The Home Purchase Process

Before we take an in-depth look at the purchase process, here are some up-to-the-minute numbers provided by Arlene Kraushaar, local lending agent with Prospect Mortgage, who reports some good news on housing.

“Existing home sales for December were reported at $5.2M, much better than the $4.8M expected.  Based on the sales pace, the inventory of unsold existing homes fell to an 8.1 month level -- well below November's 9.5 month reading and the lowest inventory level in almost a year. 

"The jump in the sales is likely partly attributed to the recent rise in rates, which ultimately got people off the fence.  Remind clients and referral partners that the glowing opportunity in housing still exists and interest rates are still amazing by historical standards.” 

Pre-qualify for a loan

Being pre-qualified for a loan determines how much house you can afford. It also allows you to move more swiftly when you find the right house, especially when you aren't the only interested buyer.

"Think of 2008 as the shock and awe part of this cycle," said local lender Hunt Conrad, also of Prospect Mortgage. "Nobody could get a grip on what was happening as values dropped and the market changed. 2009 was the year of change and more consistency in guidelines. 

"Late 2010 and 2011 are bringing the new normal. The word is out that lenders want a full in depth accounting of clients assets and nobody is immune." 

Use a Realtor

A Realtor -- a registered member of the National Association of Realtors -- is legally responsible for representing the buyer's interest in a real estate transaction. Generally, the buyer agent is compensated by the seller at the time you purchase a new home. They will be an area expert with valuable knowledge. 

Rate the houses you tour

After touring each home, write down what you liked and didn't like. “Get to know the market and be ready to decide quickly," said Michael Laird of in Healdsburg (formerly Prudential). Although homes are on the market longer, some are moving fast.

“A huge 4-bedroom, 3-bath with updated kitchen," he said, "brand new carpeting, fresh interior paint, dual pane windows, fireplace in family room, 3-bay, 6 car 1620 sq. ft. garage, beautiful in-ground pool and spa just went on the market for $570,000 and was in contract in 4 days.”

Features that help or hurt resale value

In some areas, a swimming pool actually detracts from a home's value and makes the home harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value. Your realtor can point out features that hurt, as well as those which help, resale value. 

The Art of Negotiating

Everything is negotiable when buying a house. For some reason, most buyers either don’t believe it or don’t like it. Here’s a partial list of what’s negotiable when you buy a home:

• Price, financing, closing costs
• Occupancy (when do you want to move in, or do you?) 
• Painting and repairs
• Fixtures and wall coverings (do the drapes stay or go?)
• Furniture (will the seller throw in certain pieces?)
• Prepaid taxes and insurance. 

How you negotiate determines whether you get the home of your dreams -- or whether those dreams end up being a nightmare. Ultimately, how you fare when buying a home is going to be a direct result of your knowledge. The more you know, the better position you’ll be in to negotiate. Use a Realtor for this. 

Role of the Title Company

Purchasing your home is an important decision. But how does one know that the property they purchased has a clear title? Because unknown problems can be hidden in the history of a property's title, homeowners pay for title insurance.

Title insurance is an insurance policy that guarantees the property title is free from the problems of hidden liens and claims. Public records for the property are searched to find problems in the title's ownership and history.

The fee for title insurance is usually included in the itemization of closing costs from the lender and is a one-time fee. Locally, Fidelity Title provides good customer service in my experience.

Put It In Writing

Put your negotiations in writing. Don’t reveal your strategy, and don’t make oral offers. You want to buy the house, but you don't want to hand over your money until you’re sure the seller is legally capable of conveying a good title and meeting other conditions. The seller, in turn, doesn't want to deliver the deed until you've paid for the property.

Now what? You present the seller with a written contract setting out the commitments and promises that you and the seller need to agree on and fulfill to make the sale. A well-drawn contract should protect all parties. 

There is a fairly complete list of Real Estate Offices and Realtors available here on Patch.com. To learn more about Realtors please check my past column “Meet the Realtors.” 

 Next week there will be useful information on helping mature adults in real estate.