates and we can start giving you a bunch of information and hopefully, you’ll take a ton out of it because this is a tricky process. It can be confusing at times. It’s a roller coaster. It’s up and down. It’s happy. It’s sad, it’s mad, it’s emotional. I’ve seen it at all. Anyone who’s been in this industry for a while has seen it all and it really can be a grind, but in the end, you get something great out of it. You’re getting an awesome home. You’re getting the home of your dreams and it really is a fun experience in the end. Nothing in life that’s good comes easy. Right? So there are ups and downs, but we’re here and we have the systems and people in place to make it as stress-free and the least amount of bumps in the road as possible. So we’re going to go through like I said, we’re gonna have a little educational series here and what it’s gonna do is kinda go through the process because I tell everybody I’ve given the example many times like going through a haunted house. If you’re going through a haunted house and it’s dark and you don’t know what’s going on, it’s kind of scary. But if I go to the haunted house with you and tell you where everything is and I follow you around like pointing things out, it’s not that bad. And if I tell you beforehand, “Hey, this is what’s going on” and I turn the lights on and you know exactly what’s going on, it’s not that scary anymore.
So that’s exactly what our job is here at Mitten Made Properties as a real estate provider and real estate professional. It’s to make the road less bumpy, it’s to enlighten you, turn the lights on as I like to say and help you guys through that process. So that’s what this process is intended to do. We used to meet with our clients a lot more when we got introduced to each other when we got hooked up together. With how things go nowadays, it was taking a lot of time really from the clients. I actually had somebody at one point say, “Hey Brandon, thanks so much for coming and just meeting me at this property and helping me out.” And they loved that we just got right down to business and we started talking about this process that I’m going to walk you through at the property, but they didn’t want to meet up and they actually left somebody else because that’s what they want to do. I used to do as my clients. It was a real epiphany for me. It was really like, wow, this is a game changer. It is an eye-opener. I was like, wow, we do. We have the technology. So I’ve started this where I can get all the information out to you and help all of our clients and this gets sent to all of our buyers. So, everyone who comes into our team, everyone gets this process and that way we can turn the lights on for you and have a consultation without actually having to physically spend a couple hours and sit down at a coffee shop or our office here and have a consultation. If you ever have any questions then you can just ask us. You can email us, text us, call us, it doesn’t matter, but the whole point was trying to get this information that we’re going to give you out to you. You can go on Google and you can search all these different things and do all this awesome stuff. But it doesn’t always make sense. If you’re kind of just doing one off and you’re trying to find this little answer and that little answer. It doesn’t always make sense. I want to have a relationship with you. I don’t want this to be a one-time transaction. I want it to be a lifelong friendship and I want us to really create something special here. So this is why I started doing this and providing all the knowledge, really just packaging up all the knowledge that our team has and just giving it to our clients. Like I said, turning those lights on for our clients and the setting that stage for them.
So this is the consultation. This is the first step in the process and this is it. It’s the consultation. You’re going to see the consultation here. And like I said, we used to meet in person, now we don’t have to. So it’s a lot better way to do it. Were utilizing the technology we have nowadays and it’s a heck of a lot better and it saves people a lot of time. So look forward to bringing this process.
3. HOME SEARCH EMAILS
So we did our introductions. We know who each other are. Awesome, that’s great.
So the next step is home search emails. Once we initially talk, whether we did or not, we’re gonna be sending you guys up on home search and what that is, it’s going to be all the homes that we’re finding that fit the criteria that you gave us, we’re going to be sending those to you every single day. So it could be every three days, every day, depending on the criteria you give us. If it’s a really narrow, it might be every couple of days. If it’s somewhat broad, you might be getting emails every single day. All the homes we’re finding or sending them to you. So our team is getting all these homes or sending them to you every single day.
So once you do find the homes you like, then we’re going to get into that in the next video actually, but for right now it’s home search email time. So make sure you check your emails, make sure you check your spam folder or something like that. Sometimes it might go there, but you’re gonna be getting those emails every single time. It’s the actual MLS so it’s not as low as not true, it’s not all that stuff. All those in realtor.com, they’re okay for what they do, but you want the MLS. You absolutely want what we’re giving you because it’s what the realtors use. So when a realtor goes and puts the listing into the MLS, it’s the actual thing. It goes into the whole board, into the whole state, into everything, and then it gets spread out from there and pushed out to all the different third-party sites like realtor.com, Zillow, Trulia, homes.com. You name it, AOL. It goes to all of those after the MLS. So if you’re paying attention to Zillow or Trulia and all those sites, you might be a day behind. You might be two, maybe five days. You can be a year behind if you’re looking at just that those sites solely. I’ve met people that we had their homes for sale and they Zillow kept taking. We put the listing up and they would take it off and it was like, what’s going on? You know, so that’s the kind of stuff that really drives me crazy. It drives our team crazy and it drives our clients crazy more than anything.
