Lake & Company Real Estate

The home-buying process can seem overwhelming, but just like most things, once you get started, it can flow into a one-step-at-a-time process that is manageable and even fun.

With the right team of people supporting you, it can be a very comfortable and educational experience that brings the reward we call the American Dream.

While my style is to guide you in person face-to-face for the majority of the learning experience, I have tried to also design a few basic informational pages here to complement. Some things take more time to absorb (say the principles of holding title), and some things are simple and straightforward and yet are not needed until the home-buying process requires it (say a list of referrals for inspectors).

Our fast-paced lives shouldn't keep us from fully understanding one of the most important decisions we make!

When you’re considering buying a house, some of your first thoughts will likely be:

• How will I finance my new home?
• How much can I comfortably afford?
• How can I compete in today’s fast-paced high-demand real estate market?

It’s critical to work with a trusted, professional and reliable lender. Your local bank or credit union may not be the best choice for your particular situation, whatever it is. Working with a local lender with proven experience and a high level of customer service will not only assure that your loan will go through with minimum stress, but will also be more attractive to sellers when deciding which offer to accept.

Choosing a lender who strengthens your offer will give you a better chance of having your offer accepted. Sellers want to have a confidence that your loan will go through, so that they can continue with their life plans. If there is more than one offer, as there usually is in today’s market, sellers tend to shy away from offers that include obtaining mortgages from credit unions, online financing and big banks.

Certain individuals and certain companies have established stellar reputations based on their 24/7 availability to provide updates, their clear communication skills about the loan process, and their ability to personally usher the transaction to closing.

I have a list of preferred local lenders that I can provide, so that you can decide which one seems to be the best fit for you. Not all lenders are alike. Some can offer more loan options—for example, if you want to buy a “fixer” house, you may need a rehab loan. Not all lenders are familiar with or offer rehab loans. The same is true for other types of loans that might fit your needs better than others.

I have a lender for every circumstance. Let me know if you’d like me to send you my current list.

Once you are pre-approved to obtain a mortgage with a good lender, we can start looking for your new home!

After your lending is in order, you can set out on your search.

Here are a few things to think about …

• What works about your current space?
• What doesn't work?
• As your life changes, what might become important to you down the road?

If you are shopping with a spouse, partner or co-investor, consider sitting down and individually formulating a "needs and wants" list. Sharing this list is an important exercise in establishing a method for decision making. Once you spend some time looking at homes, no doubt your list may change a bit.

I know for myself back in the 80's when I bought my house, I forfeited all my criteria when I found a home in a killer location for a good price. I knew it was possible to still get my criteria with sweat equity, and although I couldn't change the sloping street/sidewalk to the "level street" I had on my criteria, I was super happy with the large, private, level backyard that came with the house.

Read my suggestions for reducing stress …

How to reduce stress

Today's homebuyers often utilize the Internet in their home search. Lake & Company's website provides an excellent resource. Lake's site displays all property listings from all real estate companies in the Greater Puget Sound area. New property listings and changes appear on Lake's site within hours of their entry into the Northwest Multiple Listing Service computer system.

I will set up a customized search for you and will be emailing you listings at the same time that you are searching. The NWMLS has created a holding area for all listings I send you, called the Portal. With the Portal, you will be able to identify your favorites and discard homes that do not meet your criteria. Without spending a lot of time emailing back and forth, I will be able to see if you have looked at the listings and see which ones are your favorites.

Previewing: Before heading out together to look, I will most often preview the home to avoid wasting your time. Often a home is really wonderful in the photos but has a large challenge once one visits.

When you are ready to write an offer on a property, we will be filling out a Purchase & Sale Agreement. These agreement templates are in constant transformation to reflect the result of case law and to reflect new laws. Every state handles their real estate transaction agreement differently, so even if you have purchased a home before, or if you have moved from another state, don't assume you are familiar with this agreement.

When you see a copy of a Purchase and Sale Agreement you will see that Page One is where all the terms of the offer are. Additional terms that customize your offer further are listed in the Addenda section of Page One and attached to the agreement. The remaining pages are what we call the Boilerplate. The Boilerplate explains how your terms are to be carried out. For example, if you agree to do an inspection within ten days, exactly when would the count start? When is the deadline? And how do weekends and holidays factor in? The Computation of Time section in the Purchase and Sale Agreement explains how the timelines are counted.

Terms, boilerplate, addenda, earnest money and pre-approval letter make up the basic package that allows you to write an offer on the property of interest. Following is the list of the most basic and commonly negotiated terms listed on page one.

addenda (most often included)

• Finance Contingency
• Inspection Contingency
• Optional Clauses
• Utilities

the terms of your offer

• Purchase Price
• Earnest Money
• Consequences of Default
• Offer Expiration
• Closing Date
• Possession Date
• What is included in Sale
• Title Company
• Escrow Company
• Services of Closing Agent for Payment of Utilities
• Charges and Assesments due after Closing

Mutual Acceptance is the point when both the buyer and seller agree on the price and terms of a transaction. Both parties are signed around and the agreement has been delivered. This establishes the timeline for all contignecies and other terms in the agreement.

