7 Steps to Home Ownership
It sometimes seems like a long climb but you’ve finally found the home of your dreams, now what? Here are the 7 steps to homeownership to help you along the way. Keep in mind that every real estate transaction is different but once you found the home of your dreams, you can typically expect to be following these 7 steps.
1. Making an offer: You found the home of your dreams! Don’t hesitate, make an offer! I specialize in FishHawk Ranch real estate and real estate in the Tampa Bay area. We are currently in a seller’s market. There is a real shortage of good, market-priced homes for sale. So if you found the home that is right for you don’t delay and get your offer submitted. You and your expert REALTOR® (hint: for FishHawk Ranch real estate and the Tampa Bay area that would be me!) should get together, review current and similar houses that recently sold in the area and arrive at an offer price you are comfortable with. In this market, if you really want the house, my advice to you is to make a reasonable, compelling offer that the seller thinks is a strong starting offer. If you make a low-ball offer or take too long to get your offer in you really risk losing the property. Once you have an offer price, closing date, and other small contract items figured out, your REALTOR® will write up the offer. You, the buyers will need to sign and initial the offer and the formal offer is sent over to the seller’s REALTOR® (listing agent). Remember that this offer is a legal and binding contract if it gets accepted by the seller.
2. Sellers Property Disclosures: In Florida and in most of the other states, the law requires a seller of a home to disclose to the buyer all known facts that materially affect the value of the property being sold and that are not readily observable or known by the buyer. It typically covers items like structures, wood-destroying organisms, water intrusion, plumbing, pools, deed or homeowner association restrictions, environmental, governmental, or any other matters that could affect the value of the property. These disclosures are filled out by, signed, initialed, and dated by the sellers. A buyer will sign, initial and date these acknowledging that the buyer has read, understands, and has received a copy of the disclosure statement. These disclosures are typically available prior to the offer being submitted. If it is not, have your REALTOR® ask for them the day an offer is accepted. If you do not get them by the expiration of your inspection period or you do not feel comfortable with anything in the disclosures, you generally have the right to cancel the contract and get your earnest money deposit (EMD) back.
3. The Appraisal: In today’s real estate market the appraisal is more important than ever. Most buyers obtain a mortgage to purchase a home. Lenders are just not going to hand hundreds of thousands of dollars over to you because you are a nice person. Lenders will do their diligence both on you, the borrower, and on the value of the home. This is where the appraisal comes in. Even though the buyer is responsible for paying for the appraisal the lender is the one who orders it from a third-party appraisal company they trust. In my FishHawk Ranch real estate market a typical residential appraisal will cost between $450 – $550. The appraiser then goes out to the home typically takes photos of inside and outside of the home, checks the home’s condition, and compares it to the neighborhood’s comparable sales. They will then come up with an appraised value for the home. Don’t be surprised if the appraisal comes in very close to your purchase price even if you got a good deal. Most appraisers won’t go out on a limb and appraise the home for much more than the contract purchase price. If for some reason the home does not appraise, you have a few options.
- You can ask for an appraisal review. This is where the initial appraiser re-looks at the appraisal for any errors and makes changes if needed. Rarely will you see any changes made to the original appraisal.
- You can put more money down on the house.
- You can go back to the seller and let them know the home did not appraise for the purchase price and try to negotiate a better purchase price.
- If none of those work you can cancel the contract and under the Financing Contingency get your EMD back.
4. Home Inspections: As part of the Florida Real Estate Contract For Sale And Purchase and real estate contracts from other states, you have the right to get a property inspection of the home you are buying. The time period is negotiated during the contract negotiations. In general, it is usually between 10 to 15 days. In a typical residential home inspection, the inspector checks the home from the foundation to the roof and investigates all major systems and components. The home inspector will take pictures, and create a home inspection report for you. As the buyer, you can request to be present during the home inspection. Most of the time you do not need to be present during the inspection but if you feel you need to be there or want to learn more about the home ask to be present for the inspection. Keep in mind that a general home inspection and a wood-destroying organism inspection are typically done by two different companies. After the general property inspection, the inspector may suggest having a specialist come out. This could be a roofer, electrician, pool company, HVAC specialist, or even an engineer. Listen to the inspector and have any recommended follow-up inspections. This is your one chance to approve the property from top to bottom and time is ticking. If additional inspections are needed your REALTOR® can request to extend the home inspection period. If the seller refuses the time period extension you can cancel the contract and get your earnest money deposit back. Once the inspections are completed if major issues arise, depending on the terms in the contract that was used (I personally like to use the FAR/BAR As-Is Contract), you can request the seller have a licensed contractor fix the issues or get the purchase price of the home reduced. The seller could refuse. If they do, you have the right to cancel the contract and get your EMD back. If the home inspection finds something major wrong with the home and you do not want the home any longer you may cancel the contract via your inspection contingency and get your earnest money deposit back. Keep in mind that it is the inspector’s job to find the items that are wrong with the house. No house is perfect, not even a brand new house. Don’t sweat the small stuff concentrate on the larger issues with the home.
