THE REAL ESTATE
Buying Guide
WHY WE DO REAL ESTATE
OUR SERVICES
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the home selling and estate service
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also are familiar with Puget Sound. We’ve
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you at any time to review
us
OWNER OCCUPIED
An owner-occupied property is a property
that is occupied by a person who is listed
on the property’s title.
POTENTIAL BENEFITS
A home that may have expensive
upgrades and improvements
Financing easier to obtain
More dependable transaction
closing time frame
Price generally remains stable after
contract is mutually accepted
OWNER OCCUPIED
An owner-occupied property is a property
that is occupied by a person who is listed
on the property’s title.
KEEP IN MIND
Sellers may have a strong emotional
bond with their property.
Owner-occupied homes can sometimes
be overpriced.
We may not be able to get the lowest
price but patience and flexibility to
negotiate should pay off in a fair price.
negotiation will depend on seller
motivation and our negotiation skills.
NEW CONSTRUCTION
New construction is a home built to suit a client’s specific needs or a home that
has been built but has never been occupied.
Typically you are dealing with a builder who is
very concerned about the bottom line and has
streamlined the purchase process by customizing
the sales contract and specifying the terms of
homes purchase. Newly constructed homes may
come with a one year(or more) home warranty. We
prefer to be present when you tour through the
builder’s model homes to help you understand
what truly is being offered with the base price and
what costs extra as an “upgrade.” We also want
to represent your best interests when negotiating
with the builder’s site agents for your new home.
NEW CONSTRUCTION
New construction is a home built to suit a client’s specific needs or a home that
has been built but has never been occupied.
POTENTIAL
•BENEFITS
Price generally doesn’t change after contract is
accepted, unless you add upgrades and features.
• Oftentimes, you can select personal preferences for
finishes in the pre-sale homes, along with being able
to upgrade certain items in new homes. Upgrades
generally add to the listed price.
NEW CONSTRUCTION
New construction is a home built to suit a client’s specific needs or a home that
has been built but has never been occupied.
POTENTIAL BENEFITS
A buyer’s agent present to guide
The Builder may not complete the
your
new home in the promised time frame.
home purchase negotiations
You will need to be flexible with
can
your closing date.
protect your best interests. An on-site
agent at a model home is there to
represent
the builder’s best interests.
Problems and changes can be You may be able to get a lower price
common occurrences as on a presale home. The price on a
the home is being completed home is generally
completed. at market value.
INVESTMENTS
Investments are usually bought as non-owner occupied properties by a buyer
who wants to invest in real estate to gain rental income, or to renovate the home
and re-sell it for a profit.
POTENTIAL BENEFITS
An easy way to The actual cost of an investment As the property market
diversity your property is not fully tax is more stable, investment
retirement or deductible in the year in which it Properties generate fixed
investment portfolio. is purchased. Instead, landlords returns to investors.
get back the cost of the property
through depreciation each year.
Be sure to speak with your CPA
before considering purchasing
an investment property.
INVESTMENTS
Investments are usually bought as non-owner occupied properties by a buyer
who wants to invest in real estate to gain rental income, or to renovate the home
and re-sell it for a profit.
KEEP IN MIND
As an investment buyer, clients generally will look at
01 what
return can be made on their investment (ROI).
We can help you find the investment property that will
02 meet
your goals and give you sound advice on what it may
take to
get a rental property ready for a tenant, especially if it is
03 a “fixer upper.”
Lending requirements are stricter for non-owner occupied
investment properties, so it is very important to be pre-
04 approved with a lender or have “proof of funds” for a
cash purchase, before looking for an investment
property.
We have property managers we can recommend, or
provide you with rental contract samples.
SHORT SALE
A short sale is a sale of a property in
which proceeds fall short of what the
owner owes on the mortgage. Many
lenders will agree to accept the proceeds
of a short sale. Patience is the key with a
Short Sale.
A Potential benefit is you might get a
“good deal” under market value.
SHORT SALE
KEEP IN MIND
First, the property
owner will accept The property is
The 3rd party
your offer but then sold “as is” and
neither the lienholders can
the offer and price
must be approved by Seller nor the impose
all of the lienholders lienholder will conditions on the
on the property (i.e. complete any sale beyond what
mortgage bank, repairs. is negotiated
investors, 2nd between Buyer
mortgage, IRS, etc.) and Seller on the
this can take a long original contract
time to get all parties
to agree to the offer!
and could require
that offers are
still received
while yours is in
the
process of being
approved.
