WHERE DO YOU WANT TO LIVE
Now that you know what you can afford we set up a home search for you. We can set it up with cities, zip codes, school districts or whatever else your preference is. In this criteria we also want to know what types of homes and characteristics are important to you. We will set the feed up to update you every time a new house comes on the market in your criteria or a house in your criteria drops their price. Working with us you also get access to “coming soon” properties that other agents are advertising before they hit the market.
As soon as anything comes up that you like, let us know and we will set up a tour. If you have several it’s best to clump them in tours together. Typically not more than 6 to 8 in one session. We are looking for houses that fit all of your major needs and desires and the home that feels like it’s “the one”!
MAKING AN OFFER
When we make an offer it’s important to consider a lot of different things.
-Are there any other offers?
-How long has it been on the market?
-What have the recent comparables sold for in the neighborhood?
-What contingencies do we want to include (we will go into more detail about those later)?
-Are you going to ask for closing cost assistance from the seller?
We will work with you to put together the offer that helps you buy the house for the very best deal that we can.
The two things that we need to send in with the offer are the Earnest Money Deposit and Lender’s pre-approval letter.
EARNEST MONEY DEPOSIT
The Earnest Money Deposit is what you put up as collateral if you were in default of the contract. The standard amount for around Northern Virginia area is 1% of the sales price. We are required to collect this either at the time of contract or within a couple of days (defined in the offer) of ratification. We then put it into Samson’s escrow account. This money will apply towards your down payment and closing costs at closing. It will come out of your bank account during the contract process so make sure to perform any transfers immediately so the check doesn’t bounce.
On the purchase of your home the closing costs will roughly be 2.5% to 3% of the sales price. You will have lender originations fees and appraisal fees (roughly 1 to 2,000 depending on the deal). Recording Taxes for your Mortgage and Deed at the county and state level (roughly adds up to 1/2 % to ¾% of your sales price). Settlement company fees and Title Insurance fees. You are required to pay for Lender’s Title Insurance for the lender’s portion of the sale. You have the option to buy Owner’s Title Insurance to protect your interest in the property. Over 95% of our clients purchase it and we strongly recommend it, it’s a one-time fee that protects your interest in the property forever. All of the title charges together add up to roughly ½% to ¾% of your purchase price. The Survey typically costs between 300 and 400 unless you are buying something with a much larger lot. Home Owner’s insurance is another closing cost. Most companies have you pay the 1st year up front at closing. Home Owner’s insurance typically runs between $400 and $1,500 depending on your house size and insurance taken out on it. The last major closing cost fee is the beginnings of your escrow account. The Escrow Account is set up as a forced savings account by the lender. You pay a monthly mortgage and in that they collect 1/12th of the insurance for the year and 1/12th of the tax bill for the year. When the tax bill comes every 6 months they pay it from your escrow account. When the Insurance bill comes once a year they pay it from your escrow account. At closing they typically collect enough money so that they have a 2 or 3 month head start on the escrow account. That way they always have enough money in the account to make your payments. When you sell the house some day you get the balanced left in your escrow account returned to you
When deciding if you want to ask the seller to pay for your closing costs consider that you are essentially just financing the closing costs. If the Seller would accept an offer of $500,000 with $10,000 paid towards your closing costs then they would also accept an offer for $490,000 with 0 paid towards closing. If you are tight on funds and want to keep all of your extra money as a safety net going into this new mortgage or you want to use the money for upgrades and repairs to the house then getting your closing costs paid for can work great. You would rather just pay $50 more a month in mortgage and keep your $10,000 in your pocket. If you have the money and don’t want to borrow more then you need it makes the most sense to NOT ask for closing cost assistance.
The other thing to consider in this equation is if you are competing for a home and it’s a multiple bid situation it can be damaging to ask for closing costs. The seller would prefer to not pay them. The biggest reason or this is that now the house has to appraise at $500,000 for your loan to go through instead of just $490,000 in the example with no closing costs paid out.
Congratulations we now have a ratified contract what does this mean? All contingencies begin. The lender will need a copy of the contract and continue to get them any personal documentation they may need.
BUYER INFORMATION SHEET
Once you have a ratified contract we will send you a buyer information sheet within a few days. Please get this back to us as soon as you can. This helps the title company start working on preparing the deeds and the proper transfer paperwork for closing.
