8 STEPS TO HOMEOWNERSHIP

Buying a home requires a lot of time, money, knowledge and professional help. But, it doesn’t need to be complicated! 

A little prep work will lay the foundation for a smooth and successful home buying experience. In this step we'll review the overall home buying process in NWA and share ways to prepare yourself mentally and financially for the steps ahead. 

THE NWA WAY

Most real estate transactions in NWA follow the same basic sequence of events. 

These steps are not always intuitive, nor are they similar to how real estate transactions are handled in other cities/states. Therefore, its important to familiarize yourself with how things are done specifically in Northwest Arkansas. 

FOLLOW THE STEPS, IN ORDER

The #1 rookie mistake of first-time homebuyers is their desire to jump right into touring homes... lots and lots of homes. 

Afterall, they've scoured online listings for months, tagged their favorites, and are excited to walk through in person. 

But disappointment inevitably sets in when they discover home showings are reserved for buyers who have a pre-approval letter, have hired an agent, and have narrowed their search to approximately 5 homes. 

The homebuying process should be fun, not disappointing, and the best way to ensure a happy home buying experience is to be educated, know what to expect, and adhere to the process.

Following these steps will increase your buying power, protect you from making mistakes, and save you a bit of frustration and/or embarrassment down the road.

So, order a latte, take a deep breath, and take some time to read through this buyers guide in its entirety. Review everything, from the documents you’ll be asked to produce and sign to what you’ll bring to the closing table. 

BUILD YOUR KNOWLEDGE BASE 

Familiarize yourself with the real estate industry. 

In the midst of making one of the largest personal and financial decisions of your lifetime, you will also be learning to navigate an entirely new industry with many moving parts, like agents, brokers, lenders, appraisers, contracts and title companies, to name a few. Having an understanding of how the industry works and it's lingo ahead of time will allow you to proceed with confidence and focus on your purchase when the time is right.

Familiarize yourself with Northwest Arkansas and the NWA real estate market.

Now is also the time to get out and about. Explore the various towns and neighborhoods of NWA.

• Drive roads at different times of day to assess traffic      patterns.
• Check out home prices in various areas.
• Research school districts.

All of this will help you set priorities when searching for homes later in the process.

OUTLINE YOUR GOALS

Are you in need of a larger home for a growing family or ready to stop paying rent and start building equity?

Buying a home can be time consuming, as well as mentally, emotionally and financially stressful. Being able to refer back to your "why", your reason that makes all this hassle worthwhile, will enable you to make decisions throughout the process that coincide with what is best for you and your family. 

EVALUATE YOUR FINANCIAL SITUATION

You'll have to prove your worth, literally, before you'll be approved for a home mortgage loan. 

Your lender will evaluate your holistic financial situation and it’s possible you may need to build credit, pay off some debt, continue to save for a down payment, or build a longer work history before moving forward. The pre-approval process (detailed further in Step 2 of this guide) will let you know where you stand in the home mortgage game. Your lender will either let you know the price tag of the home they're willing to lend you money for, or let you know the financial improvements you need to make before they'll consider you worth the risk.

UNDERSTAND YOUR CONTINGENCIES 

If you need to sell your current home in order to purchase another, you may find yourself navigating the world of buying and selling a home simultaneously. While this situation can’t be helped in some cases, a contingency can negatively affect your buying power.

Therefore, before beginning the buying process, you’ll want to consider the possible effects your contingency will have on your home purchase and seek alternate options, such as a bridge loan, if they are available to you. 

Ready to get started? You've done your research, added some fancy new real estate terms to your vocab, and know what to expect from the homebuying process. 

Now it's time to get pre-approved and move from a casual online home shopper to an intentional and active home buyer! Move to step 2…

In this step we'll explain what is means to be pre-approved for a loan, outline the pre-approval process and explain why a pre-approval letter is so important. 

WHAT IS A MORTGAGE LOAN PRE-APPROVAL?

A pre-approval for a mortgage loan is usually referred to as a letter, known as the pre-approval letter. This letter is given to the homebuyer (borrower) from his/her lender. It states that the buyer has passed a preliminary financial screening and is a good candidate for a home loan. 

Additionally, the letter states the terms of the loan, the type of loan, and the dollar amount the bank is willing to lend the buyer. 

The mortgage pre-approval (also called a pre-qualification or “pre-qual”) is done “pre” (i.e. before) shopping for a home!

THE PRE-APPROVAL PROCESS

After choosing a lender, you will work with your assigned mortgage officer to get pre-approved for a home loan. 