So please pay attention to the home search emails we’re giving to you. They do have foreclosures on there, they do have other homes in short sales. If you want to ask about short sales, fortunately, there’s not tons of on the market right now, but short sales are a whole different beast. But foreclosures will be on the search list in the private homes and new builds will be on there as well.
So everything you want and need is going to be on that list we’re sending to you and including in that search, that’s what you want. It’s updated in real time so you’re gonna be getting those in real time. You’re going to be beating the rest of the market because most people aren’t using the MLS as they should. Most people are looking on Zillow or realtor and Trulia for whatever reason, so utilize that MLS. It’s your lifeline to guaranteeing yourself, getting first dibs on homes because you’re going to be getting updated real time. So it’s super important to keep track of those home search emails. Go and favorite it. You can favorite the stuff you like on home search emails, and then we can see those too. It’s the whole portal that we give you guys just like your realtor, so check those emails. If you’re not getting them, let me know, let one of our admins know, your agent on our team, whoever it is, let us know. That way we can help you out. Make sure you’re getting those because those are super important. Next video, we’re going to talk about what to do once you find some homes that you like.
So you found a couple of those homes that you really like. Now, what do you do? You get a hold of your agent, get a hold of your buyer’s team, get a hold of your showing assistant, get a hold of the admins on the team. That’s why we’re all here. In the past and a lot of times you see agents, they’re just one person. You can only get a hold of them. Well, if they’re out of town, what do you do then? That’s why we built the team. That’s why we built this company where people can be helped no matter what’s going on. So it’s paramount in today’s fast-moving world that we have people that are available and readily accessible. So when you do find those houses you like, you really want to find three to five homes that you really like and this is another thing, make sure before you’re ready to go see those homes, make sure you’ve scouted that area out as well. We used to have people in the past when I first started out, we just go to a home and they will show up and they say, “Oh, we didn’t like the area.” It’s not wasting my time necessarily because it’s my job, but it’s stuff that could be working on for other people if you weren’t driving onto that. It’s something that really should be taken care of first and when we get whittled down to those first three or five properties and it’s really a top three or five, we want to make sure that area scattered out. Everything is good. And then we’re going in and looking at the homes. So it’s super important to get that due diligence done before we go out and see those homes, whether it’s me and my expert agents on my team, our awesome showing assistants who might be opening the doors for you. If it is one of our showing assistants, they will be reporting back to us as well what’s going on. Their agents whether it’s me or one of my agents we’re gonna be writing the offers for you. We’re going to be doing the skilled negotiation, all of that. But if we’re on the office or if we’re on leave or whatever it may be and we can’t be out there, we still have someone open the door for you and get you into that home. So it’s super, super important.
The other part of that is don’t go off. Please don’t go off and work with a listing agent, no matter what you do, whether you are working with us or not, I would never recommend anyone ever doing that. That is the fiduciary responsibility of that listing agents to that seller. And that’s it. They have no responsibility to you. So you mean it’s the biggest transaction of your life, most likely and you’re letting someone else who has the duty to someone else negotiate on your behalf. It’s not the situation I would want to be in. It’s not the situation I want any of you in. So when you find those homes, make that list of your top three or five. Go out and check the areas. Make sure you like the areas and neighborhoods. Then come to us, come to our team and say, “Hey guys, we want this. We got these scheduled.” Give us some days and times you’re available. Let’s get these going. We figured out with the agents. That’s the other thing. You don’t have to schedule anything else on your own so you then have the team schedule showings, getting all the sellers’ confirmations and getting it all prepared for you and then all you have to do is show up at the day and time that we all choose.
The last point I’ll make is please, please stick to that home search. Again, please take that home search. Zillow, Trulia, you’re gonna find again, you’re going to find a lot of phantom listings out there that aren’t real. Stick to that home search. Find your top three or five and then let the team know. Then we get them scheduled for you and then we go. We go show them, we go see what’s going on. Hopefully, make an offer on the best house that you guys really like, and then we move on from there.
So we got through all that process so far. We’ve found the home. We like, we went on those showings and we’ve got something. We’ve got a real winner here, hopefully. So what happens next is you’re gonna need a handful of things. You need to worry about the earnest money deposit or an EMD, which is just your deposit on your home. Just like putting a deposit on anything you’re buying. It could be of a sound system or a TV or whatever. You’re putting a deposit down on the home. Usually 1% of the purchase price. We need that within 40 hours of an accepted offer. We try to get it before we make an offer. It doesn’t always happen. Most people don’t have their checkbooks, but we need that within 48 hours of an accepted offer. If we don’t have it within 48 hours of an accepted offer, then we have to tell the seller that the deposit is not in the brokerage account and the sellers then could walk away from the contract because technically it’s void at that point because the buyers aren’t upholding their end of the contract that they agreed on.