SHORT SALE
KEEP IN MIND
The price the line
holder approves Only a small
is usually higher percentage
than what the of short
home was listed sales are
for and what was successful. Financing obstacles
originally agreed include potential
to in the offer. interest rate
It can take 2 to 5 months or increases during the
longer to receive a response 3rd party approval
on an offer from the waiting period.
lienholders. After waiting all
that time, there is no Another, better
guarantee that the offer can be
lienholders will approve the accepted by the
short sale price, even if you lienholder at any
offer more than the asking point in time,
price of the short sale itself. even though your
offer has been
accepted by the
Seller.
FORECLOSURES
Bank and government-owned properties -
Real Estate Owned (REO). Fannie Mae or
Freddie Mac. These properties comes back
into the bank portfolio via foreclosure. In
many cases, you may have a home
inspection completed and still cancel the
purchase if there are too many repairs.
Potential Benefits include You could get a
“good deal” under market value or under
appraised value and You are only dealing
with the bank as the seller, not several
sellers.
FORECLOSURE
KEEP IN MIND
S
NO MODIFICATIONS LOW VALUE
REO properties are Often, these
sold “as is” with properties are
the seller making trashed and anything
no repairs. of value has been
removed by the
previous owner.
Click toPROCESSING
add text COMPETITION
Response time from
They will often
the bank can take
have multiple
up to a week and
offers, yes... a
the contracts will
bidding war!
include bank
addenda.
MAINTENANCE UNPREDICTABLE
Handyman skills may Undefined surprises
be necessary. The can often take
price to purchase the place after closing
property can be just the deal.
the beginning of the
total cost to make it
livable. There may
have been deferred
maintenance.
HUD FORECLOSURES
Purchasing a HUD home is unlike purchasing any other home. The homes are
generally listed under market value which guarantees a bidding war. If you bid high and
the appraisal does not come in at value, you will need to pay the difference out of pocket.
POTENTIAL BENEFITS
EASY BIDS POSSIBLE PROFIT ONE SELLER EARLY ACCESS
No fee to bid Might get a “good Only dealing Special benefits
online and easy deal” under with the HUD as for
for your agent market value or the seller, not teachers/police
to submit the bid. under appraised several sellers. and open to
value. owner occupants
first before
investors.
HUD FORECLOSURES
They are sold “as is” with HUD making no repairs. There are additional
costs and hoops to jump through to purchase a HUD home. Purchasing a
HUD home can cost you a total of $2,000 to $3,000 or more in upfront
fees.
KEEP IN MIND
LIABILITY
Utilities must be on for the
CLIENT NEEDS home inspection, which REPAIRS
means putting them in your Many times, these properties are
name temporarily. There may trashed and require extensive
Clients successful with their bid be fees involved from the repairs. Handyman skills may be
will need to electronically sign various utility companies necessary. The purchase price is
the contract and deliver the ($100-$200) just the start of the cost of the
earnest money’s cashier’s
home
check within 48 hours ($15) HUD does not pay for seller’s
escrow fees or title insurance, Any closing extensions required
Clients may be required to pay you will have to pay for these are for two weeks (could cost
a fee to have the home de- additional fees (usually $375 up-front). De-winterizing
winterized or winterized for the around 1%) the home after the transaction
home inspection and appraisal
closes ($150)
($150 each) You will need to be present
when the utilities are turned You do not get the key to the
on so any damage can be home when it closes, you will
mitigated, though clients are only be given access to the
responsible for any damage home, and you will need to re-
to the home caused by the key or replace the lock ($75-
Utilities $150)
THE FIRST STEP TO PUCHASING
Getting your mortgage pre-approval is as easy as 1...2...3...
REALLY!
One 15 minute phone call and it is done.
01 The lender generates a credit
report from the Credit Bureaus
The lender verifies your
02 employment and bank accounts
The information is then
03 forwarded to their underwriter
(many times this is automated)
for pre-approval
KEY BENEFITS TO
A PRE-APPROVAL
Know your budget - eliminating wasted time
looking at homes that are outside your price
range.
Get the best financing (i.e. lowest interest
rate, lowest down payment and lowest
monthly payment) which will allow you to
get the most house for your money.
You can make a stronger offer. You get the
power of immediate action. You can beat
out other buyers, and you can negotiate the
lowest price and best terms.
WARNING SIGNS
Look out for these when shopping for a loan
Lenders who solicit
you through e-mail, Offers that sound
and will not quote “too good to be
actual rates, or true,” probably
insist you are are!
already
“pre-qualified” for a
loan
Lenders who won’t
quote you a specific Out of state lenders,
interest rate (at least lenders who will not
ball park), or who are give you their cell
vague about their phone, and
service and costs. eLenders.
