How to purchase a home in Atlanta Georgia
Four or five years ago this would have been an easy question to answer for a Realtor; even a novice Realtor. Today, it is more difficult to answer this question. Why? Today we have three basic categories of houses to purchase, with a fourth on its way back. What are they? Regular sales, short sales, foreclosures and the rebounding new home market. Let’s discuss each one of these a little.
First, we have the regular sales. Believe it or not, two thirds of the homes being marketed are regular homes for sale. As a Buyer, these homes are the best home to purchase. The distressed properties have caused the values to go down on all homes, not just the distressed properties. The issue we are dealing with now is the appraisal. Oh! I forgot about the appraisal. Most Buyers I work with have to get a loan from a bank. The bank will require an appraisal. With all the distressed properties that have sold in the last two and a half years, the banks have put more requirements on the appraisals. Here are some examples of what the appraisers have to use in the research: Houses within the same neighborhood, houses within one mile of the subject property, houses that sold within the last three months, etc. Please understand that there are additional requirements the banks may impose on the appraiser.
Second, we have the short sales. Very simple, the sellers and buyers are asking the banks to take less for the property than what is owed. Georgia is a non-judicial foreclosure state so it is easier for the banks to foreclosure on a property. I will ask you to read my blog on short sales to get the full picture.
Third, we have foreclosures. These are the properties that have completely foreclosed. Either the banks, Freddie Mac, Fannie Mae or HUD are selling these properties. I have found a few “diamonds in the rough” for a few of my clients, but they are far, and few between. The biggest thing that concerns me with foreclosures is the condition: Have the heating and air conditioning systems been turned off or abused for the last year and a half while the property is being foreclosed on? Please go to my HUD blog for a few more details.
Lastly, we have new construction homes. I’ve noticed this spring and summer that there have been some new homes being built. With a good builder, I would surely show my clients these homes. The obvious concern would be the quality of construction and if the builder is in good standings with their lender. I would hate to be half way through the construction of my new home and have the builder go bankrupt. Be careful!
I’m not trying to paint a picture of doom and gloom! I’m trying to protect you. If you are reading this blog, you are trying to educate yourself on the does and don’ts of buying a home. I comment you for your efforts!
Here are some basic pointers that every buyer should follow:
1. Fine a Realtor with experience in the area you are looking in. See how long the agent has been in business, if they have their own web site (not their companies?), and if they are in tune to your needs.
2. Fine a reliable lender. In most cases the agent you select will have a history with several lenders. I strongly recommend you take their advice and use a lender they know. Otherwise, your new agent will not have any pull with the other lenders.
3. Know the estimated amount of money needed to close the transaction. Your lender and agent should be able to estimate the amount needed. The two major items will be your down payment amount and the cost for closing cost. Depending upon how you structure the offer, you may want to negotiate the closing cost.
4. Risk factory money. Rarely talked about, even with real estate agents! Once you are under contract to purchase a home, there are expenses that will not be reimbursed back to you: Home inspections, termite inspections, the appraisal, and if you pass your due diligence period, you’ll lose your earnest money.
5. Start the home search. I like to send my clients a ton of properties within their criteria and have them email me the mls numbers of the ones they like. Note: The key here is to protect my clients and help them purchase the home they want, not what I want. Then, I will set up an itinerary and make the appointments to see the properties my clients have requested to see.
6. What not to purchase. Here is where the “protect your client” phase comes into play. Here are my favorite issues to protect my clients against: Steep lots or driveways, power lines in the back yard, poor construction and tired or run down properties. There are others I’d mention, but that would be giving away my secrets!!!
7. After finding the right home, submit the offer. Here is where the rubber hits the road. As a representative of my client, it’s important to know how to negotiate. I’ve need negotiating contracts, some much larger that real estate, for over 28 years. I will do a complete market analysis of the property so I will have a better idea of the appraised value. Most of my clients will get a loan from a bank. The banks will ask for an appraisal. Why let my clients spend time and money on a property that will not appraise? Yet, I see agents do this all the time… Makes me wonder!
8. Get the accepted contract in writing. Please… and I will restate this. Please make sure everything you do is in writing, especially the initial offer. You may go back and forth with some easy verbal changes. But, when you have completed the negotiations, make sure you have everything finalized – in writing!
9. Get the contract to your lender and closing attorney as soon as possible. In your contract, you should have requested a due diligence period to get your inspections and financial items in order. I forward the contracts for my clients to their lender and closing attorney as soon as possible so they can do their jobs.
10. Get your due diligence items done. Now is the time to get your inspections completed. Get your financial documents to the lender immediately. Get a survey so you will know if there are any encumbrances on the property. (Talk with your agent about this one).
11. Shop around for the right home owner’s insurance policy. If you have car insurance or purchasing another house, I’d get a quote from my current insurance company. It’s always a good idea to shop around. Once you have decided on the company, get the insurance policy to your lender. They will need it for the underwriters.
12. Prior to closing, make sure you have the correct amount of funds to close. Your lender should be able to get very close to the amount of money you need to closing. Most, if not all, closing attorneys will require a cashier’s check from your bank or have your bank wire the funds to the closing attorney’s bank account. Some clients don’t feel comfortable with this, but this is the new way of transferring money.
13. Do a final walk through of the property prior to the closing. Over 12 years of being a Realtor, I’ve never missed doing a walk through. Anything could have happened to the house between the inspection and closing date. Though I’ve only had two issues on a walk through, one of them was a deal killer. Better safe than sorry!
14. The closing. The three documents that are most important at a closing are: the settlement statement, the lender’s promissory note and the warranty deed. All the other documents are standard and everyone signs the same thing.
I hope you have enjoyed my notes on how to purchase a home. I support the following areas: Atlanta, Marietta, Kennesaw, Acworth, Powder Springs, Smyrna, Dallas, Hiram, Woodstock, Canton, Roswell and Alpharetta. Please call me anytime! I’d be glad to discuss my favorite hobby – real estate! Go to my web site at: http://www.clearsummitrealty.com/ for a free search of homes in Atlanta.