What Buyer's Should Know

Whether new to buying real estate or new to the area, there are many questions regarding a home or investment purchase. I'll attempt to answer some of the most commonly asked questions in this article. If you have a question, don't hesitate to email me!

First, you should find a real estate agent you trust and are comfortable working with towards your purchase of a home or investment property. Interview several agents on the phone or, if possible in person. A few of the general questions you should ask are:

• How long have they been in real estate?
• Are they full time agents?
• Which areas are they most familiar with?
• Would they explain the buying process?
  
  If you are feeling good about the interview at this point, then continue on to discuss your needs and wishes in a home.
  
  
• Which of your housing or investment needs are priorities?
• Discuss price range, and financing options. Your agent should give you a list of 2 or 3 lenders to talk to regarding your particular situation. It is always best to be approved for a loan prior to finding your dream home or property. Having a pre-approval letter from a lender will put you in a stronger position during negotiations, especially in the case of multiple offers on the property.
• During your discussion get copies of all the documents that will evenually need to be signed when buying a home or property. You should be familiar with the language of these documents before signing anything in the heat of the moment. If you feel more comfortable, consult a 'real estate' attorney to look things over for you during the transaction.
• You should receive an Agency Disclosure pamphlet, specifying who the agent will be representing should you buy a home through them. This form is required by Oregon Real Estate Law, upon any substantive discussion regarding real estate. It is a disclosure for your benefit. Unless the agent is representing a seller from a prior agreement, you should always have buyer representation.
• In discussing investment property look at realistic expectations on cash returns and IRC 1031 tax deferred exchanges. Be sure your agent makes you familiar with the terminology for your type of purchase.
  
  If you are new to the area you might want a tour of various areas, neighborhoods and amenities.
  Do you want a short commute to work,do you need to be located within a few blocks of a school or transportation?
  
  If you are satisfied after your interview, it is time to look at 3 or 4 homes or properties.
  
  In looking at the properties be aware of whether the agent is more interested in questioning and listening to find out your thoughts on each property, or are they more interested in selling to you right now?
  Do they answer your questions or offer to get the answers? Or do they skirt the issues and avoid answering your questions?
  
  It is important for both the buyers and the agent to initially look at 3 or 4 properties to define more closely what is important and appealing to the buyer. Also the buyer needs to find out whether his or her expectations regarding price and area are realistic .
  After your showings you should be able to choose an agent to represent you in your property search and purchase.
  A good working relationship with a qualified agent is very important in making sure you are able to obtain your dream home or property in the least stressful and most advantageous manner.
  

Once your financing is in process and you have decided which neighborhoods are of interest, it is time to start looking for a home in earnest. Looking at homes can be an exciting and confusing business. Although you have your list of prioritized needs and wishes, home shopping is also a very emotional process. Keep that list of needs and wishes in mind. Try not to let an emotionally appealing or unappealing home direct you away from your needs. That terrible wallpaper, carpet and paint can be changed at little expense. But on the other extreme you are looking at real expense and possible problems if you purchase a poorly constructed or unsuitable home for your needs just because it is emotionally appealing. You want to feel good in a home that functions well for your activity and space requirements. That said, needs and wishes can change as you look at homes and get a better idea of what's possible or desirable.

Let your agent know of any changes in your plans or needs! Communication is a two way street for the best possible results.

Be committed, the best properties generally don't last long on the market. It is best to look at them right away!

The old and worn real estate saying "Location, Location, Location" is true.

It is best to buy the least expensive home on a street or in a neighborhood. The surrounding more expensive homes will help boost the value of your home. Another plus to having one of the least expensive homes in a neighborhood is if you are thinking of remodeling your home you will not be as likely to over improve your property for the area.

If you are looking at new construction be sure and call the 'State Builders Board' to get an idea of any complaints filed against the builder. Keep in mind that any builder that has been in business for any length of time or that builds a large volume of homes is going to have some complaints. What is important is how they were resolved. Were they serious? Were repairs made in a timely manner? Are the number of complaints unusual for the volume of homes built? The Builders Board will give you this information, as a consumer, more readily than they will your agent.