There are many different loan options available, each with their own sets of requirements, fees, closing costs, points, and interest rates.

Lenders assess candidates on a case by case basis. Your lender will help you evaluate the most suitable mortgage programs for you. If you qualify for more than one type of loan, you will get pre-approved separately for each. 

At this stage your lender is looking at your ability to repay a loan by reviewing your personal finances in depth. You will need to provide your lender with information regarding your current employment, employment history, income, assets, debts, credit reports, credit score, and how you plan to use your new home. 

Once your lender has evaluated your financial situation, they will let you know how much they are willing to lend you (i.e. your home shopping fund). They will then provide you with a pre-approval letter to submit to a seller when you make an offer on a home. 

WHY IS BEING PRE-APPROVED SO IMPORTANT?

IT LETS YOU KNOW YOU CAN OBTAIN A HOME LOAN AND CONTINUE ON THE JOURNEY TO HOMEOWNERSHIP. You'll be wasting a lot of people's time, including your own, looking at homes when you're not in a financial position to actually buy at this time. 

IT TELLS YOU (AND YOUR AGENT) HOW MUCH HOUSE YOU CAN AFFORD. 

The pre-approval lets you know the price range of home you can search in. It's certainly not fun to look for homes under a cloud of dejection after discovering the homes you’ve been admiring are out of your budget.

THE TYPE OF LOAN YOU ARE APPROVED FOR COULD AFFECT THE LOCATION OF YOUR FUTURE HOME. For example, if your pre-approval is for a USDA RD (Rural Development) home loan then your home search will be limited to towns in NWA specified as "rural areas". Lowell, Farmington and Prairie Grove are some examples of RD approved areas.

THE TYPE OF LOAN YOU ARE APPROVED FOR COULD STIPULATE THE CONDITION OF YOUR FUTURE HOME. For example, if your pre-approval is for a RD, VA or FHA home loan, then your home search is limited to homes in "good condition". You can not purchase a fixer-upper type property with these loans. 

IT PROVIDES THE SELLER WITH PROOF OF YOUR PURCHASING POWER. The pre-approval lets sellers know you are a serious buyer. It shows sellers you are able to pay them what you are offering and the peace of mind to accept your offer with confidence.

Actually, many sellers require pre-approval letters before they allow potential buyers to view their homes. Why? Because showings are often inconvenient for sellers and they want to ensure their home is shown only to serious buyer candidates.

Understandably, it is also common for list agents and sellers to wait for a pre-approval letter before they respond to an offer. 

IT GIVES YOU AN UPPER HAND IN A SELLERS MARKET. Real estate is a game of first-come first-served and whomever can present the strongest offer first often wins. Your pre-approval letter enables you to act quickly with a strong and competitive offer as soon as your dream house comes on the market. 

COMMONLY ASKED PREAPPROVAL QUESTIONS

What happens if my request for pre-approval is denied? 

If you are not approved, or not approved for the amount you want, your lender can help you improve your holistic financial picture. 

Don't be embarrassed. It is common for buyers to discover during this process that they need to improve their credit score, save for a larger down payment, pay off some debt or build a longer work history before they can buy a home. 

Count the exercise as progress. Now you know what needs to be done to make your dream of owning a home a reality. 

Is it okay to tour homes without a pre-approval letter? 

Looking at homes before knowing your purchasing power is like going shopping without your wallet. How many store owners would allow you to take home products based on your word that you'll return with money later? 

The same is true with home buying. Not many sellers are willing to take their homes off the market based on your word that you can afford it.

Furthermore, obtaining your pre-approval letter is good buyer etiquette. The home buying process involves a lot of other people and the pre-approval letter signifies to everyone involved that you are not inappropriately taking advantage of their time and resources.

You do not need a pre-approval letter to tour open houses however. Most open houses in NWA are held on Sunday from 1-3 PM or 2-4 PM. 

What if I want to offer less than the loan amount I am pre-approved for? 

Of course, you do not have to purchase a home for the amount you are approved for. What the bank says you can afford and what you want to spend based on your personal budget may be different.

The seller only needs to be assured you can obtain financing for the amount of your offer. They do not need to know you are approved for a $200,000 loan when your offer is for $150,000.

Therefore, you should request a custom letter from your lender for the amount of your offer before you submit it to a seller. Your lender does this all the time and can get you a custom letter quickly. 

Your pre-approval letter is the first step in a multi-step mortgage approval process from your chosen lender. 

Does your financial game look good? With proof of your buying power and a firm grasp of the lending process, it's now time to find the perfect agent helper to guide you through the remaining steps. Move to step 3…

In this step we'll explain what a real estate agent is, how to interview and hire the right agent for you, and how buyer agents get paid.

