Sharing our real estate tools, tips and links to get you a "clear to close."
OUR TOP TEN BUYER'S TIPS
1. Use a real estate agent. Buying or selling a home is a major financial (and
emotional) undertaking and you should not go it alone.A good real estate agent possesses intimate
knowledge about your neighborhood that can be vital in making an educated home
buying decision. Your agent should have valuable partner referrals within the
profession that will provide you with reliable answers to key questions regarding
a property and/or neighborhood.In almost every instance the buyer agent is
compensated by the seller.
agent will provide valuable price guidance based on market conditions that can change
daily and vary from block to block. A full time professional agent will pay
dividends for you by spotting overpriced listings and advising you accordingly.
agent will send you listings directly from the Multiple Listing Service that
fit your parameters so you won't need to waste time surfing real estate sites looking
at listings or waste time on offerings that are already under contract.
Experienced agents are skilled in negotiations and will remove themselves from
emotional aspects of the transaction in order to present your offer in its best
light. 2. Figure out how much house you can afford. Prior
to making your offer you need to get a better handle on ALL costs
associated with buying your dream home. The purchase price is just the starting
point. Depending on the terms of the Contract and the location of the property,
you may also be responsible for title charges, municipal transfer taxes, and
lender fees. Some of those charges may be offset by tax credits and
negotiated seller concessions. Our interactive closing statements and your lender’s good faith estimate of closing costs can help give you a
good idea of what it may actually cost you to close the deal.
condition of the house you choose will also be an important financial
consideration. Be certain to budget enough reserves to make the necessary
repairs and upgrades which will vary significantly from house to house. This is
one of many reasons why you should get your home inspection as soon as you have
negotiated the terms of your contract, or in some rare cases even before
securing a contract.
critical that you surround yourself with experienced real estate professionals
you trust to ensure that you close your deal at the right price.
3. Negotiate the offer. The old
axiom that everything is negotiable generally applies to buying a home. The key
is to be an educated buyer and understand some key concepts used in real
estate. Buyers sometimes make the mistake of comparing the list price of a
home to other homes they have seen. Asking prices are just that - the
price the seller is asking. Sellers can ask any price they want. It doesn't
mean the home will sell at that price. Your real estate agent will provide
you with comparable home sales and also examine pending contract sale prices
and other asking prices of similar homes. Comparable sales are sales of similar
type homes, in the same condition and location, that have actually sold within
the past 3-6 months. Pending sales may become the comparable sales by the time
your home closes. Similar homes that are still active are the competition for
the seller of the property you are interested in, and might be overpriced since
they are still available. All of these factors are barometers of real estate
be able to bid below list price if the property is in a buyer’s market, with little
to no offers on the property. On the other hand, you may need to pay over list
price in a seller's market, especially if many buyers are vying for the same
inventory. Your real estate agent can give you a reasonable price range and
help to manage your expectations. A good buyer's agent knows that there is
always more to an offer than its price, but price is paramount.
usually prefer an offer accompanied with a detailed pre-approval letter
from a reputable lender. To strengthen your negotiating position, the pre-approval
letter should state that your credit report has been pulled and supporting
documentation has been inputted into their automated underwriting system.
The stronger the letter, the higher comfort level your seller will have in considering
Hire an attorney
that regularly handles real estate matters. Your
cousin’s friend that just passed the bar or your brother-in-law that handles
closings on the side won’t cut it. Your real estate transaction is an
important and costly business deal with high financial stakes attached to it.
You can’t afford to settle for part-time legal assistance. You need an attorney
with a fully staffed law firm that regularly handles real estate
closings to properly address the many obstacles that can and do arise.
attorney is a key part of your professional team that manages the entire
process. Your attorney will review the contract with you and make necessary changes,
keep track of all critical contract deadlines, oversee the home inspection
including negotiating any seller concessions, monitor financing contingencies,
and assist you in getting that sometimes elusive “clear to close” from your lender.
attorney will accompany you at the closing and explain the many documents that
you will be signing to ensure the closing complies with all the terms of the
Contract. After closing, your attorney will be there to guide you through any
legal issue that may come up.
