The Buying Process

Should you rent or should you own?

An important first step is to determine whether you should purchase real estate or continue to lease. There are other factors to consider when deciding to purchase real estate than just your monthly payment amount. The link to the Rent Vs. Buy Calculator will help you determine what is best for your situation.

As you will see, the calculation is rather extensive since there are many facets of costs and deductions that affect the final comparison. Below is a list of specific data to use based on La Plata County’s sales information for 2011 in order to complete the calculator:

• Inflation Rate: 2.5%-3%
• Down Payment Amount: 3.5%-20% – anything less than 20% down will require PMI. (See calculator below.)
• Interest Rate: Approximately 4% for 30 yr. fixed (rate is based on Credit Scoring and amount of down payment.)
• Discount Points: 0-1%
• Origination Fees: 0-1%
• Other Loan Costs: Approximately $1100 + Title Insurance (amount based off of sales price.)
• PMI Calculator
• Average Monthly Maintenance: $25-$100 (home s& condos under $300K)
• State & Fed Income Tax Rate: Check most recent Tax return or contact your CPA.
• Savings Account Rates: .01%
• Home Appreciation Rate: .50%-1% (2011 La Plata Co only)
• Commission Rate: 2.5%-3%

(Should you need any help with filling out the form, please don’t hesitate to contact us. We would enjoy the opportunity to help you!)

Other important things to consider when determining whether to buy are:

• Your job stability
• Time frames for staying in one location
• Family and/or personal needs
• Credit Scoring/Financing/Down Payment Money

Beyond providing shelter & a sense of community, Real Estate has always been a long term commitment with the goal of steady appreciation of your investment. Consider your options carefully. If you find that a purchase is in your future, please read on!

Why is a pre-approval important?

If you are like most people, a real estate purchase is the most expensive item you will ever own and you will need a loan in order to complete your purchase. Leverage is a wonderful concept that allows us to live in our own homes without needing large sums of money to do so. With a down payment of 3.5% to 20%, anyone can get into a home affordably. Those with lower to moderate incomes may also want to check with the programs that the Regional Housing Alliance has to offer. The benefits of home ownership could well be within your grasp with their help Click on the link to find out more about their programs and qualifications.

We always recommend to our Buyers that they work with a local lender of their choice. They are local experts and know what is necessary for our particular area, and enable the process to be much easier and efficient. If you would like some of our recommendations please go to the Buyer Agency page and click on Financing.

Having a pre-approval will enable us to conduct your real estate search with greater accuracy. When you do find that special place, you will be ready to make fast and reasonable offers knowing that you have financial backing at your finger tips. Distressed properties demand pre-qualification and/or pre-approval letters upon offer submittals, so this is a very important step to complete prior to your home search if these types of properties are on your list.

If you find that your credit is not up to par, working with a reputable lender will also give you specific directions on credit repair and prepare you for a future purchase.

Anyway you look at it, contacting your favorite mortgage lender or company will give you a much needed financial direction to get you started. Sometimes, everyone needs a little help from time to time! LENDERS ROCK!

Contact a Qualified Realtor. You’ll be glad you did.

Once you are pre-approved for a loan and know how much home you can qualify to buy, it is time to choose a Realtor. Realtors provide you with valuable knowledge that will reduce the amount of time needed to find your perfect property. Remember, Seller’s pay real estate commissions. Using a Realtor costs you nothing as a Buyer.

Be sure to find a Realtor that is competent, educated, technologically savvy, and ready to work for YOU. Make sure that you are compatible and interview a few before making a decision to sign a Buyers Agency Agreement. You only need one good Realtor to make your home buying experience a success.

Through the use of the Multiple Listing Service (MLS), Realtors can send you a list of properties that meet your specific criteria. This can be an immediate contact by email on a new listing or delivered to you at a specific time of day by email or text. Once a property is found, we can setup the appointment to show you the property.

Realtors can answer questions you may have concerning the home itself, the buying process, or simply answer questions about the neighborhood, schools, what amenities are nearby along with much, much more. Go ahead and ask! We are here to help. If we do not have the answers, we can always find them out with a little research.

Proceed with caution if you do not have Realtor representation when real estate shopping. Unless you are familiar with the real estate process, this is an area best left to a licensed professional. You can do a mountain of “homework” on line, but when you are seriously considering a purchase, please be sure to find a reputable Realtor. We do all of the hard work, while you enjoy moving into a place you always dreamed about.

Our business is helping you find the correct type of property, negotiate your contract on your behalf to procure the best deal possible and then step-by-step, guide you through the actual contract phase, closing and final move. We also like to remain as a resource to you once your transaction is completed. Feel free to contact us if you need anything while getting acquainted with your new home. We are always here to help!
(Yes, we are Realtors, but we ROCK too!)

This is where the fun begins. What dreams are made of.