So we need that deposit within 48 hours of an accepted offer, but let’s rewind real quick. We’ve got the house we want. We’re going to be writing an offer. Gone are the days that you have to go sit in an office like this. A big conference room or something like that and goes spend a couple hours writing up an offer and then getting a submitted. Now don’t get me wrong. There’s a vast majority of people that still do it that way. That’s not the way that we do it. This just not the way the game is played or should be played anymore really in our minds. It’s all about being efficient and making people comfortable and one of those things is using DocuSign which is an e-signature platform and a cloud platform which handles all of our documents. It’s a secured network and it’s not something you have to sign up for anything even if something says that, you don’t have to. Click out of things. X things out, if something is trying to make you sign up or something like that, it’s all free. Nothing that you have to pay for. We pay for it in our end. It’s an encrypted secure network, so your documents are safe. That’s where we store our documents for all of our clients. So again, it’s a service we provide. You don’t have to worry about it. It is something that gets emailed to you and we can see our end if something is completed or viewed or not, which is really nice, but what happens is we’re going to make an offer. You’ve got a handful of different documents that you need and that is going to be sent to you in this offer.
Again, read through that offer, read through that entire offer. Make sure that you’re good at everything and make sure that everything looks fine to you. We can advise you on anything, but it’s a contract that you need to look through and make sure you’re good with. So that’s going to be all e-signature and what it’s going to do is going to go to one of the people first. If there are two people signing and go to one person first, they are going to sign what it is. If it prompts you, it just tells you to click through every area that needs to be signed or initialed. So it’ll walk you everything and once you’re done, you’ll push finish. And then as soon as you push to finish, it’ll either be sent back to the agent or send to the next person who needs to sign. So you’re going to get it, you’re gonna see it. And then as soon as that person’s done, they’re gonna push finish. And that’s going to send back to the agent who sent it to you. So then back to us.
So once that’s completed, then you have like I said, the deposit you have to worry about, which a lot of times we just have that mailed to our office. It sits in a non-interest bearing account in the brokerage here, so it sits there until closing. If you follow the contract, then you have nothing to worry about. If for some reason we need to back out of the contract, we really need to stay in that seven to 10 day inspection period, we’re there to help you guys with that. Obviously, try to guide you guys through that contract. But we need to follow the contract to the bathroom ability and that way it keeps your deposit safe. It does go towards your closing, so it comes back to you at closing. But if for some reason to say you went through the inspection period and you went through all these different periods and you said okay to everything and then a week before closing you said, “I don’t want it anymore.” Well, you probably want to get the deposit back. So it was just following the contract. Now if something happens, we’ll get into this in later videos. If something happens in the inspection period or something happens to the appraisal or your financing, then there’s a different route we take and we’ll get into those in other videos. But really quick of the offer – concessions are something that I would ask your lender about. I talked to people a lot about concessions that the big question I get. So we might put an offer in and then we get concessions we might ask back, which are just the seller helping you with closing costs.
You have one check at closing and it’s made up of two things. It’s going to be your down payment and it’s going to be your closing costs. Closing costs are comprised of a broker’s fee. There’s a $500 broker’s fee. The title has got the same fee. Insurance has their fees, the lender has their fees, everyone has their fees, right? It’s part of doing business. So those are your closing costs and then you have your down payment. Those together equal one check that you need to bring at closing. So sometimes we ask for concessions, we make an offer, then we ask for concessions to help you with some of those closing costs at closing. So that’s something we can talk about more, but that’s something that I want you to be aware of. So that’s the process with the offer. Once we get that done, we send it over to the agent and then we keep haunting them until we get a response and then we kind of move on from there. So that’s the process onto the next thing.
So we got through everything. Got the accepted offer. We’ve got our earnest money deposit into the brokerage.
Now we have the inspection. So this is one of the real key points of the transaction. There are two big contingencies and this video and the next video we’re going to hit on both of those contingencies. So pay close attention to this video and pay close attention to the next video, please. You’ve been doing yourself a huge, huge favor.
Inspection is going to be scheduled right away probably that first day, right when we get an accepted offer. Our transaction coordinator is going to get a hold of you and they are really going to be your point person from here on out to the closing table. So we’ve talked about it in other videos, but obviously, we’re a team. We all have our own individual roles in the team. I’m the lead team leader. Our other agents, they’re still involved in the transaction. We still know what’s going on every single day, but our transaction coordinator is the one that’s literally assigned to you in handling every single little piece of information and minutiae from on the day to day, the paperwork, the scheduling, things like that. The things that we’re not good at, the agents aren’t good at, so they handle that. We talk to them every single day. So each agent talks to the transaction coordinator every single day regarding each deal they have to go on so that way everyone knows what’s going on. We’re all up to date. But that transaction coordinator’s really that main point of contact. So that’s a huge point of emphasis here. They are going to be handling everything. They’re the point person.
