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Curbed U: The Home Buying Process, Part II

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Curbed University delivers insider tips and non-boring advice on how to buy, sell, or rent a home or apartment. Additional questions welcomed to the tipline.

The Search

When performing the actual home search, it’s good to be as specific and as flexible as possible. That doesn’t make much sense, but bear with us here. Given that you’ve got pre-approval, you know how much you can spend. The natural starting off point is pinpointing the area you wish to live in, and in Atlanta this is usually influenced by three things: schools, commuting, and lifestyle.

Once you’ve honed in on a specific school district/neighborhood/city/state of mind, it’s time to face the music. There’s bound to be some compromise at hand, and that’s where the flexibility comes in. Unless you’re on a Ted Turner budget, you’re going to have to give a little. Maybe it takes 30 minutes more to get to work in the morning, but you were able to score a house that’s less than 20 years old. Or you’re within walking distance of some of Atlanta’s hippest restaurants, but Fido will have to rely on the dog park for releasing all that pent-up energy.

Until you get started, there’s no easy way to guess how long you’ll be searching. Buyers have been known to look at just a few to, well, enough to test an agent’s patience in a major way before finding something suitable. It’s entirely possible you might not find anything and decide to put off the purchase until you can be satisfied. A benefit of our digital age is that you can so easily screen out definite “no’s” without wasting time. But please, don’t be like those annoying buyers on “House Hunters” who incessantly whine about paint colors and light fixtures. You’re buying a home - you can afford some minor cosmetic improvements.

Making An Offer

You've traipsed through more homes than you can recall, and it’s time to get the ball rolling with an offer. Your pre-approval makes a great first impression on the seller. Here’s the biggest takeaway about offers: everything is negotiable. The price, the terms (such as the seller making repairs of paying HOA fees), the inclusion of the seller’s baby grand, etc. are all up for discussion. Offers are frequently contingent on the satisfaction of some event, which could be securing financing, selling the home you already have, having the home pass inspection, or the completion of an appraisal. But what you really want to know is how much money you’ll be paying. This is where having a great agent comes in handy. Elizabeth Weintraub lists some of the most important factors that go into coming up with a number. Considering the overall market is a good place to start, but keep in mind that you want to think more on the micro level. Some areas in the Atlanta metro are better for buyers (areas where you see pipe farms) and some favor sellers (East Cobb, Morningside).

Your agent’s job is to pull comparable sales, and look at asking to selling price ratios. Also, the seller’s own situation should influence what you’re willing to offer. Are they desperate to sell? Take a look at the home’s listing history for info regarding the length of time it’s been on the market, and what the seller originally paid for it. Once the offer is submitted, the seller has the option of accepting it or making a counteroffer. Keep in mind that earnest money (usually 1% of the purchase price) is not required in Georgia. But most sellers (and their relators) expect some kind of earnest money to indicate that you’re serious, especially if there is a lot of interest in the house. After some back and forth, both parties should (hopefully) come to an agreement that pleases everybody. Keeping a poker face is essential; even if it’s your Barbie Dreamhouse, don’t let it show, and don’t become emotionally involved.

Closing

After your offer is accepted, closing will typically take place in 30-45 days. The cast of a closing includes you (the buyer), your closing attorney, the seller, real estate agents, loan officers, and the lender’s closing attorney. Ultimately, the title is being transferred from buyer to seller, but within the length of two to six hours a few things need to happen first. There’s a slew of documents that’ll be gone over at the closing, as explained at the website of the Georgia Residential Closing Attorneys Association.

What’s required of you is proof of homeowner’s insurance, documents required by the lender to complete your loan application, and funds for closing costs, which are estimated by your lender in a Good Faith Estimate of Closing Costs. The lender may also request a termite letter (those pesky boogers!) before funding your loan. Title insurance is a must - better safe than sorry. Also at closing, an escrow account will be initiated, which is basically assurance to the lender that the home’s insurance, taxes, and possibly private mortgage insurance will be paid.

FSBOs (For Sale By Owner)

Some sellers (about 25% of the market) wish to bypass the agent route and save the commission they would otherwise lose when the sale happens. So what does that mean for you as a buyer? The ForSaleByOwner.com blog gives a sweet rundown on how to handle FSBOs. You’ll still want to secure pre-approval. When you find a good prospect, you’ll be talking to the seller directly, assuming that you’re not working with a buyer’s agent. A valuation report of the home should be secured, which a real estate agent will usually do for a fee, and you should be sure you’re protected by hiring an attorney. He/she will be your guide for getting from the offer to the closing desk.

· Making Offers on a Home [About.com]
· Georgia Residential Closing Attorneys Association [official site]