If the area you are interested in is established, have your agent gather information regarding resales in the area to see how long turnovers are taking and what is happening with the values.

This is the really exciting part of the process! It can also be the most nervewracking and a time when level heads should prevail.
It's time to write the offer. You have already looked over all the 'Sale Agreement' documents and are familiar with the terminology. You know how much of a loan you qualify for, what the resale prices are in the area and how much your downpayment/closing costs are going to run. So all that's left is deciding:

• How much you are going to offer for the property?
• Which professional inspections you want and how much time you need to get them done?
• Any special conditions to your purchase, such as; the closing on the sale of your current home, lot line survey, appraised value of the property, cooperation in an IRC Exchange, vacating of tenants, credit of tenant deposits, etc.
• When you want to close the purchase.
• When you want to take possession of the property.
• The date for prorates on taxes and assumed obligations.
• And the amount of time in which the seller should respond to your offer!
  
  Your agent has provided you with sales information on comparable sold properties in the area. This will allow you to make an informed decision on what to offer as a purchase price. For the past several years most homes in the Portland area have been selling for about 96% of their asking price. However at this time the market is very active with more buyers than homes available for sale. In 2004 & 2005 prices have been increasing dramatically and it is not unusual for homes to sell for their list price or higher with multiple offers. This reflects that some properties are priced very well for the market and some are over priced. You want to get the best price possible, without coming in with such a low offer that the seller's are insulted to the point of not wanting to respond with a counter or acceptance. If the property is priced really well, and you know that there are other interested parties making offers, you might want to write a full price offer or even higher. However, if you have more than one property you would be happy owning, then you can be more aggressive on the offering price. If you don't get one home, you can go for the other.
  
  Once you have your offer written and signed, along with Addendums and Disclosures, your agent will contact the listing agent to set up an appointment to present your offer to the seller before the expiration date of your offer. Depending on the situation your agent may or may not get to sit down with the sellers and their agent to present the offer. I recommend your agent being present at the presentation if at all possible. Your agent knows and understands your needs and timelines. Who better to explain why's and wherefore's of your offer? At this point the seller may do one of the following:
  Accept your offer with no changes, counter your offer on price and/or conditions and dates, or they can reject your offer altogether.
  If your offer is countered and the changes just will not work for your situation, you can always counter the Sellers Counter offer.
  

You will have agreed to have your conditions removed from your Sale Agreement by certain dates. It's time to get on the phone and make arrangements for professional inspections and the appraisal. It would be best to schedule the appraisal after the inspections. That way you won't have paid for an appraisal on a house you have decided not to buy, due to problems discovered during inspection. Assuming the seller is living in the home you are purchasing, be courteous and work with your agent to find convenient times for the seller in scheduling the inspections. The following are few of the inspections you might consider having done on the property you are purchasing, especially if it is a resale property:

• Most buyers choose to have a professional home or property inspection. This is an overall, general inspection, that should bring up areas that may need a specialist's advice or further inspection. Check the boilerplate of your inspection report to see what is covered by the inspection.
• You might want to hire a specialized firm to do a through search for inground fuel tanks when an older property is involved.
• If inground fuel tanks are on the property you should have a specialist take soil samples around the tank for contamination testing.
• You may want to have a licensed, bonded roofer look at the roofing material and installation, if the roof is in question.
• A more recent issue is mold contamination due to improperly installed building materials and water leaks. There are now specialists that can check for the presence of mold.
• In the case of a water well you would want it checked for condition, purity and volume.
• If there is a septic system on the property you would want the county or appropriate agency to check for records and inspect for function.
• In the case of hillside homes, engineering reports will hopefully by available, if not then having an engineer examine the property is a good idea.
• In the case of commercial or income property, a level I and possibly a level II environmental site assessment may be in order.
• Some additional inspections you might want on an older home: It may be advisable to have the sewer scoped to ensure that it is in good repair. There are also inspections available for the presence of asbestos and lead-based paint hazards. These hazards are many times encapsulated by newer coats of paint or wall coverings, and are not an issue unless you start refinishing or remodeling and breaking through to the hazardous materials. There are booklets and other information on asbestos, lead and fuel tank hazards that you can obtain from your agent.
  Some of the inspections I have mentioned and possibly other inspections would be recommended by your professional property inspector. He or she is a property generalist that recommend you hire a specialist should any questionable items come up during the inspection. Your real estate agent should be able to provide you with a comprehensive list of possible hazards or issues that you may choose to have inspected.
  
