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12 Steps To Buying A Home

Buying a home, especially a first home, can be overwhelming and even a bit scary. This is likely the largest purchase you will ever make. To make the process easier, simpler, and believe it or not, enjoyable, here is a complete list of the 12 steps to purchasing a home in New Jersey. If you have any questions about the process along the way, be sure to ask your agent to be better serviced from the beginning and address your specific concerns and needs. 

1)   Develop a Relationship with a Good REALTOR®

As a new home buyer, you can maximize your advantage tremendously by developing a relationship with a knowledgeable and responsive REALTOR® who will keep you informed of the newest listings and will negotiate the best price and terms for you. Your agent will be your most valuable asset in the home buying process. Whether you choose to work with our agents at Links Residential or another real estate company, remember the number one rule of home buying: Find a representative you trust and stick with them!

Did you know that many homes are sold without a sign ever going up or an ad ever being placed in the paper?

These "great deals" go to those people who are truly committed to working with one agent. Why? Real estate agents are the first ones to find out about a home being placed on the market. When our agents hear of a great buy, we immediately call our clients to tell them about it, often before a sign has even been planted on the front lawn. In addition to a public database of home listings, which we screen to find properties within your price range,  our agents also have access to private and unpublished listings through connections with our affiliated offices. 

 2)   The Decision to Buy

Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer, you should start by defining your needs and goals. Ask yourself some basic questions, such as: Why are you buying a new home now? Are you moving due to a lifestyle change, job relocation, or other factor? Are you committed to buying, or is renting an option? Do you have a purchasing timeframe? The more you understand about your own individual goals, the better suited you will be to jump into the marketplace. It is important to discuss these questions with your agent so everyone is on the same page from the get go. 

3)   Determine What You Can Afford – The Financial Decision

Purchasing a home is one of the biggest decisions you will make in your life. As soon as you’ve decided you want to buy a house, make certain you have a clear picture of your financial situation. It can be helpful to meet with a mortgage broker at this point; someone who can work with you to determine what you can afford and guide you in getting prequalified for a loan. Once you are prequalified for a loan, you will have the advantage of being able to move more swiftly when you find the right home. Think of it this way: There are likely to be other buyers interested in the home you’re eying and if you’ve already been qualified for a loan, you’re one step ahead of them in the game. (Remember though, being prequalified is not the same as being accepted).

Start with these steps to prequalify for a mortgage and determine how much you can afford:

  • Get a credit report to make sure there are no problems in your credit history and correct errors in your report if there are any.
  • Do an analysis of your current household income. Analyze where your money comes from, where it goes, and how a home purchase will affect your budget.
  • Try not to add on any new debt. Since mortgages are based on debt vs. income ratios (the amount of money going out vs. the amount of money coming in), new debt could throw off the ratios and make a previously approved mortgage unobtainable.

4)   Make a Wish List – Finding That Perfect Home

Tell your agent everything you are looking for in a home. Do you love beautiful, sprawling lawns, or do you hate to mow? Are top schools in the area a priority, or are the kids grown and out of the house? Are you looking to save money on a “fixer upper”, or are you willing to spend more on a home in complete move-in condition?

Things to consider are:       

  • Neighborhood - What type of community atmosphere are you looking for? 
  • Home features - What features are priorities, and what are you willing to compromise on? 
  • Commuting - How far are you willing to travel to and from work?  Do you want to be near public transportation?
  • Lot settings - Do you prefer a small, easily maintained lot in an urban area, or a larger lot in a rural setting?
  • Home styles - Colonial?  Contemporary?  Split level?  Ranch?  Are particular styles more appealing to you?
  • Price Range - Do you want to buy at the top of your range, or at the bottom, leaving yourself more of a ‘cushion’?

When deciding on the right house for you, it’s a good idea to start by writing a list and differentiating between needs and wants. Ideally, your home will have all of your needs and as many of your wants as possible. By going through this exercise, it will help you make sure that you are comparing “apples to apples” (or “wants” to “wants”) when you begin the house hunting process. For example, it’s probably not a good idea to compromise on a “need” in order to get a “want”. Don’t be afraid to adjust your list after you’ve started to see what’s out there.

Here some examples of needs and wants, but remember: Your list will be based on your own lifestyle. What you consider a want, your neighbor might consider a need and in the same vein, one person’s dream home may be completely impractical for someone else.

Examples of Needs

  • Enough square footage for comfortable living
  • Enough bedrooms to accommodate your family
  • Adequate number of bathrooms
  • Eat-in kitchen
  • Garage or basement for storage needs
  • Lot size to accommodate children’s play area
  • Proximity to a specific school
  • Proximity to Houses of Worship
  • Access to bus/train commuting

Examples of Wants

  • Wood floors
  • Central air
  • Carpeting color, paint color, exterior color, roof color, etc.
  • Pool or Jacuzzi for recreation
  • Bay windows
  • Built-in entertainment center
  • Brass lighting fixtures
  • Skylights
  • Quiet street
  • A pretty view

5)   House Hunting
This is the fun part!  Your agent will start a search to find homes matching your criteria and your price range. They will keep a close eye on the market and will contact you immediately about new listings as they arise. If you are looking in a town that is new to you, your agent will provide you with lots of information and escort you around to familiarize you with the area and give you a feel for the community.  

One of the most important things for you to remember is that our agents can provide detailed information on almost any property listed for sale, whether it is listed by Links Residential or not.

If you see a "For Sale" sign on a property or an ad in the newspaper that interests you, ask your agent about it. We will get you all the information on the home and set up an appointment to take you to see the property. 