For example, if there is a ten-day inspection period, the ten days would begin the following day (day one) of mutual acceptance date (if it is not a legal holiday). The computation of time has many characteristics that vary depending on weekends, legal holidays, etc. It is important to review and understand the description of how time is computed in the Computation of Time section in the Purchase and Sale Agreement.

The careful management of this calendar of events is the job of your agent. These are the things that keep you in contract, which of course is a part of protecting your earnest money.

Don't relax yet! There is still work to be done, and these contractual deadlines rely on you and your team. As soon as the Purchase and Sale Agreement is signed around and delivered, I create a calendar for my clients, myself and the other agent.

schedule an inspection

Your agent can help coordinate scheduling between you, the listing agent, the seller and inspector as well as give you suggestions of inspectors. An inspection can take anywhere from 1-5 hours, depending on the inspector and size of the home. You will want to be present if at all possible.

This is not only a time to discover if there are significant repairs needed; it is also a time where you learn about your future home's care and maintenance schedule. Think of it as creating your "To Do" list that will be mapped out over the years. You also learn important things such as if pipes were to burst — where does one turn off the water main? What about earthquake safety and knowing how to turn off your gas quickly? There are many important reasons for an inspection.

Buyers are free to hire an inspector of their choice, but buyers must choose to hire a licensed home inspector. Some licensed home inspectors have contracting or engineering backgrounds; all must be licensed to perform pest inspections. Inspections can cost anywhere from $275 to $500, depending on the size of the condo or house.

The Seller Disclosure form is a document in which sellers answer, to the best of their knowledge, a series of questions about the condition of the home and any known material defects. If there are any concerns regarding any of the disclosures, this is a good time to work with your inspector on gaining full knowledge. The inspector may encourage even more expertise and suggest additional inspections. There is a timeline for this in your purchase and sale agreement.

Inspectors will look for major safety and maintenance issues, as well as minor problems such as sticking windows or paint touch-up. Inspector warranties vary and you should review this issue with your inspector.

If repairs need to be done, who does them? This is a negotiable issue. Depending on the extent of repairs needed, you may simply decide to do the repairs yourself at your own cost after you become the owner. That way you have the most control over who is hired and can oversee the work quality. Alternately, you can ask the seller to have the repairs done, or ask for a reduction in purchase price (or a credit towards your closing costs), and the seller can agree or not.

Does a buyer have to purchase the house if they change their mind during the inspection period? No. You simply disapprove the inspection; no reason is required.

How to Reduce Stress

I will provide you with a sample inspection report before you have your own inspection. It is important to review it before the inspection, especially if you have never been through one before. Inspections can be overwhelming for those with a weak stomach. It is important to remember the inspector's obligation is to point out all visible deficiencies. ALL homes have deficiencies; there is no flawless home. Even new construction can have a multitude of problems if a contractor has cut corners or used inferior building materials.

You can reduce your own stress by going in with a realistic understanding of what the inspection is about. It is important to develop your own level of tolerance for maintenance and repairs and weigh all the information alongside maintenance and repair costs. All homes require ongoing maintenance costs. This is why condo associations collect homeowner's dues. A homeowner should do the same for their single-family home.

Some experts advise homeowners to expect to spend about 1% of their homes's value per year on maintenance. The inspector helps you develop a calendar of anticipated costs and your home maintenance "To Do" list.

Following the inspection the buyer sends a reply notice – it can be as simple as "inspection waived" or it can begin a series of negotiations.

escrow

The escrow company is a neutral third party responsible for preparing documents necessary to transfer clear title to the buyer, recording the mortgage and making sure funds are transferred to the seller. The escrow process begins when your earnest money is deposited and the Purchase and Sale Agreement is delivered to the escrow company, and ends with the closing of the transaction.

Traditionally buyers choose the escrow company but it is often negotiated. Real estate brokers have years of experience with escrow companies and they know which ones perform well. Because of this they often have excellent recommendations.

Escrow manages the transaction behind the scenes. They gather all the information for the selling and buying parties, review title, make contact with the lender and work closely with them to make sure the lender documents are on schedule for a signing appointment that will need to happen a few days before closing.

Escrow will send you documents in the mail; remember as your Purchase and Sale Agreement states, "time is of the essence!" Do not delay opening your mail and be sure to promptly return any forms or information they may need.

Escrow provides your settlement statement and makes it available a few days before closing. Your settlement statement (or "HUD1") is a summary of the costs of your transaction. Look it over to make sure the loan costs are the same as your Good Faith Estimate you received from your lender. Make sure that all other costs appear accurate.

Escrow will let you know the exact amount of money they will need from you to close the transaction. You can bring a cashier's check or wire transfer the money.

Helpful hint: if you are relying on stocks or other assets for the money, make sure they are liquidated well in advance.

closing

You will be visiting the escrow office to sign the closing documents (these "documents" are your loan documents"), and some mortgage brokers offer to be there with you at signing since these documents originate with them. Signing appointments are usually scheduled 2-3 days before closing and take 1-2 hours.

Helpful hint: bring your driver's license so your signatures can be notarized.

Escrow and/or your agent will call you once your transaction has been officially recorded on the day of closing. Then you get the keys for your new home!