#1
Secure Financing Before Searching For Homes
When you find the right home and the time comes to put in an offer, you will want to include a pre-approval letter or proof of funds to make sure the seller reviews your offer in its best light.
If you are planning to purchase with 100% cash, you will want to obtain a proof of funds document that will be submitted alongside any offer to purchase. Some buyers choose a bank statement with their name and a sufficient balance visible, but most request a signed letter on letterhead from their financial institution that certifies that they have sufficient funds to purchase a home up to X amount.
If you are planning to finance your home purchase with a mortgage, you will want to obtain a pre-approval letter that will be submitted alongside any offer to purchase. Whether you are self-employed or in a job with a W2, your lender will check your credit and verify your employment to determine the loan amount of your pre-approval and give you a good preliminary idea of the terms of the loan.
Not sure where to start when it comes to finding a mortgage lender? I’ll be happy to refer you to a great local lender who I know, like, and trust. Simply fill out the contact form at the bottom of this page and I will connect you!
#2
search for and tour potential homes
As a South Bend REALTOR I can work with you to set up a showing of any house on the market – not just those listed by my brokerage! To tailor the search to your specific needs, I will need to know your time frame for the move as well as the size, location, features, and price range you are looking for.
Have something very specific in mind that you can find on the market in our area? Depending on your needs, I may be able to help you an off-market deal or an opportunity for a new construction.
#3
Submit an offer to the seller
Once you find something that could be “the one,” we will talk terms: offer price, earnest money, inspection period, closing date, earnest money, and offer expiration date. I will make recommendations but, ultimately, you are in the driver’s seat and I will write a purchase agreement according to your specifications.
Once you sign the offer, the Seller’s disclosures, and the lead-based paint certification for that property, I will send your offer! Then we wait to see whether the Seller accepts, counters, rejects, or ignores your offer.
- If the offer is accepted: You have a house under contract. We move on to the next step. Congratulations!
- If the offer is countered: This is a good sign! The other party didn’t accept your offer as-is, but we were close enough that we may be able to meet in the middle. A counter offer terminates the old contract and forms a new offer wherein some new terms are specified that replace the old terms and all unmentioned terms remain the same as those of the first offer. Now that you’ve received a counter it’s your turn to accept their terms, reject it outright, or re-counter!
- If the offer is rejected or ignored until it expires: We go back to step 2 and keep searching for your next home!
#4
Submit Earnest Money Deposit and Shop for Home Insurance
Once you and the seller have signed and agreed to the terms of your offer in the Purchase Agreement, the next step for you is to deliver any earnest money according to your agreed upon terms. Typically, buyers and sellers agree to earnest money delivery within 2-3 days of acceptance of the offer in an amount roughly equal to 1% of the agreed upon purchase price of the home.
This money does not go directly to the seller. It is held in escrow, typically by the listing broker or, less often by your buyer’s agent’s brokerage (Irish Realty) or the title company.
- If all goes well and we make it to the closing table as anticipated: The full amount of your earnest money deposit is applied to your account balance as a credit at closing. You can think of it as pre-paying some of your closing costs.
- If a contingency of your offer is not met and you decide to walk away from the purchase: We will submit a formal request to have your earnest money refunded.
- If for some reason you choose to walk away from the sale in breach of contract: The seller retains the earnest money deposit as liquidated damages.
You will also want to call around to home insurance providers within the first week that you are under contract. If for some reason you are unable to obtain home insurance on a home for a reasonable price then there is a short window of time during which you can use that as a contingency to validly walk away from the sale with your earnest money in hand.
#5
Assess the Home’s Condition and Negotiate repair of any defect
I recommend budgeting $500-1,500 for home inspections. This way you can cover a whole-house inspection and any specialty inspections as needed.
In most scenarios, it is in your best interest to order a whole-house inspection to identify any potential defects in the home. The whole-house inspector is a generalist who will examine your property from top to bottom and from inside to outside. This inspection will give you a good picture of the condition of the home that may soon be yours and put you in a strong position to negotiate for repairs of undisclosed defects. Depending on what the inspector notices, additional inspections from specialists may be called for (HVAC, electrical, plumbing, radon, mold, pest, foundation, etc.)
In St. Joseph County some homes on well and septic (as opposed to city water and sewer) are required by law to have a water test and septic inspection completed before a property is sold. If this law applies in the case of the house that may soon be your home, those tests will need to be done during this step as well.
Unless a home is being sold as-is or you have decided to waive inspections, we will work to negotiate that the seller repair defects prior to closing. In these negotiations it is important to be as specific as possible about what repair is needed, so the inspector’s recommendations are extremely helpful. That said, even though every home, even a brand new home, has items that an inspector could identify as imperfections, not every item is considered a defect. You should be prepared to negotiate for repair of safety hazards or big ticket items, but not for minor details or items that would fall under the scope of normal home maintenance.
Don’t worry if you don’t have a home inspector in mind already – I can recommend one!
#6
Obtain Final Loan Approval From Your Lender
This step applies only if you, like most buyers, are financing your purchase with a mortgage. Work for this step is happening in the background from the moment that your Purchase Agreement is accepted.
Your loan originator will order an appraisal and work with his or her team of processors and underwriters to review your final loan application.
- If the home appraises at value we are in the clear
- If the home appraises “at value conditional on the following repairs” we will negotiate with the Seller to have those items repaired prior to closing
- If the home does not appraise at value you may choose to walk away from the sale if the terms of the financing contingency were not met, or you may choose to proceed with the Purchase, either by negotiating with the Seller to arrive at a reduced offer price, or paying additional cash at closing as an appraisal bridge between the home’s appraised value and your offer price.
Between pre-approval and final approval, you will want to avoid the following:
- Changing jobs or how you are paid
- Closing existing credit accounts or applying for new credit
- Co-signing on any loans
- Making any unusually large purchases
- Moving large sums of cash in or out of your bank account without clearing it with your lender first
#7
Utilities Transfer, Final Walk Through, and Closing
I will work with you and the listing agent to set a date for closing. Once we have a closing date set, you will want to contact the utilities companies to have utilities activated on your moving date. I can share their contact information!
Approximately 24 hours before closing, you and I will go on a final walkthrough to make sure that the home is still in the condition you expect it to be. We
#8
Settle into your new home
When you are moving boxes and organizing your new home it can be a hassle to stop what you are doing and think about what your next meal. Let me know your moving day and lunch or dinner is on me! I will bring pizza and soda to celebrate your big day.