There are two major reasons to avoid calling on a newspaper listing yourself:

  1. The ad has been posted by someone representing the seller, not you. Many homes have drawbacks that are not mentioned in an ad; things like traffic noise, power lines, litigation in the community, etc. The most important thing you can do is have someone on your side providing complete information and looking out for your best interest. Our agents will critique the property with an eye towards how well it meets your needs and any shortcomings it may have.
  2. Since the Links Residential agent you are working with is already familiar with your home needs and finances, there is no reason to start the process again with someone else, namely, the seller’s agent. When you see a home that interests you, keep your agent in the loop. In addition to saving you time and energy, it will also show your agent that you are just as committed to them as they are to you. And if this home isn’t for you, the next great deal that comes across their desk, will surely go your way. 

This goes back to rule number 1 (see above): 
Find for yourself the right agent and stick with them!

6) Making An Offer

When you’ve found a house that meets most of your needs and wants, you may find yourself getting emotionally involved. You may imagine moving your furniture in, planting flowers, and hosting your first big holiday party. But try not to get too attached prematurely. There are a number of steps you must take before you’re holding the keys in your hand, and you need to think clearly and objectively at this point so that the offer you make is a realistic one.

What is a proper offer?

There are a number of factors that will affect the offer you make. Market supply and demand, the condition of the home, how long the house has been on the market, and your personal circumstances with regard to how soon you need to close on a home, all come into play when framing your offer. If you “low ball” your offer, some sellers will react with a counter offer; others might dismiss your offer outright. In an active market, you’re likely to lose out by making a low bid. If multiple bids are anticipated, it’s advisable to go with your “best offer”. We will guide and advise you on ways to make your offer more attractive: for instance, a mortgage credit approval and flexibility on the closing\settlement date can help make your offer stand out and ultimately close the sale. After all options are considered, your purchase offer will be carefully prepared and presented by your agent.

7) Negotiating Your Offer

With your purchase offer, you will be expected to submit a check as ‘earnest money’. If your offer is accepted, this money will be placed in a trust account and in most cases, applied to the purchase price of your home.  The seller in turn, may accept, reject, or make a counter-offer.  If the seller counter-offers, you may agree to that price, or make your own counter-offer. Because counter-offers are common (any change in an offer can be considered a counter-offer), it is important for you as the buyer, to remain in close contact with your agent during the negotiation process so that any proposed changes can be reviewed quickly. We will work together to negotiate the best price possible for your home.

8) Offer Acceptance – Attorney Review Period

Note: In New Jersey, although not mandatory, it is a prudent and typical practice to hire an attorney for the closing of real estate.

An accepted buyer offer leads to a legally binding purchase contract. This contract is a signed agreement between the seller and the buyer. Your attorney will start the process of ordering the survey and title work. Attorney review in the state of New Jersey is considered three business days, but can be extended. During the three-day attorney review, either party can cancel the contract.

9) Home Inspection

As a buyer in New Jersey, you are responsible for hiring and paying for a home inspector. The home inspection should be ordered within 14 days of the contract being signed; usually it is done as soon as attorney review ends. A number of inspections are common in New Jersey residential realty transactions. They include inspection for termites and wood-boring insects, radon inspection, and mechanical and structural inspection. During these inspections, an expert comes to the property to determine if there are material physical defects in the home and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through. 

What if the inspection turns up problems?

Few homes are perfect. Some problems may be simply cosmetic; others may be more serious and call for costly repairs. You may decide that the issue is not important enough to bring up if it puts you at risk for losing the home. Any home inspection issues you choose to address should be done immediately after inspection results are received. In most cases, the seller and buyer will come to an agreement regarding these concerns. You and the seller may decide to meet in the middle and share the costs of repairs, or one party may pay for the repairs entirely. Your agent and attorney will work with you throughout these discussions.

10) Mortgage Process and Commitment 

At this point, you as a buyer have already been pre-qualified for a loan and the final mortgage commitment is being processed by the bank. Typically, it can take up to 30 to 45 days before a final written mortgage commitment is received.

11) The Final Walk Through

You should always do a final walk-through after the sellers have moved out, but before you go to closing. The final walk-through is not the time to do a home inspection. It is simply an opportunity to make sure that the home being conveyed to you is the home you agreed to buy. You should also make sure that that all items the sellers agreed to leave are indeed there. If the condition of the home has changed since the acceptance of your offer, you should bring it to your attorney and agent’s attention before the deed changes hands.

12) The Closing

Technically, two separate closings occur at this time:  the closing of your mortgage loan and the closing of the home sale. 

What to expect:

The closing, or settlement, is a brief process where the necessary paperwork needed to complete the transaction is signed. The title to the property is transferred from seller to buyer, the buyer receives the keys to the home, and the seller receives payment. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. Closing is typically held at the buyer's attorney's office, with both buyer and seller at the table. The buyer will traditionally arrive around 45 minutes earlier to handle the mortgage paperwork.

Here is what happens during and after the closing:

  • You will review and sign the HUD-1 settlement sheet and other loan documents.
  • If everyone agrees that the papers are in order, you submit a certified or cashier’s check to cover the closing costs and the balance of funds due (if applicable).  
  • If the lender will be paying your property taxes and homeowner's insurance, a new escrow account is established.
  • You receive the keys to your new home.
  • The closing agent will record the mortgage and deed at your local government clerk’s office. When the deed is recorded, you become the official owner of the home.

You are now an official home owner!