The process of buying a home may seem a bit daunting, but it doesn’t have to be. Our goal is to help you not just find the perfect home, but to help make the process a fun and enjoyable experience. To better prepare you for the process that awaits, here is a short synopsis of the steps in the process:
1. CONTACT THE DEVEAU REALTY TEAM FOR A FREE CONSULTATION
When buying a home you need someone that will represent you and your interests and has the experience to provide you with the right advice. The Deveau Realty Team has helped more than 50 first-time home buyers just like you! We know that needs and wants of each buyer can be as varied as there are houses to look at, so we make sure to listen to what it is you really want and then we help guide you to make that dream a reality.
We have worked with buyers who have had all different timelines, so whether your current lease ends in 60 days or 6 months, it is never too early or too late to get the conversation started. Given our experience in assisting first-time home buyers we are able to guide you through the process of buying a home and we will ask you questions you never thought of it but are very important to the process.
To read more about the Deveau Realty Team and our in-depth home-buyers’ guide click here
2. GET PRE-APPROVED.
Based on our years of experience, we can provide you with a list of really great lenders to work with that provide excellent service and great rates! Most sellers will not entertain an offer unless there is a pre-approval letter with it so this is definitely worth getting done prior to seriously viewing homes. One thing to note here is that I recommend all of my clients to run their own credit report using annualcreditreport.com to determine if there are any errors in their credit history before applying for a pre-approval letter. It is always best to do this and have negative items corrected prior to having banks run your credit for pre-approval.
If you are on a path to homeownership there are several things you do not want to do, which are commonly referred to as the Ten Commandments of Buying a Home
- Thou shalt not change jobs, become self-employed or quit your job
- Thou shalt not buy a car, truck or van (or you may be living in it!)
- Thou shalt not use credit cards excessively or let current accounts fall behind
- Thou shalt not spend money you have set aside for closing
- Thou shalt not omit debts or liabilities from your loan application
- Thou shalt not buy furniture on credit
- Thou shalt not originate any inquiries into your credit*
- Thou shalt not make large deposits without checking with your loan officer
- Thou shalt not change bank accounts
- Thou shalt not co-sign a loan for anyone
*This means do not have department stores or other 3rd parties pull your credit. Running your own credit as recommended above is fine.
One of the first questions first-time home buyers need to know is – “How much house can I afford?” The pre-approval process will be able to answer that for you. Ultimately, the approved loan amount will depend on three main things, which are:
- Monthly income and monthly debt payments (i.e. debt-to-income ratio),
- credit score, and
- cash reserves (how much will you put as a down payment and how much cash will you still have left over after closing). If you have family contributing to the down payment it is very important to let the lender know this and also whether it will be structured as a gift or a family loan.
Also, are any life changes expected in the near future that would change the current household economics (e.g. expecting a baby, going to one income earner in the family, taking on graduate school debt, etc.)? What a bank wants is today’s financial snapshot so that the bank can satisfy the regulators that it followed the rules. Our advice is to consider the future circumstances and not just the present when determining what you can afford.
3. GET SET UP ON COMPASS COLLECTIONS
Once pre-approved, the next step is to discuss your wish list with respect to areas of town, neighborhoods, schools, property amenities, etc. to make sure we target the right neighborhoods for your customized home search so that you are viewing homes that are within the pre-approved budget provided by your lender.
Combined, we have lived in Houston for over 50 years, and we have helped first-time home buyers purchase homes all over the city. We know Houston’s neighborhoods very well and can guide you through the pros and cons of different areas of town.
As agents with Houston’s #1 real estate brokerage by sales volume, we have a tool exclusive to Compass agents which is Compass Collections. The first truly interactive online home search tool, Collections provides the ability for home-buyers and their agents to organize, monitor, discuss and collaborate on a hand-picked portfolio of properties. Collections gives agents tools to share real-time updates such as availability and pricing changes, and for agents and homebuyers to communicate on individual listings as well as the overall search.
4. VIEW HOMES
Now on to the exciting part and that is viewing potential homes. As we walk through the properties with you we will be able to tell you pros and cons about the house and certain things to consider in your decision-making. Our vast experience in helping homebuyers has helped us be able to act as an advisor to our clients instead of just as a chaperone. Also, if you prefer to have a new construction home we can provide you with insight on the builder’s reputation, preview model homes with you and negotiate terms with the builder.
5. MAKE AN OFFER
As real estate agents in Texas, we use forms promulgated by the Texas Real Estate Commission (TREC) forms. These are standard forms that are used on most all residential home purchases with boilerplate language and fill-in blanks. We can walk you through the TREC form and help you understand what makes a great offer vs. a weak offer. Certain selections, such as who pays the title insurance, what is the right amount to put for option fee and days, etc. are things we can advise you on to make sure your offer is fair but not offensive. Note that some builders will have their own contracts so having an attorney review those is highly recommended.
After making the offer it can go one of several ways:
You receive a request to resubmit your highest and best offer (which happens only when the Seller receives multiple offers)
- Seller accepts your offer as-is
- Seller counteroffers with revised terms
- Seller extends an invitation to submit a new offer with proposed revisions
The main difference between #3 and #4 is that when the Seller counteroffers the Seller can’t accept another offer until you respond, whereas with an invitation to submit a new offer the Seller has no obligation to await a response from you and can accept a new offer.
Once an offer has been accepted you are now under contract and there are certain provisions in the contract that the clock starts ticking on, such as the option period. The option period gives you time to perform inspections on the property and you can terminate for whatever reason during this period of time (typically 10 days).
6. PERFORM DUE DILIGENCE
This is one area where our team has superior expertise. In all of the training that realtors receive to become licensed, one area that is not included in the coursework or testing is with regards to building construction. As such, most agents have limited knowledge with regards to the magnitude of repair issues and estimated costs. As John’s family owned a home remodeling business, and as we have been real estate investors for more than a decade, we have vast experience in just about anything a home could require. We have done the kitchen and bath remodels, roof replacements, and even some of the less common items such as house leveling and drywood termite remediation.
Given this experience we are able to walk you through the inspection report and guide you on what are the major vs. minor items, potential cost to address issues, and what is common/uncommon requests to make during the negotiations.
In addition to negotiating on repair requests, there are number of other things that we work with you to complete to make sure there aren’t any surprises.
- Review Title Commitment to identify any exceptions
- Provide insurance recommendations so that you can obtain insurance quotes
- Determine whether the property is located in a flood plain
- If any remodeling or addition was done to the property, obtain evidence from
- the City’s permitting office as to whether appropriate permits were pulled
- Verify school district information
- Review survey to determine if there are any right-of-ways that would prevent future planned construction on the property
We review the closing statement from the title company to verify that there are no errors before your scheduled closing time. At closing the escrow officer with the title company will provide explanations for each of the documents they are asking you to sign (which are provided to them by your lender). Once all documents have been signed by both Buyer and Seller and the transaction has been funded (i.e. the title company has received your funds for the down payment and the funds from your lender for the loan, and these funds have been dispersed to the seller and the seller’s lender), the transaction is done and you can then have the keys. This is why we never recommend a Friday afternoon closing, because if there is a hold up with the lender and the title company doesn’t receive the money in time to fund the transaction by end of day, the title company is not allowed to give you the keys to the house – which means if you had movers scheduled on Saturday you are now having to reschedule.
As a real estate team that has helped dozens and dozens of first-time home buyers we make recommendations and offer advice to make the process as stress-free and fun as possible. If you are ready to make the move from renting to owning and want to work with a 5-star real estate team, give us a call. We’d love to speak with you!