Again, we can still be talked to for sure, but they are the main point of contact. They’re going to have the up-to-the-second information for you. And like I said, they’re going to be one is helping you schedule with the inspector that you choose and with the sellers. So other than scheduling the time to get that done. We have an awesome inspector that we use a lot and you don’t have to use them. It’s up to you who you want to use, but a vast majority of people use him. He is amazing. We have a million great testimonials on him too. And he’s awesome. It’s either, you know, I can’t wait for you to use him. If not, no problem. As I said, it’s totally up to you.
So inspection is going to take two or three hours and it’s an important time for everyone who wants to be there. The real big thing is the inspectors are gonna be climbing into everything and getting into all the attic and the basement, the crawl space, whatever it is, they’re going to be checking everything out. And the big thing is we want to look for big-ticket items. So if there are big issues like there’s a hole in the roof or they have a furnace that’s not working or an air conditioner not working, that’s the kind of stuff we want to look for. Especially in a seller’s market, it depends on what market it is, but especially in a seller’s market, generally as a whole, it’s not going to take too kindly to put yourself in their seller’s shoes. So the seller’s not gonna take too kindly to somebody coming in, getting them under contract, taking them off the market and then coming back to them a couple of days later, a week later and saying, “Hey, we want to drop the price a couple thousand dollars because you have some old mechanicals. You have an old furnace and old AC. Well, most sellers are going to say, “That’s great. You should have seen that when you showed the property and when you saw it.” Most probably really I won’t be willing to work with you. You might get some, very few that are willing to just do something just because it’s just old. Generally, if sellers are only going to budge or do anything if something’s broken or it doesn’t work or it’s a safety hazard, so one of those three things. That’s the three ways that people are going to get stuff done and maybe change stuff for you or clean it up or fix it. So it’s broke, it doesn’t work or it’s a health or safety hazard, so that’s. Those are the handful of ways that you’re going to be able to get something done.
Otherwise, again, the sellers are going to be very unwilling generally to work with you on all these little nickel and dime things because the seller is expecting you, the buyer, to be understanding of what’s going on. You’re getting a home that’s been used. It’s just like buying a used car. There’s going to be a lot of little things that come up in the inspection report. It’s got to be a lot of little things that you just get with an old house or it’s an older house or a used house or resale. So that just comes with the territory. So again, to reiterate, we want to focus on big, big-ticket items. So if it’s a big safety issue, if it’s broken, if it doesn’t work, those are the things that we want to then talk about. Go back to the seller and say, “Hey, can we, one of a couple of things, could we ask for a little concession, maybe a little credit at closing or could we have you fix it? Or you know what, hey, that’s fine. We’re going to fix it ourselves. The buyer’s gonna take care of it to closing. Don’t worry.” Or the other option when there are things that come up, which they will come up because every inspection has them. You could walk away, you could just say, “Hey, this is way too much. Maybe there are maybe ten huge, massive problems and the chances are that doesn’t happen.” But just hypothetical, well then you could walk away, “Hey, it’s just too much seller. I’m sorry, this is a lot going on in the process. I just can’t handle it. I don’t feel comfortable and my heart’s not in it anymore, so I’m walking away.” That’s something with you’re staying within that inspection period. That’s totally your right to do that. So those are the couple of different ways to get things done. The seller is helping you maybe fixing it or maybe they’re giving you a credit at closing or maybe you’re walking away or maybe you’re saying, “Hey, that’s fine. Totally fine. We’re good with that and we’re moving forward. We’ll take care of it after closing.”
So I hope that gives you a little insight into the inspection process. I know it’s kind of a little bit longer video, but then the inspection process is so, so important. It hangs people up a lot. It really does. People get very caught up on it. We see many things over and over and over again in inspection reports. We see mold a lot here in Michigan. We see attics and things like that. We see a lot of old homes were built with vents from bathrooms that just go into the attic, which again, creates mold a lot. So we see those things a lot. We see a lot of the new code now is to have Ground Fault Circuit Interrupters or GFCI outlets close to water sources. Most homes don’t have that. So we see a lot of things like that. Don’t get alarmed when you see stuff like that on the inspection report. Very common stuff. A lot of them are easy fixes. Maybe a couple of hundred dollars to make all these fixes. It’s something that you have to be very cognizant of, especially if there are other offers on there and that the seller is getting other offers or they had a lot of action, they’re going to be an unwilling lot of times to really work and bend over backward to do all these things. So you have to be very cognizant of where you are in the transaction and very aware of what’s going on and know that “Hey if I was a seller, what would I be expecting? What would I expect from the buyer and what would I be doing if I was a seller?
So I hope again, that gives you a little bit of insight into the inspection process. Once we do that, once we settle on something and agree on “Hey, we’re just moving on and moving forward, that’s great.” Or “Hey, these are a couple of little fixes. Maybe there are going to get done. We’re gonna have an AC guy come out and look at the AC or a furnace guy come and fix the furnace because it wasn’t working.” Then we’re going to sign a one-page document addendum saying, “Hey, we’ve waived our inspection period and we’re good to go and moving forward and moving on to the appraisal.”