HOA/CONDO DOCUMENTS (GET OUT OF JAIL FREE CARD)
If the house that you are buying is an HOA or a Condo Association the seller will provide the documents with all the rules and regulations. This will also show if the house has an current violations. The seller is required to fix all violations before closing. We will typically accept the documents first to check for violations and then forward them on to you. Don’t worry you don’t have to read them all. Read any sections that might be important to you. The most important part of the documents to remember is that once you receive them you have 3 DAYS THAT YOU CAN VOID THE DEAL, no questions asked. If we received the documents on a Tuesday you have until Friday at 9:00 pm to void if unhappy. If we void on HOA docs we DO get our Earnest Money Deposit back.
HOME INSPECTION: – days of contingency – negotiation period
The first thing we schedule after getting our contract accepted is Home Inspection. We typically have anywhere from 7 to 14 days for our contingency.
We have some great inspectors I can recommend:
Kelly Harden – Harden Home Inspections – 703.674.6958 hardenhomeinspections(at)gmail(dotted)com
Matt Drifmyer – Noble Home Inspections – 703.801.7364 noblehomeinsp(at)cox(dotted)net
Mike Ward – Post to Pillar mike(dotted)ward-dahl(at)pillartopost(dotted)com – 703.352.1333
We can set it up for you or you can schedule directly. The inspection will take anywhere from 2 to 4 hours to complete. It will cost anywhere from $325 to $600 depending on the size of the home. You pay the inspector directly at the inspection, this is the only bill (and radon if you do that) that isn’t rolled into the settlement and your closing costs.
We encourage you to attend the inspection if you can. If you can’t make the whole thing then coming for the last hour can be productive to see the summary of what’s found. You will learn A LOT about your house and the future care of it by coming to the inspection. It’s not a bad idea to take pictures as well. You will get a great report at the end with pictures and links to more information but taking notes is always a good idea. One other thing that buyers love to do during inspections is take any measurements they may want later for furniture or replacement of flooring or painting. It could save you a trip out to the house later.
The inspector gets us a full report typically by the next day after the inspection. We then take that report and determine what things we want to ask the seller to fix. They don’t have to fix everything that we ask for but if we are unhappy with what they are willing to fix we are allowed to void the deal. Inspection requests are typically not a time to ask for cosmetic issues. We typically ask for any repairs that are hurting the functionality of the house. Electricity, heating and air, plumbing, appliances, any possible roof issues or exterior issues.
We have to get to them the full copy of the report and the addendum with the request for repairs before the end of the deadline.
Once they have the addendum we then have until the end of the Negotiation Period to come up with an agreement. We can either come to an agreement on what repairs will be done or a credit in-lieu of repairs. The credit can sometimes work better because you can then use that money to hire your own contractors to do the repairs and make sure they are done the way you want.
If we can’t come to a deal during the Negotiation period we have 2 days during the “purchaser election” period to void the contract based on our unhappiness with the condition of the house. We DO get our Earnest Money Deposit back if we void.
RADON INSPECTION: days of contingency
If you choose to complete a radon test the cost is $99. We contract with All-Pro Services to drop the radon test in the home and then 2 days later come back and get the results. The radon test is placed in the basement and tests the air quality. If the house has a buried basement it’s a good idea to test for Radon. If no part of the basement is underground you probably shouldn’t test for radon. If the house tests over the 4.0 pCi/L then we will ask the seller to remediate for Radon. Radon Remediation typically costs around $800-$850 if needed. Part of our request would be for them to verify with a retest that the remediation system they put in the house is working.
We will typically have 21 days for our Financing Contingency. The only way to get out of the deal on a Financing Contingency is if we get a rejection letter for the bank. If we get rejected for Financing then we can get out of the deal and get our earnest money deposit back.
After 21 days the seller can ask us to remove the contingency and provide a loan approval letter. If we haven’t received loan approval yet then we don’t have to remove it. If they get tired of waiting the seller’s only recourse is to send us a notice saying that if we don’t remove within 3 days the deal is void. At this time we would have 3 days to remove the contingency or move on from the deal.
At any time we can switch lenders or switch loan programs as long as we don’t delay settlement or cost the seller money. It is our STRONG recommendation that we lock in with a lender within the first week after ratification and stay with that lender. Switching lenders late in the process can be disastrous. We also strongly recommend against using an internet lender or someone from out of the area. Many times we have seen lenders from out of the area over promise and under deliver. Whenever a closing is delayed it’s almost always with a lender from the internet or out of town. They don’t have the accountability and the desire to get the job done right that a local lender does. This process goes much much smoother if you have a lender that we know and trust to get the job done.