5. Hire a good home inspector. Hiring
a licensed and experienced home inspector should be a top priority for a
home buyer. We love your dad and your uncle, but they are simply not objective,
or in most cases not adequately trained, to spot problems in a home. We have a
whole page devoted to this topic which can help
you get started with your due diligence. We suggest that you get referrals from
friends and family who were happy with the professional inspector they used
when they purchased their home. Your lawyer and real estate agent can also give
you the names of reputable home inspectors in your area to use.
present for the inspection and ask your inspector many questions. The home
inspector is your paid consultant, so take advantage of the time you have with
the inspector. Don’t just find out what is wrong with the property now. Ask your
inspector what items will need to be addressed in the future and the time
frame for repairing and replacing items. Don't be afraid to ask how a component
works or how you should maintain it once you move in or even what it is. Good
inspectors will spend several hours with you at your inspection and will
welcome questions from you.
6. Understand the home inspection contingency. The
home inspection contingency is governed by the form of contract used. Read the
inspection provision and review it with your lawyer before the inspection to
make sure you fully understand it. Most form contracts limit the seller’s potential responsibility to material
items that don’t work, regardless of age. Having said that, your inspector
should still inspect ALL
items so that you can be aware of and budget for these items once you move in. Your
lawyer should review the inspection report with you and discuss your
options. Depending on the issues raised in the home inspection report, your
options range from terminating the Contract for material defects, to
accepting the property in its “As Is” condition. There are many options in
between, including the seller making requested repairs and/or providing a
closing cost credit or price reduction. Your real estate agent’s input should
be sought on inspection requests to include his/her important insight on prior
negotiations and market considerations.
7. Carefully choose your lender. Your
lender is also an important real estate professional that must be
carefully chosen. As with the other real estate professionals on your team, you
need to find a lender that has successfully closed deals for friends and family
in Cook County. Your realtor and lawyer can also help you find reputable
lenders in the area. Interview more than one to find the lender that you
are most comfortable with.
look around for the best deal, but look beyond the interest rate on the loan.
Each lender is required to give you a Good Faith Estimate of Closing Costs which you should
review with your lawyer before you make your final decision.
is the lender’s underwriting department which can be more important than your
loan officer. The underwriter will determine what additional documents you or
your lawyer will need to provide and will ultimately make the “clear to close”
decision. We have handled a number of deals with terrific loan officers whose
good work was undercut by unreasonable requests made by underwriters. Talking
to your loan officer, attorney, and real estate agent about this issue upfront
will save you headaches down the road.
8. Promptly get all information and documents to your lender. Before
you even make that offer, it’s a good idea to gather and keep every piece of
financial paper in the two months leading up to buying your
home, including pay stubs, bank statements for savings, checking, and
investment accounts, W-2s, tax returns for the previous two years, canceled
rent checks, and any mortgage or property tax statements for any other property
you own. If you are able, put these documents in PDF format to make it easier
to send to your lender.
The one potential closing delay issue that you have control over is getting any
requested information to your lender in a timely manner. You may get frustrated
by the amount of documents requested, but if you don’t comply right away with
your lender's requests, your closing could be delayed or worse you may find
yourself in default under the terms of the Contract. Keep your lawyer apprised
of any financing problems so that he or she can request an extension and
help you through this sometimes difficult process.
9.Maintain your credit profile. In the
months leading up to your home purchase, avoid adding to your credit
obligations, especially during the period between your pre-approval and the
closing of your loan. Don't close or apply for any new credit cards, keep the
balances on your credit cards within normal range, and don't make any major
purchases on credit. Any of these actions could upset your debt-to-income
ratio, which is a key factor in determining your eligibility for a loan. Be
aware that a new credit report is always obtained by the lender just prior
to funding your loan. If a new inquiry of credit is found on the
updated credit report, it could raise your interest rate and fees related
to your loan or even keep you from qualifying for any loan. 10. Take advantage of the final walk through. Most
contracts give you the right to inspect the property shortly before closing.
Take advantage of this final inspection. Generally, you are ensuring that the
property is in the same condition as it was when you signed the contract. This
is NOT an opportunity to re-inspect the property to find old defects that were
missed at the inspection. You should be looking for any problems that occurred
after signing the contract such as damage caused by seller during the move out
or removal of personal property that was to remain with the home. You also want
to be certain that the property has been left in the condition required by the
contract, which is typically “broom clean." A walk through may also be needed to ensure that all agreed upon
seller repairs were properly completed. In that instance, an inspection should
be done well in advance of closing to give the parties time to address any
problems that might come up.
tips are intended solely to be helpful in understanding the possible issues
involved generally in a residential real estate transaction in Cook County
Illinois. There are, however, many factors that may affect these tips. Before
signing any documents or depositing or receiving any money preparatory to
entering into a real estate contract, you should consult with an attorney of
your choice to ensure that your rights are properly protected.