So I know it’s a little long, but this is very, very important. Go back and watch this again if you need to. It’s a very, very important video. Ask me if you have any questions. Ask one of our expert agents, if you have a question. I mean, we’ve done this many, many, many, many times. So it’s nothing to get too, too crazy and too freaked out over, I promise. There’s always a solution for something, whether it’s one of those four solutions backing out or fixing it somehow or another. Don’t worry, there’s always, there’s always some type of solution.
So we got through the craziness. That was the inspection. Now we have the appraisal. So the appraisal contingency really consists of two different contingencies in a way. So the appraisal is an appraiser that is sent out by the lender to the property and it’s not a friend of the seller or something like that. It’s drawn randomly by the lender and then they get that. They picked that person and then they send them out to the property. Usually happens within the second or third week of the transaction, of the pending process after the accepted offer. The appraiser’s going out, he’s doing kind of what the inspector did in a way, but he’s not getting as detailed. He’s not diving into the crawl space, he’s not getting in the attic. He’s doing comps in the area. He’s checking everything, taking pictures of everything, just checking to see what kind of condition is the home in. Does it stack up to the other homes in the area? Because really what the appraisers doing is he is giving a value based on the area and the other homes in the area and giving that to the lender because the lender is obviously off somewhere else, never sees what’s going on because they’re really the investor. You’ve got to think of the bank as the investor because they are and they’re the investor and they’re making sure that their investment is a good one. So if for some reason this buyer can’t make the payments and I have to resell this house, would it make sense? What would the value be at in order for me too – “Okay, great. I can sell this and still maybe make my money back and be out clean.”
So that’s what the appraisal’s for. It is the appraiser going on, giving a value, giving a report to the lender and saying, “Hey, this is what I think that the amount of the home, the value of the home is and this is what I think you should lend on it. And then the lender takes that comes back to us and says one of a couple of things. Number one: say it’s $200,000. The price came in at $210,000. Okay, great. That’s awesome. You have $10,000 equity day one. That’s amazing. Great. We’re moving on. Number two: we have the price coming in at value. Wonderful. Okay, moving on. No problems. Moving on to the next step. Number three is we have a little bit of an issue. The appraisal comes in a little bit low, so say it comes in at $190,000. That means there’s $10,000 difference there in our price. So our purchase price we agreed on was 200. The appraisal came in at 190, so that means we have some negotiating deals.
There’s one of a couple options. Again, just like the inspection. One: you could walk away. Either party could walk away and say, “Hey, I’m out of here. The contract’s broken, the funding’s not there and we’re out.” That could happen. That’s one possibility. The other possibility is that the seller comes all the way down and drops their price $10,000. Drops or price all the way down to the appraised value. Again, does it happen a ton? I mean, after the big recession a handful of years ago, five, six, seven years ago, you would see that a little bit more. You’d see that more because people were trying to get the heck out of their homes. Now in a different market that really doesn’t happen that much. It’s just the way the world is, the way the market is. You kind of have to know what market you’re in as well. So that’s another way. The third way is the buyer could bring up the rest of the money. They could bring $10,000 cash to the closing table. So you’d have your closing costs, your down payment, and then you’d also bring the $10,000 in extra to make up the difference between the appraised value and the purchase price. So that would all go into one check, those three things. And that would be your check at closing that you would give. So again, something that there are some people doing that because of the market we’re in now in a seller’s market, you’ll see that a little bit more. It doesn’t happen that often. But the fourth way is to have some kind of in between. So some kind of negotiation where it’s a 50-50 split or a 60-40. So the seller comes down five grand and the buyer brings an extra five grand. So now we’re at 195, the purchase price of 195, but we still have to meet that $5,000 difference to buyers bringing that out and the other $5,000 or so or maybe a 60-40, 70-30, whatever gets negotiated.
So that’s the most common way. The other most common thing we see is people backing out because sometimes people just can’t get something done. So those are the two most common, some type of negotiation between or someone backing out. The two least common are the seller coming all the way down to the buyer going all the way up. There is another thing that can be done if there is a low appraisal if you can fight the appraisal, you can appeal it, but very rarely see it work because what happens is you have to send a bunch of comps and they review it and you got to send the comps and you do all that stuff and send the report to them. And then the same person that did it reviews it, that did the initial appraisal. So the chances of them saying, “Oh yeah, you know what? I completely messed up.” Very slim. But it does happen usually when it does happen or if it does ever, it’s because someone did. It was just some human error. Say they got the wrong property and they did the report. Maybe they went to the right property physically, but they did the report based on the wrong property. They messed up the address or something like that. So we see a human error come into something like that. But again, I mean, as you would expect, that doesn’t happen very often.