A real estate agent is a licensed professional who can negotiate and arrange every element of the purchase of your home. Your agent will legally represent you and be the rock you rely upon throughout the remainder of the home buying process. Therefore, it’s important to select someone whom you can trust and feel comfortable.

And, with more than 3,500 real estate agents in Northwest Arkansas, you can be very picky when choosing your agent!

Real estate agents are independent contractors. They work for themselves, can choose which firm they work for, and move between companies at will. 

Most agents in NWA are REALTORS (real-tors). REALTORS are licensed agents who belong to the National Association of REALTORS, the largest trade group in the country. Members of this group are held to high ethical standards of practice and must adhere to the REALTOR Code of Ethics.

An agent must work under the supervision of a broker. A broker is a real estate agent who has completed specific requirements granting them the ability to start their own real estate company and hire, supervise and train agents to work under them.  

When you hire a real estate agent, you and your agent enter into a relationship known as agency. This agency relationship is governed by a set of responsibilities that you owe to one another throughout the transaction. 

WHAT TO LOOK FOR IN AN AGENT

It’s likely that a friend or two have already sent you the names of agents they love and trust. Referrals can be a great starting point for finding an agent, but before you engage them, be sure to determine if the agent is a good fit for the property you wish to purchase. 

Remember, the agency relationship created with your REALTOR puts them is a position to create legal obligations for you and have intimate knowledge of your finances, so take care with this important decision. 

Look for an agent who:

• Is familiar with your town or – even better – your      specific neighborhood, 
• Has experience helping homebuyers buy houses that are similar in style and price range to what you are looking for,
• Offers services and conducts business the way yoU desire, and
• Is professional and trustworthy.

WHY IS CHOOSING THE RIGHT AGENT SO IMPORTANT?

While many agent practices are regulated by their brokers and the AR Real Estate Commission, the types and extent of services offered to a client are determined by the agents themselves. Therefore, services and quality of services can vary from agent to agent, even within the same company.

IT IS OFTEN DIFFICULT TO KNOW AN AGENT'S EXPERIENCE FROM THIER TITLE. The real estate industry is a primarily commission based profession with individual agents competing for your work. Take the time to interview a couple agent candidates to find out more about them and the clients they serve. Do they work primarily with buyers or sellers? Have they been in the business full time for 20 years or part time for 5 years? How many buyers did they help purchase a home last year?

MOST AGENTS HAVE A SPECIFIC NICHE. Many agents focus their attention on a specific market in NWA. Some are more versed in commercial real estate and don't deal much with residential homes at all while another agent may only help buyers find luxury homes in Fayetteville. You want to make sure your agents niche is in line with the home you are looking for. 

For example, if you are looking for a lake home you will likely have a better experience with an agent who is familiar with the side of Beaver Lake you are interested in, lake properties, the market value of community vs. private boat docks, and restrictions enacted by the Arkansas Core of Engineers, etc.

THERE ARE DIFFERENT REAL ESTATE CONTRACTS FOR DIFFERENT TYPES OF PROPERTIES. Therefore, you want an agent who is familiar with the contracts needed for your specific purchase. 

As you can see, not all real estate agents are created equal in service, nor equally qualified to help you with your specific purchase. Don't settle. Take the time to find the partner you will work best with and trust. 

HOW DO AGENTS GET PAID?

The majority of agents in Northwest Arkansas are paid on a commission basis and get paid at closing when the purchase of your home is finalized.

Buyers typically do not pay real estate fees (commission)! In Northwest Arkansas, the most common commission fee on real estate transactions is 6% of a home’s sales price, which the seller pays. The sum is typically deducted from the seller’s net at closing and then split evenly between your agent (the buyer agent) and the listing agent. Therefore, as a buyer, it usually does not cost you anything to seek the protection and representation of an agent.

There are some instances where a buyer could be responsible to pay for real estate services, such as when purchasing a home listed for sale by owner, new construction properties, or when soliciting the help of multiple agents. 

Did you know that real estate agents often make a commission on referrals? Let’s say that you met an agent named Susan through a friend. She is professional and trustworthy, but she specializes in working with investors to find multi-family homes in Benton County. You’re in the middle of a corporate move and are looking for someone who specializes in new construction and suburban single-family homes in Rogers.

You can let Susan know that her expertise isn’t a perfect match for your needs and ask if she knows any agents who may be a better fit. If you work with her referral, she could still receive a nice commission on the purchase of your house.