  It is always a good idea to be present during inspections. Inspector's are often willing to explain things as they conduct the inspection, many times pointing out maintenance items and areas that could be problems in the future. These are not items that are going to show up in the report, so the only way you are going to know about them, is to be there during the inspection.
  Don't count on the appraiser to point out any problems with the property. The appraiser's function is to value the home, so the lender knows that the loan is based on a fair market value. They will only mention glaring problems and will many times rely on the inspection reports to determine what problems should be addressed prior to closing.
  As soon as you have your reports in hand, schedule a meeting with your agent to discuss any problems with the property and draw up a response to the reports for the seller. Unless the property has been purchased as a fixer upper, was obtained at a very good price or market pressures make it unadvisable you will most likely be asking a seller to complete or pay for any major repairs to the property. This is negotiated unless you have specified the dollar amount of repairs the seller will be responsible for in the original offer.
  If the home doesn't appraise for the price you agreed to pay, you can come up with more downpayment to the lender, ask the seller to reduce the price, or challenge the appraisal if you and your agent feel confident the appraisal is in error.
  Once you have negotiated and removed all the conditions from your Sale Agreement you are on your way to home ownership.
  

Almost!
You are just waiting for you lender to finish the loan documents and you will be ready to close the purchase of your new home. In the meantime any repairs on the property your are purchasing, that are required by your lender, need to be completed and reinspected. In lieu of reinspection ($), the lender may accept a written statement from you that you are satisfied with the repairs, and sometimes they will accept the itemized bill from a licensed, bonded contractor that the work was performed properly.
If there are tenants in the home you are buying and wanting to occupy, you should always make the seller responsible for having them move out prior to closing your purchase. Generally tenants move out, with legal notice, in a timely manner leaving the home in good condition. But occasionally things don't go smoothly and it is best that the seller be responsible for turning over the property to you vacant and in good condition. In any case, it is a good idea to have a final walk through of the property just prior to closing. This is to make sure that everything is in the same condition as when you agreed to purchase.
You have received word that you loan documents are drawn and on the way to escrow or the attorney's where your closing will take place. There are a lot of papers to sign so you may want to ask for copies of all documents to look over before signing. If time is tight, at the very least make sure your closing statement with your debits, credits and cash needed to close is correct. The lender isn't going to change the boilerplate loan documents for you, but you want to make sure that the interest rate, monthly payment, term of the loan, payoff provisions, adjustment indexes and margins have been written up correctly. You may have agreed to let the sellers stay in the property for a period of time after closing. This usually involves the sellers covering your mortagage, tax and insurance liabilities, for the period of time they occupy the premises after closing. Be sure to check to make sure these figures are in order.
Get a list of utilities from your agent and call them with your move in date and new billing information. In some cases your agent can switch utilities for you.

You are signing your loan and closing papers. This is not closing, closing takes place when the new deed is recorded with the proper local governmental agency. The time from signing to closing is usually 1 to 2 days. At that point the property is yours and all your diligence has paid off! You will get the keys from your agent or the seller when you are entitled to possession of the property. It is a good idea to have the locks re-keyed just before moving, as many copies of the current keys may be floating around with various people.
That's it...Enjoy your new home!
I have endeavored to cover as much as possible in an article. Each state has it's own real estate laws and practices which may vary from those discussed here. Please contact me with any questions. I am not an attorney, but can answer questions regarding real estate practices and procedure.