I hope that kind of clarifies the appraisal process. Again, another little longer video, but these two things are very important and there is still one more aspect to this contingency. So I was telling you before, there are two aspects to the appraisal contingency. It’s appraisal and it’s financing. So the financing right now through this process, you’re going to be doing a bunch of paperwork and you’re going back and forth to the lender, signing things and you’re sending us that stuff to them. Well, in that process from the accepted offer to the closing table before you signed, if something were to happen, heaven forbid, someone loses their job or the income takes a huge hit. I had someone that was getting his visa renewed and they didn’t know if they are going to get it renewed or not in the middle of the transaction. If it didn’t get renewed, the lender would deny them. And then that would again not meet the financing contingency or appraisal contingency, so they’d be able to get out of that. So any of those big circumstances happen like that, like those life circumstances, then those are ways that you can get out of the contract cleanly and get your deposit back. It doesn’t happen that often, fortunately, but there are things in place. That’s what we have these contingencies. That’s why we had the inspection contingency and that’s why we have the appraisal or financing contingency, depending on what you want to call it, is to help you protect you because you have no idea what the appraisal is going to come in at. You have no idea if you’re gonna have your job a month from now. No one knows. It’s life.
So you have these contingencies in place, we put them in there for our buyers to make sure that they’re protected. You’re protected through this process. And if these things do happen, there are ways to remedy that and get out of that. So, and again, full disclosure, I mean, not everything is always completely clean. I mean you could still follow a contract to a T. The contract is between you and the seller. Purchase agreements between two parties, a buyer and a seller, and you can follow the contract completely to a T. The seller could still try to sue you. It’s just like anything, it’s like you’re walking down the street or someone walking down the street in front of her house and they slip and fall and they tried to sue you. It’s the same thing. So they can try to come after the deposit, more or less a seller would try to do if they did decide to come after you. Again, very rare. But if it did come to that and for some reason you would just say, “Hey, judge or arbitrator like, look, we followed the contract. Our team, look, everyone followed the contract. We’re good. We want the deposit back. We’re getting out of here.” So that’s what you have to worry about and that’s what we’re here for as well, just to help you through the timelines and keep with the contract and stay on top of that. So staying in the contract is very important obviously to be very aware of that.
I know these videos are long, the inspection and appraisal process is super, super important. They catch a lot of people. They trip a lot of people up. Just so many people, no matter how many times I tell someone in other videos, I talked about doing consultations in person before. It would take a lot of time up for our clients to do those consultations. They have to drive out and do that and I could tell them 10 times and give them the paperwork and I give them everything and then we get to a different process down the road or a different choke point. And they would ask me something. I told them before five times. It’s just human nature. That’s fine. But I figured this way, it’s easy. That’s why we started doing these videos so that we could always have the literature there, we can always have the process in front of people if they want to go back if you want to go back and re-watch these videos and really see from the source. What are people looking for? What is a seller is looking for? What is going on in the appraisal process? What’s going on the inspection process? What are we looking for? What’s going to happen?
That’s what this is all about. So sorry that these are a little bit longer, but this is super, super important. These two things are huge and they’re a huge part of the process. They’re also something that I want to make sure that everyone’s comfortable with and it gives you some sense of ease going through this and a little bit less bumpy than it would be for most people.
So we got through those massive videos. I’m sorry that they were so long, but they are super, super important. I can’t stress enough how important those videos are, so if you didn’t see those videos for some reason, the inspection and the appraisal video or you don’t remember half of what I said, please go back. Spend 15 minutes or so and watch those two videos again, please, please go watch. Those are super, super important. They’re going to save you a lot of time, a lot of headache, and a lot of heartache, I promise you.
So we’re in the homestretch now. We’ve got the title and insurance on the property that are going to be run that we need to get. Title work is going to be started with a title company the last week or two of the process here. They’re going to be checking for clouds in the title, making sure that the proper people, the proper sellers are on the title and make sure there’s no lingering issues or defects. So they’re gonna be going through all that and they’re also working with the both parties and I’m working with a lender to make sure that we have all the documents and get everything ready and scheduled for closing. Then obviously Marie, our transaction coordinator’s gonna be transacting all this and coordinating everything and making sure everyone’s in the loop. She’s gonna be contacting you, obviously every week and multiple times a week and she’s always there for you, obviously. Well obviously and we are too.
So we have the title process that’ll be happening. You won’t have to worry about that that much. And then we have the insurance process. So we have some awesome insurance providers that we work with that I get my insurance through a different people and some great resources, some great contacts. We can send those out to you. I always advise everyone to talk to a handful of people. See what’s given you the best rate, the best terms. We have a bunch of people. You might have somebody they already going through and you might know some other people as well, but take the people we have, take the people you have. Put them together, call them all, pit them against each other and see what you come up with. We’ll be glad to do that for you. All you have to do is ask. We’ll get those people out to you. You’re going to be doing is buying insurance on the house obviously. And the lender really wants you to have insurance. Their big thing is making sure that the house was insured. So we’re going to be doing that, making sure that’s done. You’re most likely gonna have to pay that one year upfront and closing. So the whole first year you’re not gonna be paying the insurance because you’ll have paid the first year up front of closing. So that’s generally how it goes unless told otherwise, type of thing or unless something else comes out. But you’ll be paying that. They’re part of your closing costs. They’re part of your prepays at closing.