SEAL THE DEAL

Once you’ve selected an agent, it’s important to complete the agreement in writing before getting started. To do this, your NWA agent will ask you to sign a document called an Exclusive Buyers Agency Agreement, a contract outlining the terms of agency between you and your agent’s brokerage. This document gives your agent the ability to show you homes and represent you throughout the transaction (covering their liability in everything from giving advice to writing up an offer for you).

In order to complete the agreement, you and your agent will review the following items:

• The names of all parties entering into the agreement
• The type and price point of the property you are      seeking
• The length of the agency agreement (typically 6 months)
• Real estate commission owed to the agent
• Fees for cancelling the agreement

Found the agent for you? Lucky you to have such a great agent by your side! Now it’s time to start the search for your new home. Move to step 4…

It's time to look for the perfect home that meets your lifestyle and budget. In this step we will help you determine your wants vs. your needs, the importance of setting priorities, and explore the various ways you can search available homes as a serious homebuyer. 

DETERMINE YOUR WANTS VS. NEEDS

Although your upcoming home purchase is one of the largest financial decisions you’ll make, your home choice affects more than your pocketbook. Aspects of the home you choose, such as location, type, and included amenities will directly affect elements of your day-to day-life like your commute or how often you cook vs. eat out. 

Will you be spending your Saturdays mowing and maintaining 5 acres of rural land or dodging splashes at the neighborhood pool?  

Now is the time to define what is most important to you. If you are moving with a partner and/or your family, a family meeting is in order! Sit down and get crystal clear on your top priorities together. Remember, you're agent isn't a marriage counselor :)

The average buyer will tour just 5-10 homes during their search. If you need to see more than that, then you likely haven’t set clear parameters and need to go back to clarify exactly what you’re looking for.

Ask yourself:

• What do I need in a house?
• What do I want in a house?
• What am I willing to sacrifice?
• What am I not willing to sacrifice?

THE IMPORTANCE OF SETTING PRIORITIES

IT KEEPS YOU FROM VIEWING HOMES YOU ARE NOT REALLY SERIOUS ABOUT

Home showing can present various logistical challenges for sellers. Perhaps they have to leave work early to remove their pets, spend time cleaning, or eat dinner out while you poke around their place. Throughout the buying process you want to insure you are respectful and mindful of buyer etiquette rules by not inconveniencing your agent or sellers unnecessarily. 

IT KEEPS YOU FROM MAKING EMOTIONAL DECISIONS

Let’s say you fall in love with a home that 3 other buyers love too. In fear of losing the house you submit an offer much higher than the budget you set for you and your family, making it difficult to afford your monthly house payments. Setting clear priorities and adhering to them helps prevent you from making hasty decisions you may later regret.

IT ALLOWS YOU TO CREATE A VERY SPECIFIC MLS SEACH THROUGH YOUR AGENT

Your agent has direct access to the Northwest Arkansas MLS (Multiple Listing Service) which has many more search fields than what you can search for yourself on Zillow or Realtor.com etc. 

For example, if one of your "must-haves" is a creek on your property, or a boat dock, or two-stories, your agent can create a property search for you that yields only homes that include this very specific criteria. You'll no longer have to spend hours sifting through pictures of countless listings to see if the properties have what you want.

IT HELPS YOU DETERMINE IF YOU CAN AFFORD WHAT YOU NEED

Now that you’re pre-approved and have your list of must-haves, you can evaluate if the two line up. In other words, search the inventory of homes currently on the market and determine if your list is realistic for your price point. 

If the answer is no, then you either need to reevaluate and sacrifice some of your priorities to purchase a home now, or revisit your finances and develop a new plan to purchase a home at a later time when you can afford what you need.

How to Search For Homes As a Serious Buyer

As a buyer, you’re no longer looking at properties for fun or for research purposes. You have specific criteria and want to be the first to know about new listings that hit the market so you can act quickly and place an offer on your dream home before anyone else grabs it.

To do this, you need to know how listings are distributed to the public, the benefits and restrictions to various search methods, and tips to beat “the system”.

NATIONAL AND SUBSCRIPTION FEEDS

While this is not the best way to search for homes (we'll get to why later), it is the most common way homebuyers search for homes, so we'll start here. National real estate sites, like Zillow or Realtor.com, make it easy to access listing information and set up alerts for newly available homes. These companies receive these home listings by paying for a subscription feed from the Northwest Arkansas MLS system.

The main drawback to sites with subscription feeds is timing. These sites pull feeds from the MLS at different times throughout the day. Therefore information about a home could potentially be 4, 8 or even 12 hours old before it is updated. 

