BUYAUSTIN.COM - AUSTIN REAL ESTATE

First Time Home Buying Secrets - Contract to Closing

Transcript:

Your contract is processed next. What that means is that once we’ve come to a full agreement, your contract goes through the whole process. Your earnest money and your option fee are deposited. The earnest goes to the title company and the option fee is deposited and given to the seller. That’s money that is given to him or her and it is their unrestricted money to back out. It’s your buyer’s remorse money too. Or your inspection comes in and you’re not happy with it. Just today we had one come in and the inspection was bad. He didn’t want to deal with plumbing issues and the roof needed to be replaced. He lost his $150 but he got his earnest money back and we’re moving on to find another house. All the stuff that the title company is involved with is ordering all of the paperwork that it takes to put together your transaction. The loan continues to be processed with Kenton or Dominick and then it’s all underwritten. It used to be that human beings did all underwriting. People would actually sit down with a file and determine if the person was worth of receiving a loan. Then we got away from that and everything was computerized. I mean everything. We had some people with ratios that didn’t even make sense at all, but if the computer said yes, they got the loan. But now it’s back to more sensible underwriting, and that’s really the way it should have been done all along. They have people review the loan after the computer generates it. Human beings are looking at the machines.

The inspection is then performed and that needs to be done by a state licensed inspector who goes through the entire property and makes sure that everything is in working condition. Those conditions that are not working, he’ll mark up on your inspection. The buyer and the buyer’s agent determine who will pay for repairs when reviewing the inspection. We negotiate repairs and it’s usually in the form of money. Other times, we actually have to have them repair it. I think with the storm that came through recently, we actually have to have the roof repaired before the lender will fund the loan. One of the things that I warn people about during these inspections is some of the stuff can look official when it’s really not that important. We’re talking about $20 and $30 items that look daunting but actually aren’t. So you want to have the realtor and the inspector explain the items to you. In fact, what you really want to do is be at the inspection when the inspection is done. You’ll really learn a lot about the house that way. These inspectors are zealous. They’ll teach you all kinds of things about a house. Every time I go to one, I learn something new. If there’s something wrong with the property, we can extend the option period or get you out and go find another house. So just because you signed a contract to get a house, you have time to get out of the contract if the inspection doesn’t pan out. There’s a little bit of a different process with new homes because you don’t have an inspection period but you do have walk-throughs. You do have the option to inspect it towards the end when the house is almost finished.

Ok, step 9, we’re almost done, almost in the house. Conditions are satisfied. Conditions agreed to by the parties are performed and contingencies are removed. All the loan conditions are satisfied and the documents are drawn up and delivered to the title company. The buyer performs a final walk-through. I like to be on those final walk-throughs, especially with new construction because I’ve seen so many homes and I love looking at the cosmetics. It’s great to have more eyes on the cosmetics. In other words, the paint and cabinets, little scratches sometimes go unnoticed. I’m really very picky and I make the builders get that property fixed the way it’s supposed to be. On a resale home, the buyer also has to make sure to agree to fix in their inspection. And finally, it’s to make sure that there’s been no floods, fires, or hailstorms between the time that you put it under contract and the time that you bought the house.

Next is closing and home ownership. The title company performs closing where you gain the title, which is that nice warranty deed that they give you. You leave the closing with the keys and a big stack of papers and you get to enjoy the benefits and responsibilities of homeownership. By the way, make sure that you use a cashier’s check when you go to close and bring a checkbook in case there are some shortages on the closing statement. Make sure you bring a cashier’s check and also bring an ID. Sometimes you need two forms of ID now because of the Patriot Act. Some people get to closing and didn’t realize that they needed a cashier’s check. Just remember that it needs to be a cashier’s check. Also, one of the big reasons that you have an agent is that 9 times out of 10, I can find a mistake on the closing statement, usually in the buyer’s favor. Sometimes it’s a little bit; sometimes it’s a lot. Sometimes it’s thousands of dollars. I also get to explain to you a lot of the things that are deductible.

Your professionals say thank you for the opportunity to serve you and once again, we ask for a referral. In fact, we like to ask you for a referral all the way through the process, including once you get out of this room. You may not be interested in buying a house right now but you may know some one who’s going to. You should just say, “Hey, talk to these guys. The really know what they’re doing and they really seem honest and they have a high level of integrity.” I’m not going to go over all of these people here but this is in your book. The asterisks that you have there are all of the people that you put to work. That’s why you should be treated like the first class citizen that you are when you’re a first time home buyer. How many people feel like a first-class citizen when they’re going to a realtor and saying, “I’m buying my first home?” They don’t get treated as well as somebody who has bought 2 or 3 homes. You guys need to be treated like first-class citizens. 42% of the market is first time home buyers and every time a first time home buyer buys a house, you put all these people to work. You pay their salaries. They should be kissing the ground that you walk on. And guess what. When a first time home buyer buys this house and puts all of these people to work, the person who’s house you bought is usually going to go buy another house and put another crew of people to work. So you guys are helping the economy. Why do you think we got the $8,000 tax credit? It’s because the government knows how important it is to get first time home buyers into homes. They put all these people to work who then put a whole litany of people to work down the line as they in turn buy up or buy their next house. It’s amazing how much oh an economic boost we get from buying a first time home. So be treated like the first-class citizen that you are and that is our job here. With a new home tract, you’re putting all of those guys to work too. You know, one of the things about buying a new home right now is that a lot of times, they’ll sell a house at a loss. Why? Cause they have crews to pay. They don’t want to just say “well, we didn’t sell any homes this month, so you’re fired.” Sometimes they’ll even sell at a loss just to keep the operation going.