Title and insurance, fortunately, it’s a little bit of a quick video today because I know you guys are a little bit, probably a little tired from the inspection and the appraisal video, but we’re in the home stretch. We’re almost there. So those two, title and insurance, make sure you get those done. You need those before you close. Really insurance. The title’s going to be taken care of. We’re gonna be handling that and work with them, but insurance, make sure you get a hold of those providers. Ask us, we’ll be sure to shoot our contacts over to you.
9. FINAL WALKTHROUGH/CLOSING
Okay, we’re almost there. I promise. I know it’s been a couple of long videos in a row. Those are super important videos though. So again, if you haven’t seen those or you didn’t get all of them, please go back and watch them again. They’re super important.
This video is all about final walkthrough and closing. So final walk through is the last chance you have to see the home before you sign on the dotted line. It’s probably been a little while since you’ve seen the home since the inspection. So what you want to be doing is going to the home and check in to make sure it’s still there. But seriously, I know it’s kind of funny. I tell everyone that but it’s serious. Heaven forbid the home burns down or a tree crash through it or a tornado blew it away or something like that. Something crazy, the chances of that happening are small, but you know what’s happened. You know,if someone’s gone to the closing sign on it and then went there to the home and has gone. So you want to go number one, make sure it’s still there. Number two, the more relevant and I’m sure more off to utilized reason I guess is fixes. You want to make sure that the repairs are done. So if there were repairs that were needed in the inspection and or the appraisal, you want to make sure that those were completed and this is your last chance. So the final walkthrough is usually done right before closing. So within the last hour or two before closing. It could be done the morning, it could be done the day before. But generally people don’t like to do that. They’re like “Hey, I’m on the road, I’ve got work off whatever it is, let’s just do it before closing.” Makes sense. Offices usually pretty close to the home generally. So it just makes sense for most people, but still it is the last chance you had to look at the home, make sure everything’s good. 99%of the time everything’s fine and it’s all good. But the very few times and the slim chance that something is wrong, maybe something or a bunch of things weren’t done. Through the process, we try to get documentation, we try to get things done and confirmed before we even get to that point. Sometimes it’s hard, sometimes we don’t always get all the documentation we need, we don’t get everything that we want. So the final walkthrough is obviously like the best time to do that because you’re there, right? So that is the last opportunity to do that and make sure everything is good. We’re there and make sure everything is cool and there’s no holes in windows and they moved out or there’s no holes in walls. They didn’t take a bunch of the stuff they said they’re going to leave. That type of thing. So we’re making sure everything’s cool.
Then we had the closing. Closing will be about an hour long. The buyer is going to have a lot more to sign than the seller. The buyer has their mortgage docs and the real estate docs where the seller just has the real estate docs to do which aren’t a ton. So the mortgage docs are a big stack of papers. The buyer’s going to have a lot more sign, but it’s really going to be about an hour. It’s probably anywhere from 30 to 60-70 minutes. So prepare for that. Do some hand exercises to make sure your hand is stronger, you’re gonna sign a lot. That’s really about it. Hopefully you’re getting the keys at closing, if not, no big deal. We’ll be doing occupancy period. So what that will be is if we did negotiate occupancy periods, some people waive it just depending on negotiation, generally people is with occupancy and the seller needs to stay in the home for a little bit after the closing, i’s called the occupancy period. And what happens is the title company hold some of the funds from closing and from the seller and they hold them in escrow and then they sit there until the seller moves out. So once the seller moves out, they have a prorated amount. So whatever your payment was or whatever everyone negotiates, the agent negotiates on your contract, that’s what it will be prorated as. So usually a lot of times it’s if your payment’s, say it’s $2,000 a month divided by 30 for 30 days. So $2000 divided by 30. Well that number is what you’re going to be getting per day. So they stayed there for 14 days, say it’s $100 a day, just for example, it’d be 14 days times $100. So that’s money that you would get for letting them or rent your home after closing. And then they would get the rest. So whatever money they put in and they didn’t use or didn’t get used, they’re going to be cut a check back for that. So that’s also one addendum, it’s going to be an addendum that’s signed. The title company can hold it. The agents could have at one of the offices, but the sellers will inform everybody of that. They’re good. They’re, you’re handing the keys off. Leave them at the office, the buyer will come sign, pick up the keys.