This can be very frustrating in a competitive market where you want to know as soon as a new listing comes available. There were many times last summer in NWA where homes where sold before the listings even hit national feeds. Similarly, a house may be under contract but still show up as active on these sites until the feed is updated. 

Therefore, when searching national sites for homes it is best to mark your favorites and ask your agent to look these homes up on the MLS to make sure the information is accurate. 

SET UP A SEARCH THROUGH YOUR AGENT

Since you are working with an agent now, use him! Agents in NWA have direct access to the Northwest Arkansas MLS which means listing alerts set up by your agent will be instantaneous. With both you and your agent’s eyes on the market, you’ll be able to ensure you don’t miss anything – and will be prepared to jump on an opportunity when it arises.

We mentioned previously how direct access to the MLS allows agents to narrow your home search by very specific criteria, but it's also possible for them to set up multiple searches for you or make your search as broad as you like. Additionally, you can custom tailor your new listing alerts to come to you immediately, or only on certain days of the week or certain times of day. A search set up by your agent will give you access to a portal where you can see all current and past listings sent to you and mark your favorites. 

Agents are also able to access information from MLS listings that are not public like showing instructions, special list agent remarks about the property, the days on market, and attachments like the Seller's Property Disclosure or a survey they can share with you. 

OTHER WAYS TO FIND NWA PROPERTIES FOR SALE

MLS listings do have some shortcomings as there are restrictions placed on agents, such as word limits and the number and types of pictures they can use. Therefore, agents find alternative ways to market properties so you can get see home listings in a different light, often with videos and more detailed information. 

For example, you can subscribe to email newsletters and follow the social media accounts of local real estate firms and agents who showcase their listings through these methods. 

Find some homes with potential?  Time for the fun part! Let's go see some homes! Move to step 5…

BEST PRACTICES

TOP 10 BUYER ETIQUETTE RULES FOR SHOWING APPOINTMENTS

Be pre-approved for a home loan before viewing homes.

Sign an Exclusive Buyer's Agency Agreement with your agent before viewing homes.

Do not view a home just for fun. Respect the time of your agent and the seller. Do not request a showing if you are not considering a home with the intent to purchase. 

Do not view multiple homes with multiple agents. Let other agents you come into contact with know that you are already working with an agent. Looking at a home with one agent and using a different agent to write an offer could create a sticky situation where the first agent is entitled to compensation as the procuring cause of sale. 

Have YOUR agent set up all showing appointments . Your agent can open the door to any house on the MLS and can also help you handle the purchase of a home listed For Sale By Owner. 

Call YOUR agent to view a property, NOT the agent on the yard sign.

Call YOUR agent to view a property, DO NOT knock on the door.

Be on time. 

Do not go through owner belongings or sit on the furniture.

Ask permission before taking pictures or video.

THE SHOWING PROCESS

DETERMINE THE FINAL FIVE

It's time to hone in on your favorite homes, trimming your list to five or less. You can see yourself living in these homes and will seriously consider making an offer if your showing experience is positive. Walking through a home in person allows you to give the home a final thumbs up or thumbs down. 

However, pictures can be deceiving. The listing photos may be fantastic, but you should also ask yourself what's not in the photos that could be a deal breaker for you.

Take a quick drive to preview your favorite homes before scheduling showings. Get a vibe for the neighborhoods and how well the surrounding homes are maintained. Take notice of traffic noise, the commute and local amenities. Did the photographer strategically angle his camera away from something unsightly? There's no need to tour a home if it doesn't pass the drive-by. 

SET UP APPOINTMENTS

Next, let your agent know which homes you want to see. Keep the list to 2-4 homes for a full yet relaxing day of showings. It is respectful to give sellers ample notice so they can prepare. Typically, scheduling appointments one day in advance is sufficient. Vacant homes can usually be seen with very short notice. 

Your agent will check the seller showing instructions for each property and make the appointments. Showings are granted a one hour window and most buyers average 15-20 minutes per house. You know your preferred pace so if you need more, or less, time at each house let your agent know so they can schedule the day accordingly.

Agents will access the keys to a property with a Supra Box. This is an electronic box accessed with their phone. These boxes work from 8am-8pm and showings are generally scheduled between 9am-7pm. 

SHOWING DAY

Hooray! You’ve made it to showing day! As your agent opens the door to the first home on your list, remember what this part of the process is all about: experiencing what you can’t see from pictures. Try to see past the décor and get a feel for the flow, age, and details of the property. 

