OK, Mike - I'm completely new to the home-buying process.  What should I expect?

I get this question a lot, so I figured I'd give you a somewhat brief overview of the home-buying process (I tried to touch on each aspect quickly, so this is not an exhaustive/complete summary of the process, but it should provide a general synopsis). 

I've broken the process into 7 simple steps:

1 - Get Pre-approved

Getting pre-approved involves talking to a lender to determine how much you can comfortably afford as it relates to your new home purchase. This is a free service that most lenders provide and can be done over the phone or through the internet. My advice…talk to a local lender over the phone vs. contacting an on-line lender (some of these will pre-qualify you for far more than you can actually afford). The whole process should only take you 15 minutes and can save you lots of time/effort by keeping you from looking at homes that you can’t afford. They will be able to give you a good idea of how much your monthly payment will be and will also examine your credit to determine if there are things you can do to improve your credit score in preparation of you buying your home.

2 – Contact an Agent and Get Your MLS Search Started

If you’re serious about buying a home at some point, you need to use an agent (and no, I’m not just saying that because I’m an agent myself). Here’s the one thing that most buyers just don’t know…In Georgia, you can use an agent to help you as a buyer - and you never have to pay them a dime. If you don’t already know, only sellers pay Realtors when a home is sold, and they do so from the proceeds of the sale of their home. If a seller has listed his home with another Realtor, they have already agreed to pay a percentage of their proceeds from the sale of their home to their Realtor and the Realtor that represents the buyer for their home. Therefore, the seller’s agent works for the seller to try to help them get the most for their home…and the buyer’s agent works with the buyer to try and help them get the home for as little as possible. In the end, the seller pays both agents and the buyer has to pay nothing. So, whether you choose to use me or another agent, please use someone for your own benefit. I see buyers try to “go it alone” and just get completely taken advantage of. Hey, you wouldn’t perform heart surgery on yourself, would you? Would you represent yourself in court if you were part of a lawsuit? So why would you try to buy the most expensive thing you’ll ever buy without the help of a trained professional? Remember, the seller is going to pay a pre-determined commission (a percentage of the sale price of the home) to the agent(s) involved – so if you don’t use an agent to represent you, then the seller’s agent will just get the whole commission – all for only helping their seller and not helping you at all! A seller’s agent CAN’T help you as a buyer – they HAVE to only help their seller get the most they can for their home. If they help you at all, they’ll be breaking the Georgia Real Estate License Law, so while they might be REALLY, REALLY nice to you…it’s because they know they’re taking advantage of you (and getting their seller a great deal) and they’ll be getting paid double for it! So, now you contact me and say, “Mike, I’d like to buy a home.” After I ask you how much you’ve been pre-approved for, I’ll set up an account for you through the MLS (Multiple Listing Service) so that it sets up a personalized webpage for you and e-mails you everything that’s currently listed which meets your criteria (minimum number of bedrooms, minimum number of bathrooms, lot size, location, etc.). Then, it will e-mail you the moment any new homes are added that meet your criteria and add them to your webpage. You will find out about new listings even before most agents find out about them! You’ll be able to save any listings you’re interested in to your “Favorites” folder. You will also be able to make notes directly on each listing that I will be able to see – such as “Mike, I’d like more information on this home” or “Mike, I’d like to go see this home with you tomorrow afternoon.”

3 – Get a “Buyer's Brokerage” with an Agent

In Georgia, in order for an agent to actually represent a buyer (or seller, for that matter), the agent and the buyer have to enter into a written agreement called an “Exclusive Buyer’s Brokerage Agreement” (similarly, in order for a seller to use an agent to sell their home, they have to sign something called an “Exclusive Seller Listing Agreement.”) This is a written agreement that is issued from the Georgia Association of Realtors and is used state-wide. It allows an agent to act on behalf of the buyer. From the buyer’s perspective, it also forbids the agent to do anything but try and help the buyer get the best possible deal on the best possible house/property. In order for an agent such as myself to give any professional advice to or write any contracts for the buyer, this form must first be signed. Some buyers are hesitant to “sign” with an agent because they fear that they will be “stuck” with the agent until the end of time and worry that they won’t be able to break their “contract” with the agent if they later discover that the agent isn’t a very good worker, isn’t knowledgeable, isn’t dependable, etc. – well, here’s the great news (and it’s the news that many agents will never, never tell you)…you [as a buyer or seller] can opt out of any brokerage agreement with an agent at any time. All you have to do is to write a letter to that agent’s boss (broker) and tell them that you’d like to terminate your brokerage agreement with that agent. By Georgia Real Estate Law, that broker will have to immediately terminate your “contract” with the agent. You don’t even have to give them a valid reason. I’ve heard people say, “Why should I sign a brokerage agreement with an agent when there are some agents that will show me 100 houses and not make me sign anything?” My answer: If you find an agent that will take the time to go above and beyond for you without asking you to sign an agreement that allows them to be your agent, I would say that you’ve found an agent that is either very inexperienced (so they’re scared to ask you to sign the brokerage agreement) or has been unsuccessful as an agent and is so desperate to “close a deal” that they are willing to risk driving you around for a month or two with the hope that you’ll end up using them as an agent. Remember, by Georgia Real Estate Law, an agent can’t give you any professional advice or information without a signed buyer’s brokerage agreement. Also, remember that before an agent can help you write an offer on a house, you must sign a buyer’s brokerage agreement with them, so you’re going to have to eventually “sign” with them anyway. Do you think that a successful agent would be willing to invest a lot of time, effort, and expense in you without any assurance that you will use them in your real estate purchase? The answer is “no.” Once you’ve signed the buyer’s brokerage agreement, the floodgates of real estate information will now open between you and your real estate professional. I will now be able to give you professional advice/strategy/etc. on your real estate purchase. I’ll be able to show you the prices that homes in a particular subdivision or area have been selling for, tell you how long a home(s) has been on the market, etc. Then, a little later on in the process, once you become interested in a particular house, I’ll be able to provide you with items such as the plat, the seller’s property disclosure, the septic survey (if applicable), the covenants for the subdivision (if applicable), the comparable sales in the neighborhood/area, and provide you with all the information regarding the history of the home(s) you’re interested in (such as what the sellers paid for it, what they borrowed against it, how long it’s been on the market, how many times it’s been on the market, how much the sellers have reduced the price, etc.) I will investigate every possible aspect of the home/neighborhood/area and we’ll be able to come up with a “game plan” on how to get you the best possible deal on your new home.