Are we good to go? There’s the transfer affidavit you’re going to get at closing and the principal homestead exemption. You’re gonna get those two sheets at closing. And those are things that you want to file with the city assessor. You absolutely want to go do that or if you don’t, the assessor’s, about 40-45 days, they’ll start fining five bucks a day. I can’t remember exactly what it is, a couple couple $5 or $10 a day up to like $250. So it depends on the area as well. But you want to go do that right away. So try to go do that the day of closing, if not the day after. Make sure you don’t forget. They’ll know, we’ll talk about it at closing as well, but they’ll know. Once you go to the city assessor and you walk in and say, “Hey, I just bought a house.” They’d be like, “Hey, come here.” They’ll know exactly what’s going on so they’ll be able to help you out.
So that’s it. Congrats guys, you’re closing your home. Awesome. So excited and I’m very happy for you and my team I know is always so thrilled whenever we can help one of our buyers, one of our clients into a home of their dreams. It’s just such an amazing feeling and it’s awesome. And we couldn’t be more thrilled that you chose us and you trust us to help you through this transaction. I know it’s crazy. I mean just go back and look at these videos. It’s crazy. It’s a crazy process. It’s up and down and it takes awhile just to explain the process, let alone go through the process. So congratulations, you made it and enjoy that new home. We’ll have to come over and see it at some point and get pictures and everything and see what you guys do with them. So we’re also going to have one more quick video. Just kind of going over some of the postcode stuff, so pay attention to that still and that’s important as well. And again, congrats and hopefully you guys have an awesome time in the new place.
So you close on the home, hopefully it’s going to be the best home ever and you’ll live there forever. But seriously, one last thing, actually, two last things, referrals. If you guys know anybody looking to buy or sell, we’ve obviously spent a ton of time trying to inform our clients, trying to provide the best service possible and the best product possible. We have a product and we have a service. We have a service where it’s our agents with our agents, our transaction coordinators helping our clients and our service we provide there, but also the product that we have and put out there. All these videos that we do, the countless hours that we’ve put answering questions, building our website with all the relevant questions that are asked out there in the industry, all in one spot in one hub and all these videos that I don’t think you’re anywhere else in, who knows, country, the world.
So we really appreciate anybody that you know, any friends or family, people that you love, that you send our way. We’ll treat them with the same love, respect, and service that we did with you guys. Hopefully they will love this experience just like you guys did. We love helping you guys through this because it’s a crazy, crazy roller coaster ride and you get there. You get a great reward at the end, but it is tough. Things like this,over the years I just was like, “You know what, I’ve got to start putting our knowledge into products.” So not only do we have a service, we have products that we can use to help inform our clients and help them through the process, make it less stressful, make it easier. Because I really believe one of a couple things. I think we are a stress management firm and I think we’re a marketing firm and we just happen to do real estate. It’s just a crazy industry and it’s the most amazing industry, but it is crazy at times and if not all the time. Again, we appreciate it so much. We appreciate your trust, but we also love anybody that you did send our way. I wholeheartedly know that you trust in us and that you know that we will provide a service that we did just like we did for you. So, we have a ton of client appreciation events. We’ve got a lot of other different giveaways and in taking care of the people that take care of us. So we really do truly appreciate it.
The last thing is referrals on the other end. So what I mean by that is we have a ton of vendors and contractors, client appreciation party. You’ll probably see a lot of them. We have one or two throughout each year. You’ll probably see a lot of them in there. Our inspectors, our title people, lenders, contractors, you name it. We have a ton of them. Financial advisers. We have a lot of people that we work with and that we have great relationships with and that we know do an amazing job. So, the product we put out there, we only want to work with people that have a product that’s comparable to ours. So if you need anything, if you need contractors, if you need anything but vendors at all, please reach out to us. We love helping out not only our clients, but we also love helping out our referral partners as well and all of our vendors.
So whatever we can do to help, we want to be your resource for life. And again, like we’ve said many times before, this is not a one time transaction. We can’t wait to extend this relationship forever. So thank you again so much. We really do truly appreciate it. This won’t be the end of us giving you guys information and keeping you up to date in the market. Obviously with our YouTube channel under our website, we have a lot. We have market updates every single month as to what’s going on. We have market analysis going out to our database each each month and stuff. So we’ve got a lot of stuff, a lot of things we put our time and effort into to keeping our clients, our past clients, our friends, our family, investors, loved ones, business partners, vendors, everyone up to date all the time and we just truly appreciate you and everyone else has helps us and supports us.
So enjoy that new home. We’re so thrilled and happy for you. We can’t wait to see what you’ve done, what you do with that. We can’t wait to see you at our client appreciation events and have some fun. So we’ll talk to you soon. If you ever need anything, obviously reach out to us. Give us an email or shoot us a text, give us a call, go to our website, do something, firstname.lastname@example.org is our general email. So in case you can’t find my email or someone else’s email, info at legacy group.mi.com and that will actually go to everybody. So I wish you guys all the best. I look forward to seeing you and talking to you soon. Enjoy the new house. God bless.