As you tour homes, remember that you are in someone’s home, so be very respectful and treat it as if it were your own (maybe it will be!). Many homeowners today have cameras in their homes. You should assume that you are on camera at each home you tour and keep your behavior and comments in check.

If you are seeing multiple homes it is important to stay on schedule. If you need more time at a particular property you can make a second showing appointment to return another time.

Take notes to keep the details and your thoughts about each house straight. Property specifics for multiple homes can start blending together by the end of the day. 

Additionally, jot down any questions you have about each home so your agent can inquire and follow up with you.  

Helpful items to have on hand for showing day:

• Flashlight
• Measuring tape
• Phone (for directions, camera and timer)
• Notebook/pen
• Snack pack
• Wasp spray/bug spray
• Hand sanitizer
• Toilet paper
• Umbrella 
• Printed property information (MLS) sheets
• Activities for children
• Full tank of gas :)

SECOND SHOWINGS

If you are seriously interested in a home you can request a second showing. This is a large purchase and first impressions can be deceiving, especially if you looked at several houses in one day. The purpose of the second showing is to catch anything you may have missed the first time and allows you more time in the home to better assess the condition of the property and  the age of appliances and equipment etc,  which may affect the offer you wish to make. 

Ready to make an offer? Have your found the one!  Let's start the process of making it yours. Move to step 6…

In this step we'll take a look at the parts to the residential real estate contract used by REALTORS in NWA, ways to make your offer as strong as possible, and outline the process for how offers are submitted and negotiated. 

PARTS OF A CONTRACT

If you’re unfamiliar with the real estate contract used by REALTORS in NWA, take a moment to walk through the NWA Residential Real Estate Contract now.

This is a legally binding document with a lot of moving parts. For new homebuyers there are likely unfamiliar terms and topics as well. Ask your agent for a printed copy to review. You do not want to see this contract for the first time when you are frantically writing an offer on the hood of your agent's car under a time constraint! 

LET'S BE REAL 

Even more common today is for buyers to discuss the offer they wish to make over the phone with their agent and then e-sign the document. In this case you may not even have a copy of the contract in front of you! 

Therefore, it's imperative to read through the contract now and have a very good working knowledge of it's parts. You want to know what questions your agent will be asking you and fully understand what you are signing.

AGENT DISCLAIMER

All contracts used by REALTORS in NWA are written by attorneys and legally binding. Your agent is only authorized to fill in the blanks of these forms. They are not able to make any changes to the contract, as that would be practicing law, nor can they interpret the contract for you. So, if you have any questions about the terms of the contract you need to seek legal advise. Again, something you want to do now and not when you are in the midst of a multiple offer situation.

Terms and Topics to Know

• Purchasers
• Property Description
• Purchase Price
• Method of Payment
• Agency
• Closing Costs
• Earnest Money
• Nonrefundable Deposit
• Title Work
• Survey
• Fixtures & Attached Equipment
• Contingencies 
• Home Warranty
• Inspections
• Property Disclosure
• Termite
• Lead Based Paint Disclosure
• Closing Date
• Possession
• Other
• Licensee Disclosure
• Expiration Date
• Signatures

MAKE A STRONG OFFER

FIRST, RESEARCH. 

Your agent will do some research and provide you will comps (comparative sold homes) for the home you wish to buy. These will help you determine if the house is priced correctly, eliminate appraisal concerns, and give you assurance that the purchase is a sound investment. He/she can also provide you with the seller's property disclosure, the property's listing history, POA information, knowledge of other offers on the home, and any additional information that may affect your timing and/or the amount you plan to offer.

NEXT, LOOK AT YOUR OFFER FROM THE SELLER'S POINT OF VIEW. 

The seller will evaluate your offer by looking at their net. You may be offering the seller list price but if you are asking for closing costs and a home warranty the seller will deduct these numbers from the purchase price to see how much you are really offering. 

Obviously – the strongest offer will be what the seller has the home listed for (or possibly higher in a multiple-offer situation). 

However, how strong a seller perceives an offer to be really depends on the their desires and situation. 

If you happen to know some information about the seller's desires you can use this to make your offer stronger. For example, if you know the seller wants to close quickly, then offering to close on the earliest date allowed by your lender may make your offer more attractive. 

BE SURE TO INCLUDE YOUR PRE-APPROVAL LETTER. 

Your pre-approval shows the seller that you are able to obtain financing for the amount you offered. This letter makes your offer stronger as it gives the seller a sense of added security. You can get a pre-approval for the exact amount of your offer from your lender.

Remember, especially in a hot market, that many sellers won’t even consider buyers who don’t have a pre-approval letter in hand.

