Buyer's Guide

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Affordability Assessment for Home Purchase

It's vital to assess your financial capacity for a home purchase before starting your search.

This assessment helps in setting achievable goals by focusing on homes within your budget, thus streamlining the search and avoiding potential disappointments. It also plays a significant role in financial planning, taking into account the total cost of homeownership including mortgage, taxes, insurance, and upkeep. This ensures a sustainable investment over time.

Additionally, being aware of your budget can enhance your credibility with sellers, potentially giving you leverage in a competitive market. It also helps in avoiding financial overreach, ensuring a more comfortable and rewarding home buying experience.

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Maintaining a Strong Credit Score

Follow these strategies to bolster your credit score:


Punctual Payment: Avoiding late or missed payments is crucial for maintaining a good score.
Balanced Credit Utilization: It's advisable to keep your credit card balances below 30% of the limit.
Manage New Credit Accounts: Frequent applications for new credit can temporarily lower your score.
Diversify Credit Portfolio: A mix of different credit types can positively influence your score.
Monitor Credit Reports: Regular checks and correcting any errors can help maintain a healthy score.

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Preparing for Home Purchase Expenses

Key costs to consider include:


Down Payment: Typically ranging from 3% to 20%, though some programs offer 0% down options.
Closing Costs: These usually range from 2% to 5% of the loan amount.
Home Inspection: Essential for identifying potential issues, costs can vary.
Moving Costs: These depend on the distance and the amount of belongings.
Initial Home Maintenance: Budget for potential immediate needs like painting or minor repairs.

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The Importance of Mortgage Pre-Approval

Securing pre-approval is a crucial early step in the home-buying process. It involves a lender evaluating your financial situation to determine a feasible loan amount. This not only indicates your seriousness as a buyer but also clarifies your purchasing budget. Essential documents for pre-approval include:


Income Proof: Recent pay slips and tax documents.
Asset Proof: Statements from banks and investment accounts.
Credit Analysis: Lenders will assess your credit score.
Employment Confirmation: Verification of your current job.
Identification: Government-issued ID like a driver's license or passport. This process not only sets a realistic purchasing limit but also strengthens your negotiating position when making offers.

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Escrow Period

Now that we are under contract, the escrow process begins in your real estate transaction. Thefirst critical step for a buyer is usually to decide on the necessary inspections for the home orproperty. This is a pivotal phase, as it will help you understand the condition of the property andidentify any potential issues that might need addressing.

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KEY STEPS OF ESCROW

1.- Choosing Inspections.

2.- Providing Recommendations.

3.- Scheduling Inspections.

4.- Reviewing Inspection Reports.

5.- Negotiating Repairs or Credits.

My goal is to provide you with the most personalized service that is designed to help you buy your dream home

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NEGOTIATE REPAIRS/CREDITS

It is not A-typical for issues to be found during the home inspections. Depending on the specificterms of your purchase agreement, this may result in another round of negotiations with theseller. These negotiations may be in terms of asking the seller to have repairs made or give acredit in lieu of repairs.

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Credit in Lieu of Repairs

This involves analyzing and determining average costs of the repairs you would ask the seller to pay in lieu of having the repairs completed prior to closing. This often is a preferred option for a seller rather than them having to deal with finding contractors and dealing with work underway while they are preparing for the move. KEEP IN MIND, THIS COULD AFFECT YOUR LOAN. We will discuss the pros and cons of this option on a case- by-case basis.

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Asking Seller to make Repairs

One of the obvious advantages of a seller making repairs prior to closing is that the work is completed before you take possession of the home. The disadvantage is you do not get to choose who makes the repairs or how it is completed.

A white kitchen with a stove and a sink. The kitchen has stainless steel appliances and granite countertops.

APPRAISAL ORDERED

Now that your lender has an actual address, they will begin to move forward with processing your loan. Your lender (if applicable) will arrange for an appraiser to be dispatched to provide an independent estimate of value of the home/property you are purchasing.If the appraisal value is found to be at purchase price or higher, your file will continue to move through the underwriting process.

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PROPERTY TITLE SEARCH ORDERED

A property title search is an essential step in the home-buying process that serves to verify the legal ownership and status of a property.

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PROPERTY SURVEY CONDUCTED

A property survey, conducted during the home-buying process, serves as a crucial tool to determine many key findings.

Understanding how buyers agents get paid

A simple explanation.

When a seller lists their home, historically they agree to pay a commission to their real estate agent (the listing broker) as part of the listing agreement. This commission is usually a percentage of the sale price of the home.

Based on market dynamics, the type of property you are looking to purchase, and other factors unique to your situation, you may request that some, or all, of the compensation outlined in your buyer representation agreement is paid by the Seller. However, please note that a Seller is not obligated to entertain such a request and it will all come down to negotiations at the time of offer and acceptance. As your advocate and trusted guide, I’ll be there to help you navigate these negotiations and pursue the best outcome for your specific needs.

The commission is paid at closing. Once the property transaction is completed, the commission is disbursed as per the agreements to the respective brokers/agents.


1.- Negotiating Commission with the Seller:
If we encounter a listing that is NOT offering a commission to buyer agents, and you still want to consider the property, one approach I can take is to negotiate with the seller or the seller's agent to include my buyer's agent commission in the terms. This can be part of the overall negotiation process when making an offer on the property.


3.- Seller Concessions:
A seller concession is an agreement where the seller agrees to pay a portion of the closing costs on behalf of the buyer. This can include various fees associated with purchasing a home, such as loan origination fees, appraisal fees, points, etc, reducing your upfront out-of-pocket expenses, potentially making the home purchase more affordable to account for direct pay commission obligations.


2.- Adjusting the Purchase Offer:
Another strategy could be to adjust the purchase offer to indirectly cover the commission. For example, if the home is listed for $300,000 and the typical commission would be $9,000, we could offer $309,000 with the condition that the seller pays a $9,000 commission to the buyer's agent. This way, the net to the seller remains the same and your commission obligations are rolled into the overall price of the home.


4.- Buyer Pays Commission Direct:
In cases where the seller refuses to pay the buyer's agent commission, and it cannot be built into the purchase price, you as the buyer may be responsible to pay the commission directly. This would be something we'd discuss and agree upon before moving forward on a property and it will be stipulated in our buyer's agency agreement.


OR ANY COMBINATION OF THE ABOVE

My role as your buyer's agent is to represent you and your interests in the home buying process, and this service, in a traditional setup, doesn't add a direct cost to you as a buyer. The commission structure ensures that I am compensated for my efforts and services by receiving a portion of the commission paid by the seller to the listing brokerage. This setup allows me to focus entirely on your needs and interests, helping you find and purchase the ideal home.

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Ready to buy or sell? Michelle brings 10 years of experience and local expertise to make your real estate journey smooth and successful. Whether you're seeking your first home, downsizing, upsizing, relocating or even an investment property, reach out to Michelle today!

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Contact Details

Michelle Ziesch

Phone

(303) 552-1388

Email

[email protected]

Phone

(303) 699-6760

Address

7935 E Prentice Ave, Ste 105 Greenwood Village, CO 80111

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