WOOD DESTROYING INSECT INSPECTION – (TERMITES)
Someone has to pay for the $35 inspection. It’s about 50/50 whether the buyer or seller pays for the inspection. If we choose to order it on our end then we will order it for you. The inspection has to be done within 30 days of closing. It costs just $35. 80% of them come back clean. If they find a need for any type of treatment for termites the seller is required to treat before closing, non-negotiable. This is a lender requirement. For $35 I would prefer to be the one who gets the results of the termite inspection.
You pay for a survey as part of your closing costs. It costs between $300 and $400 typically. You are not required to get a survey done. The downside is that if you don’t have one done then your title insurance policy will have an exception on it for the boundaries of the property. Survey’s come in handy if you plan on doing any type of fence, deck or patio work in the future as you will need it for permits and hoa applications.
The appraisal contingency will typically be 21 days from ratification. The lender orders the appraisal through a 3rd party. You pay for the appraisal typically as part of your closing costs. We typically get the results around day 10 to 17 after ratification. The appraiser will walk the house, take measurements, a few pictures and note upgrades. They are working to assess the value of the home compared to recent sold homes around the area
If the appraisal comes in less than the contract price we have( 3 options) the right to void the deal if the seller won’t come down to the appraised value. The lender will only give a loan based on the appraised value. 1.The difference you would have to come up with in cash. There may be some instances that we are willing to pay more than the appraised value because we really want the house. 2.In most instances we can get the seller to come down to the appraised value or 3. worst case negotiate a deal in the middle. Appraisers are looking at sales within a mile of the home that have closed in the last 90 days. If they don’t have enough data they will go back slightly longer and look at a slightly larger area if need be. Most houses appraise at the sales price exactly because appraiser has the sales price going into the appraisal. If we can’t come terms then we have the option to void the deal.
Preparing for Settlelment:
HOME OWNER’S INSURANCE
Once we get through inspection and appraisal you will want to secure home owner’s insurance. You can get recommendations from me or the lender if you don’t have a trusted insurance provider already. Most insurance agents will ask you to pay one year up front at closing. If you pay them before closing then make sure you let us know so you don’t get double charged on the closing statement.
As you prepare for closing remember to switch over the utilities. We will get you the names of the utility companies. You want to set up service to start for the day of closing. That way you don’t have any interruption in service during the transfer.
We will do a final walk-through. It’s typically a day or two before closing. Sometimes the morning of closing. It will only take about 30 minutes to an hour. We will walk the house and make sure that everything is in the same condition that it was at home inspection. If there were any repairs to be made then we make sure that all repairs are completed and looking good. At final walk through the house will be empty. It has to be in broom swept condition. All appliances, lighting, fans, curtain rods, blinds typically stay unless otherwise agreed upon. The actual curtains are defined as “window treatments” in the contract. If we checked yes in the contract then they must stay. If we checked no then the seller can take the curtains with them.
We sometimes don’t get your bottom line until the day of or day before closing. The best way to get a close estimate is to talk to the lender in the week leading up to closing. They can give the best estimate on what you will need for closing. All funds at closing either need to be wired to the title company or in a certified check made out to the title company. If you bring a little bit too much they can write you a refund check. If your check is a little short then you can write a personal check up to $1000 for the difference.
For Settlement you will need to bring your license and your certified check (unless you wired it)
At Settlement you will get your keys. After closing the house is yours unless we have a rent back agreement in place.
THE SETTLEMENT STATEMENT OR HUD 1:
Your numbers will be on the left side of the page. Page 1 is the summary of all numbers. The top section is the debits that you owe and the bottom is the credits to you. Line 103 is all of the settlement charges added together from page 2. Page 2 typically consists of lender charges, escrows, insurance pre-payment, title company charges, transfer taxes and then miscellaneous at the bottom (surveys, termite inspections, hoa transfer fees, any other charges)
The other notable charges on the HUD-1 will be prorations for taxes and hoa. If the seller has pre-paid taxes or hoa then you will credit them back for the time that you will own the house. If they have owned the house for any days that haven’t been paid for then they will give you a credit towards those future dues payments.
Your bottom line of cash needed to close is at the bottom of page 1 at line 303.
The last thing to remember for closing is to make sure we get any parking space numbers, house or garage codes, mailbox numbers or any other questions you have for the seller answered.