KEEP YOUR EMOTIONS IN CHECK. 

Buying a home is very personal. This can be an emotional time. Try to rely upon your agent to help you muster as much mental focus as possible to keep your attention on your priorities and goals. Make sure fear of losing the home or excitement doesn’t sway you to make a decision you may regret later.

UTILIZE YOUR AGENT'S EXPERTISE. 

When making an offer, remember that it’s likely you will never meet the seller. This can make the negotiating process challenging, because it means you know very little about the person on the other side of the table.

HOW DOES THE SELLER RESPOND?

After the seller has evaluated your offer, there are three ways they can respond: 

Accept:

Were they happy with your offer, or at least happy enough? If so, the seller will sign the offer as you wrote it and you are now under contract. 

Reject:

If the terms of the offer are deemed unacceptable to the seller, or they feel you are too far apart to negotiate and come to agreement, they will reject the offer and move on to the next buyer.

Counter:

If the seller isn’t thrilled with the offer but is interested in working with you to see if you can come to agreement, they will send your agent a counter-offer. You can either accept their counter or, if you are not in agreement with the terms of the counter, submit a new offer to the seller or move on to a different property. 

Was your offer accepted? 

All parties have signed and your dream house is under contract. Now it's time to execute the terms of the contract and make it yours for good.  Move to step 7 …

In this step we'll discuss how to adhere to the timelines and terms of your contract, outline the inspection process in detail and take a look at what's happening with your loan.

WHO'S DOING WHAT?

WHAT YOU'RE DOING

The major buyer responsibilities include: 

• performing inspections.
• securing financing.
• securing a home insurance policy.

Are you selling your current home?

If you're purchasing your next-step home contingent on the sale of your current home, then you'll need to simultaneously complete the necessary seller steps for your current property during this time period. 

WHAT THE SELLER IS DOING

Throughout the pending period, the major tasks of the seller include:

• allowing inspectors, appraisers, termite companies and  surveyors, etc. access to their home.
• completing any repairs you've agreed to.
• moving out.

WHAT YOUR AGENT IS DOING

Throughout the pending period, your agent is a busy bee – s/he is:

• making sure you are sticking to the legal time frames set within the contract.
• staying in constant communication with the title company, your lender and seller's agent to ensure everything is on track. 
• dealing with problems as they arise. 
• checking on contingencies. 
• following up with earnest money checks and deposits.
• ordering home warranties and termite policies.
• providing access codes to inspectors.
• scheduling appraisals and specialty inspections. 
• completing appropriate paperwork.
• negotiating changes to the contract, if needed.
• checking on you! They want to make sure you’re doing okay and help make your move and transition as smooth as possible

ADHERE TO CONTRACT TIMELINES

Everyone on your team is charging forward to execute your contract and a lot is happening behind the scenes. Title work is being performed and your lender is actively moving forward to process your loan. Additionally, inspections, surveys and home warranties are being arranged (as per the terms of the contract).

Understand that this is a time of collaboration between you and the seller. You need to know what you agreed to, follow through and adhere to the strict timelines in the contract.

The length of this step is set by the closing date stated on your contract. For a typical contract this will be 30 to 45 days from the date the contract was signed by all parties. However, the length can vary drastically depending on how the home is financed and the terms/concessions agreed to between you and the seller.

LET'S TAKE A LOOK AT THE VARIOUS PROCESSES HAPPENING SIMUTANEOUSLY DURING THE EXECUTION PHASE OF THE CONTRACT: 

TITLE PROCESS

To legally transfer property in Arkansas a title search must be performed. Title researchers at a title company will examine available public records on the subject property to check that there are no outstanding circumstances that could endanger your ownership rights. 

INSPECTION PROCESS

Although you’ve negotiated a contract, the inspection process is a reminder that there is still another round of negotiations to go. This process opens up the door for more discussion with the seller. 

Inspection day is your opportunity to bring contractors and repairmen to the property to get quotes, bring family members for a sneak peek, do some measuring, and look at the house in great detail. This will likely be the last time you are in the house until the final walk-through.

If your contract grants you the option to inspect, you have 10 business days to do so. Many buyers choose to hire a professional licensed home inspector to do a full inspection of the home they wish to purchase. The amount of time the inspection takes and how much the inspection will cost depends on the size of the home. The average cost is $300-$400.

Even if you can not make it the entire time, it is a good idea to come at the end of the inspection so the inspector can walk you through the house and explain any findings in person. He/she will email you a comprehensive report with pictures and a full write up of their findings (usually within 24 hours). 