We have now reached the portion where we now look for a suitable property for you. We do this by having an extensive conversation about what a home should contain for you, your preference on locations or subdivisions, climate & terrain, pets &/or livestock, timetables for moving, and more. Using this introduction time, we can assess your needs and budget and narrow your search results to listings that best fit your criteria. If anything changes during your search period, we can easily adjust your parameters and continue on. Previewing properties from your email can save you hundreds of hours searching the internet for something you may be interested in. Our MLS tools allow anyone to receive timely notifications of new listings as they are entered into our system. Nothing can notify you earlier of any new listings! (Except maybe your neighbor or friend that is listing their home.)

Once a property is identified as a possibility, more information can be obtained or a showing appointment can be made or both. We have the ability to access any MLS listing in our area. We even work with For Sale By Owners (FSBO’s) under certain circumstances as well. Distressed listings, Short Sales &Foreclosures will require patience & an experienced Realtor. Short Sales, (where the owner sells the home for less than what is owed to the lender, with lender approval), can be some of the most lengthy and problematic contracts to bring to a close. Foreclosures, ( Bank or Lender owned real estate), usually can be completed in less time than a Short Sale. However, there still is no standard practice between lenders, so time frames and contracts can vary. You will find the lowest prices (up 30% less than market value) on these types of listings, but you will need to be ready, multiple offers usually are the norm on these types of listings.

Let’s write a contract!

The Contracting Phase

Now that you have found the home and are ready to write a Contract to Buy & Sell Real Estate, we now begin the contract phase of the purchase. Colorado Real Estate contracts were written with the Buyer in mind. Buyers have many opportunities to thoroughly investigate their real estate purchase before committing to the final purchase. (Click on the link above to read an actual Colorado sales contract.)

Two of the most important sections deal directly with the investigation or Buyer Due Diligence contained in the contract. They are Section 3, Dates & Deadlines and Section 29, Additional Provisions. Anything that is not listed in Section 3 as a deadline date, can be addressed in Section 29. As you can see, Colorado contracts address most standard items within the contract itself. This ensures that crucial items are not missed or forgotten.

As Realtors, we will make sure that you understand all sections of the contract and keep you on track as to performance of all deadline dates and any other contract stipulations. Earnest Money is the amount that accompanies the offer and is held as collateral so that you continue to work through the contract in a timely fashion. It becomes part of your down payment amount and is fully refundable should something hinder the purchase. An important caveat, however, is making sure none of the contract deadlines are missed. This jeopardizes the Earnest Money refund. This is a very important reminder not to miss a deadline date and a crucial service that we provide to Buyers to keep them on track while progressing through the contract phase.

Title and Common Interest Community (CIC) documents will be provided to you along with a Seller’s Property Disclosure. Included in these documents are subdivision Covenants & Restrictions, HOA Financials, Plats, Oil & Gas Leases, and much more depending on that particular property.

The Seller’s Property Disclosure will allow the Buyer to investigate or inspect the home & property to satisfy themselves at to the condition and suitability of the premises.

Loan applications & approval are also addressed here to keep the Buyer performing in a timely manner.

Appraisals, Surveys and any physical Inspections are also time-lined here as well.

Homeowners Insurance, utility transfers, irrigation water transfers, water well transfers are also addressed and your Realtor will prompt you to take care of these items as you work through the purchase.

Since this is a legal document, all of our forms advise that the parties should seek legal and tax or other counsel before signing.

As Realtors, we have legal duties to perform in order to make sure that our client’s needs are met. We shall refer you to experts in fields such as Home Inspections, Lenders, and other service providers as deemed necessary for your particular situation.

The hard part is finished, let’s move to the Closing.

Closing and the Move

Now that all of the contract deadlines have been satisfied and everything is in place, we move into the Closing Phase. Closing consists of finalizing all lending criteria and the lender is ready to create the loan documents and send them to the Title Company. The Buyer will have a final walk through of the property to be sure everything is as when they originally viewed the property and that all repairs or inspection items have been completed. This usually occurs the day before or day of Closing. Also the day before closing, all of your down payment money should be at or on its way to the title company. You can either have a cashier’s check to bring to the closing table or you can wire funds to the title company’s bank account.

On the day of Closing you will meet with your Realtor and Lender at the Title Company to sign loan documents and title papers. You will receive keys to the property then and will be able to take possession of the property based on how your contract was written. You will have also contacted all of the utility companies for transfer based on your possession date. Once the papers are signed you become the official new owner of the property! You are now ready for the moving van!

CONGRATULATIONS!! YOU DID IT!

Ongoing Support

If you are new to the area, you may need more referrals from your Realtor. Sometimes the Seller can help by showing you the subtle nuances of your new home. Neighbors can also be of great help to acclimate you to your new surroundings. Either way, remember your Realtor is a wealth of knowledge and resources and will be ready to help you any way you may find necessary. (Well, maybe not grocery shopping for you, but you get the idea.)