The Rules of Engagement
"Just relax," my hairdresser said as she held my neck and rinsed my hair, "I've got you."(Thank you.)
In the hustle and bustle of life, I too often forget that simple message (none of us has to do this alone), but it's a powerful sentiment and one that bears repeating . . .
as we move quickly into the spring season and the frenzy begins to build in earnest. After what's been an unusually slow start to the spring market, we're finally starting to seem some real inventory, so in spite of wet weather, I'm going to encourage you to get out there this weekend and rise to the challenge.
Since you're essentially in training, DO expect to see some lively competition at the Sunday Open Homes; pent-up demand is a natural consequence of too few offerings in a highly dynamic marketplace with loads of well-qualified Buyers who've been waiting since well before Christmas to jump into the ring. (That's the bell in your ears.)
If it feels like a mob scene at the fights, that's okay, the truth is that the vast majority of Buyers need the validation of the herd (for lack of a better term)in order to justify their interest.
In fact, most of us only find the courage to go for the BIG BUY when joined by others. When no one else shows up come the offer date, anxious Buyers begin to wonder, "What's wrong with the house?" "How come no one else is bidding?" "Maybe it's not such a great opportunity after all???"
And so it goes . . . self-doubt can take over and we begin to question our commitment and desire.
Of course, buying in competition is NO easy feat; it takes grit and determination to box and you'll undoubtedly take a few punches along the way, which means that you will either quickly learn to duck and weave, or get knocked out.
Because Agents have helped so many Buyers into homes, we often forget how unfamiliar this territory can be, especially for new Buyers who haven't yet gone 12 rounds, been knocked to the mat, or gotten back up to fight another day. (BTW, the same is true for Sellers who may go decades in between home sales or purchases.) In plain language - it ain't easy. ("Yo Adrienne!")
"This is unbelievable!" one client kept saying every time I brought him a new form to sign, "our contract was one page when we bought this house years ago." (I agree, it's far more complicated than it ought to be which is why you shouldn't attempt to sell or purchase a home without a professional.)
Relax, I've got you.
So here's how it goes on the Buy side: (I'll tackle the Sell side next week.)
1) YOU have to make the decision to move. This isn't that easy in light of how challenging the marketplace can be, but you're the only one that can do it. I can't want a house for you more than you do, which translates into the reality that you'll probably need to dedicate several months and most of your weekends to finding a home until we hit on the "right" one and successfully get into contract. (Identifying homes is as easy as the Internet; closing the deal is far more nuanced and difficult to accomplish.)
2) Once having made the decision, spell out your goals and timeline,establish your price point, and identify the neighborhood in which you wish to live. The sooner you refine your hunt, the easier it is to find the home, and the more helpful your team will be to you. Remember, we are set to jump into action.
3) Contact a lender. This can either be a mortgage broker, a banker, or your own sweet parents (if you've been incredibly fortunate at birth). But for most of us hard-working folk, DO expect the lender to ask for at least two years of tax returns and verification of employment. If your income is largely based on commissions or bonuses, or if you are self-employed, expect the qualifying process to be as invasive as a root canal. It only hurts for a few days, but there's absolutely NO way to compete in today's world without a preapproval in hand.
4) Create a relationship with a local REALTOR! Your aunt in Palo Alto is well-intentioned, but not the right choice for our local market here. Thank her for her time and ask her to refer you to an area specialist (she'll get a fee and you can all be nice to one another at family gatherings). Working locally is the only way you will gain the inside track and believe me, you are going to need it.
5) Once you have identified a home, you should carefully read the disclosures and weigh the risks involved. While good agents will help you with this seemingly insurmountable PILE of documents and give an opinion when asked, don't avoid this task yourself. It's your money, your risk, andyour home once the deal closes - not ours. An opinion is just that. In short,you have to be informed about the purchase and that's a tougher challenge when homes come and go in a matter of mere days. Unfortunately, it doesn't give a Buyer much opportunity to ponder or process . . . but that's our current market place - for better or worse - so if a home purchase is your goal, you'll have little time to inspect or reconsider. Try and do as much of that before you make an offer to ensure some level of comfort.
6) Write a love letter and include a photo. As silly as this sounds, Sellers want to know to whom they'll be handing over their precious home. No, it won't beat out the offer that's $50,000 higher, but all things being equal, it may tip the scales in your favor. Your Agent will take it from there and his or her work will include the California Purchase Agreement, a cover letter and synopsis of the offer, signed disclosures, and any additional documents that may be required. In other words, it won't be a quick signing process - nor should it be; this is a substantial investment. You need to understand in full, exactly what you are signing and agreeing to. Docusign is a time-saver no doubt, but make sure your Agent explains the contract before signing on the dotted line.
7) Congrats, your offer has been accepted. You are over the largest hurdle, but far from done. Escrow is now opened with a title company (a neutral third party), your good-faith deposit is sent in, your contingencies begin to count down, you arrange for homeowner's insurance, an appraisal is ordered by the bank, inspections are set, and any renegotiation in price or terms takes place during this tenuous period. In many ways, this period of the transaction is the most vulnerable part of the equation so mind your manners. Courtesy goes a long way towards settling even the most contentious battles should they flare up. (In my experience, negotiations aren't about right and wrong, but about seeking common ground.)
8) Once a meeting of the minds has been reached and ALL contingencies are removed, the underwriter creates loan documents that are then sent to the title company and drafted for the Buyers' signatures. Signing closing documents takes anywhere from 30 minutes to an hour and you'll need your ID so don't forget it. Several of these documents are notarized so closing documents are always signed with wet signatures - never electronically. Make sure you are in town to sign!
9) Now that documents have been signed, they are returned to the underwriter who approves them and releases funds the following day. You deposit your share of the purchase price and then transfer of ownership is properly recorded down at City Hall by the title company within 24 hours. The Trust Deed now sits in your name and your lender is the new lien holder.
10) Don't forget to turn on your utilities, pick up your keys and order several pizzas to meet the moving truck. You're now a happy homeowner (or at least, that's the goal) It's time to unpack and move in. (Invite your friends over to help. Everyone likes pizza.)
Yes, home ownership is a big adjustment to be sure, which is why it isn't for everyone. (Don't tell my boss I said that.) Moreover, it will likely take you 12 rounds to get there and a good amount of dancing and finesse. (Heck, I've outlined 10 steps here and that doesn't include the disappointments and near misses) but you won't be alone; there's a whole team of supporters in your corner and we're going to stay right there beside you until the last bell rings. "Float like a butterfly, sting like a bee" - whatever it takes.
"Relax, we got you."
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Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.