YOUR COST
DOWN PAYMENT
How much do you have set aside? There is down
payment assistance programs for qualified
borrowers. Rule of thumb is 3.5% of the purchase
price for FHA mortgages, 3% to 20% for
Conventional mortgages, 0% for VA and USDA
mortgages.
APPRAISAL
An appraisal of a property typically costs between
$500-$1000. Your lender has an impartial third
party appraise to verify its value. If you pay cash to
purchase a property, we recommend you order an
appraisal
EARNEST MONEY
In Washington at least 1% of the sales price is
customary. It will need to be deposited into the
escrow trust account within three business days of
the seller accepting your offer. The money is
credited to you at closing as a portion of your
closing costs or down payment. Earnest money can
be refundable based on provisions in the purchase
contract.
YOUR COST
CLOSING INSPECTION
COSTS
Consist of escrow and title You will have the option of
fees, lender charges, hiring an inspector. We we
prepaid interest, taxes and have a list of inspectors.
homeowners’ hazard Depending on how large the
insurance. Lender closing home or property is and its
costs can vary from 2% to age, the inspection cost will
5% of the purchase vary. Inspections typically
amount, depending on the cost approximately $400-600
loan program you are for homes up to 3,000
using. From the lender, square feet, $350+ for
you should get a written condominiums. Payment is
estimate breaking down required at the time of the
costs involved with the inspection. Mold, lead,
loan. The costs can be asbestos, sewer scopes and
paid at closing, or some other tests need to be
costs can be financed. We ordered ahead of time, and
can ask the seller to pay there is generally an extra
for part or all of the closing charge for each of these
costs, but in some tests ($60-300).
situations, it is not
possible. Be prepared for
the seller to counter your
proposal.
COMMISSIONS
The Seller pays!
STEP-BY-STEP STE
P
Real Estate Property Buying #1
KNOW YOUR OPTIONS
• Pay cash
• Conventional Financing with 3-10% or more down.
• Government Backed Programs FHA 3.5% down, VA 0%
down
• Special Programs such as 100% USDA, Teacher or Doctor
Programs, etc...
THE REAL ESTATE
PROPERTY SEARCH
Start by deciding which areas
interest you and what property
STEP-BY-STEP type. I can help you match your
needs to the right property and
Real Estate Property Buying area.
STE STE
P P
#2 #3
BEGIN LOAN APPROVAL
PROCESS
Meet with a lender to determine how much
property you can afford. Obtain pre-approval
for the loan amount you need. This will
improve your negotiating position with the
property sellers.
INSPECTIONS,
REPAIRS,
INSURANCE, ETC.
Inspection periods usually last 5-10
days. Inspections are performed by
a Licensed Home Inspector of your
choice to help you understand the
condition of the property. Contract UNDER CONTRACT
details such as repairs are further After mutual acceptance of the
negotiated. During this time you’ll Purchase and Sale Agreement by
need to arrange insurance for your you and the Seller, escrow will be
new home. Title Insurance will opened on the property and your
provide a Commitment for Title “earnest money” will be deposited
Insurance for you to review. with the escrow company.
STE STE STE
P P P
#6 #5 #4
MAKE AN OFFER
When we find the right property, we will
review market conditions and work with
you to present a competitive offer. I will
explain all documentation and ensure the
terms are in your best interest. The
process may go back and forth a few
times between you and the Seller and
may require inspections prior to offer
GO TO CLOSING
When you sign your closing documents, you will need
to bring a picture ID and a certified check if you’re
STE making a down payment or wire the money to
P escrow. Possession is typically not given until after
the transaction has recorded at the county recorder’s
#7 office, which transfers ownership. This is typically
done by 9:00PM on the closing day. I’ll meet you after
this to give you keys to your new
CONSULTING SERVICE
MY COMMITMENT TO YOU
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HOW I HAVE YOU COVERED
[Link]
[Link]
rachelle@[Link]
(206) 886-3986
YOUR PREMIER
DESIGNATED
BROKER
A business and industry leader,
Rachelle was the President Elect for
South King County WCR in 2014,
currently participates on the Data Use
Secure the Negotiate the Ensure a great
Task Force with the NWMLS, and is a
best financing. lowest price. buying
NWIBA Board Member. Rachelle gets
her initiative and zest for life from her experience
grandma who is “feisty, yet
hardworking." This same zeal drives
Rachelle’s passion for achievement
and inspires others.