Buyer's Guide

Buyer's Guide Deciding to Buy a Home

Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.

Why Do You Want To Buy?

• Are you tired of paying rent?
• Have you decided to pay your own mortgage and not your landlord’s?
• Have you outgrown your current home?
• Are you looking for an investment portfolio?
• Are you looking for a rental property?
• Are you looking for a vacation home?
• Would you like a larger yard?
• Would you rather live in a different area?
• Do you want to shorten your commute?

Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown?

Property ownership is an excellent investment, whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.

Are You Planning for the Future?

Take a look at our Give Your Kids a Chance – A House for Every Child program to learn how an investment property can help pay for college!

Before you start shopping for your property, it is a good idea to be prepared.

Build Your Personal File

Your file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:

• Financial statements
• Bank accounts
• Investments
• Credit cards
• Auto loans
• Recent pay stubs
• Tax returns for two years
• Copies of leases for investment properties
• 401K statements, life insurance, stocks, bonds, and mutual account information
• Any other information you believe you may need to share

Check Your Credit Rating

Your credit score will have a huge impact on what type of property you can buy and at what price. When you first meet with a lender, they will check your credit rating so that they can determine what you can afford. The lender will research your credit ratings from the three credit reporting agencies Equifax, Experian, and Trans Union. We will be happy to recommend experienced, knowledgeable lenders in the residential, construction, commercial, and investment real estate fields.

Be Careful With Your Finances and Choices

Now is not a good time to make sudden career changes, large purchases, or life changes. You want to approach your property purchase from a position of financial stability. Once in the process, changes to employment, marital status, and financial commitments can derail a loan in progress.

Once the above preparations are out of the way, it is time to find the right property for you.

Take A Drive

Get to know the neighborhoods, complexes, or subdivisions that interest you. Drive around and get a feel for what it would be like to own a property in the area. Start getting a sense of the properties available in those areas. If you see a sign or open house, call us! We can get you all the information on those properties.

Narrow Your Search

Select a few properties that interest you the most and have us, as your real estate agent, make appointments to visit them.

Time To Buy

Once you have picked out the property you want to purchase, we can help you make an offer that will be appealing to the seller. A good agent will investigate the potential costs and expenses associated with the new property. An agent can also help you draft your offer in a way that gives you the advantage over other offers.

The Process, Step-By-Step

The Initial Agreement and Deposit

A purchase and sale contract is a legal agreement between a potential purchaser and the property’s seller.
Some important tips to keep in mind to streamline the process:

• The state of Vermont requires all contracts to be in writing. Verbal agreements, including counter-offers and addendums, will be converted to written agreements to be signed by both parties. We will assist you in all the paperwork for your purchase and make sure that you have copies of everything.
• Stick to the schedule. Now that you have chosen your offer, you and the seller will need to be aware of all timelines that mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process, our team will keep you constantly updated, so you will always be prepared for the next step.

Your Attorney

Your attorney will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions that limit various activities, such as building or parking restrictions. There may be recorded easements and encroachments that limit the rights to use your property.

How to Hold Title

You will want to consult with your attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate, and tax implications, especially when selling or upon the death of the title holder.

Inspections

Once your offer is accepted by the seller, now is the time to do the inspections agreed upon in the contract. Whether that is having a licensed property inspector inspect the property or having other inspectors who specialize in a specific area (eg. roof, HVAC, structure). The seller will also be working through the inspections you asked them to do in the contract, and will provide an invoice to you.

Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).
   
3. They may cancel due to an unsatisfactory inspection.

Appraisal and Lending

It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will typically be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm that their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. As you approach closing, double-check with your lender to be sure they have all the necessary paperwork and documents from you.

Associations and Resale Certificates

If the property that you are purchasing is part of an association or conditional upon an association approval, the State Resale Certificate will include legal documents of how the association operates. It will outline the rules and regulations, along with providing meeting minutes and financials. You will receive it within 10 days and have 5 days to cancel. If you need legal clarity, your attorney can assist.

Property Insurance

If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners' insurance by shopping around for insurance. You can also save money with these tips.

• Consider a security system
• Find out where the closest fire station is
  

We will be happy to recommend experienced, knowledgeable insurance agents for every property type.

Closing Day

If you have come this far, then this means that it is almost time for a congratulations, but not yet. Do not forget to tie up these loose ends:

• Final Walk-Through: More of a formality than anything else, the final walk-through takes place a day before or the day of the closing. You will visit the property to check to see if the property is clear of occupants and their belongings, that everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.
  
• Home Services and Utilities: Before closing, we will provide a list of useful numbers for the activation of home services and utilities to make for a smooth transition on closing day.
• Be Prepared: We are ready to assist you should an unforeseen glitch pop up, even at this last stage. Something at the property breaks down, or some other minor detail – no need to worry. We have encountered these problems before, so we know how to handle them efficiently and in a stress-free manner.
• Closing: The closing agent will furnish all parties involved with a settlement statement, which summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as well as the closing agent, certifying its accuracy. If you are obtaining financing, you will have to sign all pertinent documentation required by the lending institution. If you are unable to attend the scheduled closing, arrangements can be made depending on the circumstances and the notice that we receive. If you are bringing funds to the transaction, you can elect to either have the funds wired electronically into the closing agent’s escrow account, or bring a certified bank check or have funds available as indicated by your lender and closing attorney to the closing in the amount specified on the settlement statement. The seller should arrange to have all property keys and any other important information for you at the closing so that you may receive these items at this time.