4 - Get appointments and go view homes

Now that I’ve gotten your MLS account started which has allowed you to preview some homes on-line and we’ve entered into a buyer’s brokerage agreement, we can now start getting appointments to go view homes. You’ll be able to call/e-mail me and let me know which homes you’d like to go see. Then I will look up each home on the MLS service and call the listing agent to schedule an appointment for us. Simply by having me call the listing agent, you may benefit. Some listing agents will inadvertently or unwisely reveal too much information over the phone which may benefit you as a buyer. For example, I’ve called agents to schedule an appointment to see a home and the agents have said, “Yes, please bring me an offer on that house! My seller is desperate to sell and will get foreclosed on soon if they don’t sell!” Or, “My seller’s husband just passed away, so she really has to sell that house because she can’t afford it anymore.” Or, “I’ve tried to tell my seller that their house is really overpriced, but they’ve told me that they’ll take much less than what the home is listed for.” Or, “My sellers are getting transferred out-of-state, so they’ve GOT to sell this house fast! Just make us an offer and I guarantee you they’ll probably take it!” This, needless to say, is not information an agent would tell a prospective buyer over the phone. Then, I will map out the homes and determine the best sequence of appointments so that we don’t waste any valuable time back-tracking from one home to another.

5 - Identify favorite(s), Research, Make an offer

Once you’ve viewed some homes and think you’re ready to make an offer on your “favorite,” I will investigate all aspects of your favorite home(s) and we will use every bit of information we can against the seller in order to get you the best possible deal. I will also explain the Purchase and Sale Agreement to you (which is the document that we will use to make our offer on the house – it’s often informally called a “contract”). I’ll explain all the aspects of the contract such as the earnest money, closing costs, due diligence period, etc. At this point, we will also work closely with a lender(s) to make sure we optimize each financial aspect of your real estate purchase. This is arguably the most important/involved part of the home-buying process, and is the step that makes it critical for you to work with an agent that has “been through the fire” many times before. Need I remind you – you’re buying a home that costs hundreds of thousands of dollars – you need someone who will take care of you and take care of you well.

6 - Due diligence period

A part of the Purchase and Sale Agreement is called the Due Diligence Period. After we agree on terms with a seller, we enter the Due Diligence Period (also sometimes referred to as the Inspection Period.) This is a period of time that’s negotiated with the seller (generally 10-21 days) which allows us to do any inspections we want to do on the property. We can investigate any aspect of the property (the neighborhood covenants, the property lines, the septic system, the water, radon, mold, lead-based paint, termites, pests, every single aspect of the house…typically performed by a licensed, certified home inspector, etc.). Our goal is to find as many things wrong with the house so that we can either get the seller pay to have them fixed or have the seller give us a monetary allowance so that you can perform the repairs after purchasing the house. Again, this is a critical part of the overall process. If the home is a new construction, we will simply compile our list of “defects” and present it to the builder. The builder will then be responsible for correcting/repairing each defect to our satisfaction. The great thing about the due diligence period is that if no agreement can be reached on the repairs/allowances, then you’ll be able to walk away from the offer you made on the home and will be free to pursue another property.

7 – From the Due Diligence Period to the Actual Closing

Assuming all parties can agree on the items that arise from the due diligence period, and assuming that all things go well with the financing portion of the contract (unless you have cash to pay for the home and are not going to get a mortgage), I will oversee the process of providing the closing attorney we selected with all the necessary information they require to oversee the transfer of ownership of the home from the seller to you. This is when we are in the “home stretch” the overall process. We’ll start the process of getting the utilities (water, electricity, garbage, gas, TV, phone, internet, etc.) set up and finalize all aspects of your new home purchase. This is just about the time to start getting excited!

Again, this is not meant to be a complete description of the overall process – only enough to let you get a rough idea of what to expect. If you should have any questions at all about any part of the process, please let me know and I’ll be happy to explain in further detail.

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