5. Loan approval / Hazard Insurance: Depending on you and your lender the loan approval process can typically take 4 to 6 weeks. Don’t be surprised if the loan approval takes right up to the closing date. Unfortunately, this is part of this real estate process. At the very least a lender may clear most of your conditions and will just need to re-verify your employment right before closing. During the loan approval process, the lender will make sure the home appraises, check your credit, review your tax returns, bank statements and pay stubs. Be ready to provide and re-provide any of these documents. The bank will also want to approve the property’s preliminary title report to make sure there are no liens recorded against the property that might affect its value. Once all of that is completed to the lender’s satisfaction, you will get a clear to close! Tip: Do not make any large purchases (furniture, washer, dry, car), open up any new lines of credit, or quit your job until you have closed on the home. Doing so may cause you not to qualify for the loan.
During this time you will want to shop for and bind the hazard insurance on the home as soon as possible.
6. Final Walk-Through: The day of or the day before closing, typically after the seller moves out of the home. You and your REALTOR® will want to do one final walk-through of the property. You want to make sure the condition of the home is the sale as when you went to contract. You want to ensure the seller didn’t remove any appliances that per the contract should remain or remove any fixtures, make modifications or leave furniture or garbage behind. You will also want to ensure that items the seller promised to correct have been addressed. This is not a time to look for and find new items that need to be fixed or corrected. If something is missing or needs to be fixed, do not close until it is taken care of to your satisfaction.
7. Closing: About a week prior to closing you will want to transfer the utilities (electric, gas, water) into your name. For the actual closing, typically in the FishHawk Ranch, real estate market, and most of Florida in general most closings are done by a Title Company. In some cases, they are done by a real estate attorney. The closing usually takes place at the Title Company. Some Title Companies offer remote closers that may come to you. Keep your hand warm and your fingers well-rested, you will be signing a lot of papers!
Once you receive a clear to close (generally a day or two prior to closing) the lender and the Title Company will put together a final Settlement Statement that will have the exact amount of money needed for you to close. Each Title Company does this differently but the trend is to have the amount you need to close wired to the Title Company prior to closing. The Title Company will get you wiring instructions and the amount you need to wire before closing. In some cases, the Title Company will accept a cashier’s check from the bank, but this is more of an exception than the rule now. The lender will also wire their funds to the Title Company. Be prepared, you and all parties on the contract will need to show a photo ID, as your signature will be notarized. Prior to the closing, the Title Company closer should send over a closing statement and final Settlement Statement for you to review. Make sure to ask for the statement early, it will give you a chance to ask any questions and make sure there are no last-minute surprises. Once all of that is complete and all the paperwork is signed, it gets sent back to the lender for review and funding. In most cases, you should receive the keys to your new home at the closing table. Congratulations!
Note: Please ensure you verbally verify any wiring instructions prior to wiring any funds. Please see WARNING: Real Estate Scams Costs Buyers BIG BUCKS for additional information on why you should always verify wiring instructions.
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About the author: The above Real Estate article “7 Steps to Home Ownership?” was written by Jeff Gould, a nationally recognized Tampa Bay, Florida REALTOR®.
Jeff is a top-selling, nationally recognized REALTOR® and local FishHawk Ranch real estate expert. You will find him selling homes in Tampa Bay, Florida, and surrounding areas. Some of those areas include FishHawk, Lithia, Riverview, Valrico, Apollo Beach, Brandon, and Tampa.
If you are looking to sell or buy a home anywhere in the Tampa Bay area, Jeff is your local and trusted professional.
Jeff can also be reached via text or phone at (813) 421-3007.
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