Based on the inspection report, you may find that you want to get some quotes for various repairs. If so, these should be done within the allotted 10 day inspection period as well. 

Following the inspection, you will submit a document known as the IRSA (Inspection Repair and Survey Addendum) to the seller with a list of items (if any) you wish the seller to fix before you are willing to purchase the home. They can either agree to your repair requests or respond to your requests with a list of items they are willing to do (if any). You will then need to determine if these terms are acceptable to you.

Inspection Process infographic goes here.

LENDING PROCESS

A typical home loan will take between 14-45 days to complete and will move through the following steps:

1. Pre-Appproval
2. Application
3. Processing
4. Underwriting
5. Closing

APPRAISAL PROCESS

The appraisal is part of the lending process. An appraisal is conducted to assure the bank that they are making a wise investment by giving you a note for the price of the home in question. 

The appraisal process will vary based on the type of loan you are requesting. The following graphics will familiarize you with what to expect from the process. 

Appraisal infographics (x2) go here.

MAKING CHANGES TO THE CONTRACT

Sometimes changes to the contract are necessary. Any changes will be made on the appropriate NWA real estate forms and signed by all parties. The two most common forms used to make changes to a contract during the execution phase are the General Addendum and the Closing Date Addendum.

BE FLEXIBLE 

In order to close on time you need to do everything you can to accommodate schedules and adhere to deadlines. However, there are some things that are simply out of your control. For instance, the underwriting process could take longer than projected, or the seller may need some extra time to make the repairs you requested. 

Remember, all parties are working hard to meet the terms of the contract. The execution of the contract will require the involvement and collaboration of multiple people from many industries. 

Are you clear to close? It's time to take the final steps to home ownership! Move to Step 8…

Today is the day! At closing you will make the purchase of your new home official. In this step we'll outline everything you need to do before, during and after closing. 

BEFORE CLOSING 

SCHEDULE A FINAL WALK-THROUGH

Prior to your closing, you will conduct a final walk-through of the property. The purpose of the final walk-through is to ensure the terms of the contract have been met. It is suggested to do this walk-though prior to the day of closing so sellers have time to complete anything found outstanding. 

At the final walk-though:

Bring a copy of your contract and IRSA with you for reference.

Look to see that any repairs agreed to on the IRSA have been completed by the seller. 

Confirm that the home is in the same condition it was when you made the offer. Remember that a home looks very different when it’s vacant and some imperfections that were previously behind furnishing may now be visible. This is normal and not considered in breach of contract.

Double check expensive items and major appliances are still working properly. 

Confirm that the items that convey with the sale are still there and all unwanted items have been removed.

REVIEW YOUR SETTLEMENT STATEMENT

You will receive a HUD-1 (Housing and Urban Development) ALTA (American Land Title Association) statement from your title company three days prior to closing. This summary will break out the expenses pertaining to the sale. You want to check to make sure that all the numbers on the form are correct.

THE DAY OF CLOSING

Your closing will take place at the title company on the day specified on your contract. The closing will be on a weekday between 8 a.m. and 5 p.m at a time set by you, your agent and your closer. 

If you can not attend the closing in person a long distance closing can be prearranged and conducted via FedEx in front of a notary, or a trusted friend can sign for you via power of attorney at the title office. 

If you and the seller used the same title company, you may close together or one right after the other. You may also close at completely different times or through different title companies. It is possible (and common) that you may never meet your seller at all.

BE SURE TO BRING:

• Your drivers license. Everyone signing needs to bring theirs too.
• A cashier’s check made out to the title company for the final amount stated on the HUD-1 form. 
• A pen to sign more papers than you can imagine. 
• Your spouse!  Even if your spouse is not on on the loan paperwork, he/she will be      required to sign at closing too.
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Buyer closings are significantly longer than seller closings. In addition to real estate and title documents you will sign all paperwork to finalize your loan. Buyer closings take approximately one hour (if you are familiar with the documents and understand what you are signing). If you wish to read through the stack of documents at the closing table it will take longer.

If you are taking possession of the house on closing day your agent will present you with the keys, garage door openers and a congratulatory hug when signing is completed! 

AFTER CLOSING

After a well deserved celebration dinner there are a couple other tasks to complete as you settle into your new home: 

• Change the locks.
• File for your Homestead Tax Credit.
• Look out for a copy of your Title Insurance Policy in the mail.
• Set up your mortgage payments.
• Update your driver's license with your new address.
• Let friends and family know your new address.
• Change your address on all online accounts and credit cards.
• Throw a housewarming party to show off your new place!

Congratulations – wishing you many happy memories in your new home!