Decision to Buy
Selling Before You Buy
Use a Real Estate Agent
Shopping for a Home
Escrow, Inspections and Appraisal
Closing the Deal
Decision To Buy
Owning your own home is part of the American dream. Whether this is your first purchase or its time to trade to a different home that better meets your needs, this decision deserves careful consideration.
Why Do You Want To Buy A Home? Are you tired of paying rent? Have you outgrown your current home – do you need more bedrooms or a home office? Would you like a larger yard, or are you tired of yard work? Would you rather live in a different neighborhood? Do you want to be closer to work, school, recreation, or family? Having a good idea of your reasons will help you choose the home that best “fits” your needs.
Has Your Income Grown? Take advantage of your new good fortune – Historically, home ownership has been a very good investment. Also, home ownership can provide a means of “forced savings”: every month, part of a fully-amortized mortgage is applied toward paying down the principal part of your loan, thus building your equity over time in addition to any market appreciation in your area.
Can You Afford To Buy A Home? Experts recommend spending between 33-40% of your income on housing. If you’re renting, you might be shocked when you add up what you’ve spent on rent over the years. Many people find the tax advantages of home ownership make it less expensive than renting! Please see our calculators to work through the rent vs. buy calculator.
Down Payment Blues? While there may be advantages to making a down payment, many loan programs today allow you to buy your home with little or no down payment…please see our financing page for more details.
Do You Need A Tax Break? You may be pleasantly surprised to discover that you could afford to spend more money each month on a larger mortgage, because the tax benefits from your mortgage can actually lower your income taxes! Please see our financing page for more details.
Now that you’ve decided to buy real estate, you may be getting excited about looking at properties. But before you go shopping, we highly recommend that you do some additional homework to help avoid disappointment and frustration later.
Start a Green File: A Green File should contain all of your important financial documents. Start by making copies of all your financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns. If you haven’t already, start saving for a down payment and extra funds for incidental home buying and closing costs (i.e., inspections, appraisals, title insurance, etc).
Check Your Credit Rating: Credit scores range between 400 and 800. 620 + is considered “good”. 680 + is considered “premium” and may possibly help get you a lower interest rate.
Below you will find the contact information for the 3 major credit reporting agencies to help you determine your credit rating. Ask your lender how to improve your credit score if you need to. Going forward, treat your credit like gold.
Equifax http://www.equifax.com (800) 685-1111
Experian http://www.experian.com (800) 392-1122
Trans Union http://www.transunion.com (800) 888-4213
Get Pre-Approved By A Lender: There are two key benefits to getting pre-approved. First, you will know how much house you can afford. Second, when you find a property you want to buy, your offer will be better positioned than someone less prepared. Your lender may want to know some of the following information:
Job and career status
Monthly debt payments
Total assets and debts
Toe The Line: Now is not a good time to change careers, move your money around, or buy big ticket items. Lenders like stability. So if you are considering any major changes, it pays to meet with a lender and ask them how to proceed before you make any changes! If you are tempted to buy a big ticket item, consider the following:
A $500 a month debt payment (like a credit card or auto loan) could lower the amount of home you can afford by about $83,000! *
* Based on a 30 year mortgage at 6% interest.
Selling Before You Buy
You may have already started shopping and dreaming about your next home. Surely you can just put your current home on the market once the offer on your dream home gets accepted, right? Actually the opposite is true!
When to Buy - When to Sell: Unless you have considerable financial resources, it could be risky to put an offer on a new home before your first home sells. In fact, you might lose your chance to buy your new home if you cannot sell your first home in time or if you do not get the sales price you expected. You might even have to make payments on both homes until the first home sells.
Selling a Home Takes Time: It might take longer than you expect to sell your first home. It can take several weeks just to get a home listed for sale. It might take another month or two to find a buyer. Then depending on the lending market and the results of home inspections it might take another month or two for the buyer to close the transaction. Remember: Sellers don’t want to wait for you to get your home sold!
Expert Advice Will Help Negotiations: Our job is to get you into the strongest negotiating position possible: As seasoned real estate agents, we handle many transactions each year. Take advantage of our experience when we share with you that sellers prefer buyers who make a “strong” purchase offer. Sellers will choose qualified buyers who are ready to close the transaction quickly and easily, over buyers who are less prepared. If you are serious about buying, let us help you prepare so you can make the strongest offer possible. Lastly, we will help you structure your offer so you are protected in case things don’t go as planned.
Worried Where You Will Live? This is a common concern when juggling a purchase with a sale. We have many ideas to help you! For example, we can negotiate a rent-back period so that you may rent your first home back from the buyer for a month or two while we help you find and buy your new home. Let us help you find the most convenient and affordable solution to minimize the moving impact on your lifestyle.
Real Estate Agents Are Valuable Assets: Agents know the market and can help you prepare your home for sale. We have helpful suggestions so that your home looks its best. We can help you budget for clean-up and any repairs that may help the home sell easily. We can help you decide which inspections should be completed prior to listing your home for sale. We know how to price homes appropriately so that your home will not be overpriced and sit on the market for a while without receiving offers. We also know that you may need us to go the extra mile to keep both your purchase and your sale transactions going smoothly. We have a good track record.
Use a Real Estate Agent
An Important Decision: While it is possible to find and buy a home without an agent, this is one of the largest purchases and most important decisions you will ever make. A home may account for a third of your monthly spending and a large part of your assets. The home purchase transaction will require making many important financial decisions, understanding complex issues and completing a lot of paperwork. So it is not only comforting but extremely efficient to have an expert help you cut through all the red tape.
Buyers & Buyer’s Agents: Buyers’ agents specialize in helping buyers! Buyers’ agents listen to what you want and then help you find your ideal home. We can notify you the instant that a home, meeting your requirements, comes on the market and we will make the appointment to get you in at the soonest possible moment. No more leaving voice-mails for agents who don’t bother to call you back. No more waiting for a Sunday Open House to see a home. No more calling on a newspaper ad only to discover that someone already put in an offer.
Buyer’s Agents are FREE! Real estate agents don’t get paid until you successfully buy your home. Agents often have a wide network of resources they can share with you, helping you select inspectors and recommending service providers such as lenders, insurance agents, landscapers and contractors. Besides, on Guam, the seller pays the agents, so why wouldn’t you want someone working for you?
Knowledge is Gold: Often we know about properties that are not yet on the market. Because real estate is all we do (sometimes 24/7!), we’re the first to know of price reductions and other important news.
Your Own Personal Expert: Think of a buyers’ agent as your expert advocate. We will share our experience, represent your best interests during negotiations with sellers, and help you understand all the decisions you need to make. We will work tirelessly for you, and our goal is to make your transaction go as smoothly as possible.
How to select the right agent:
Look for a full-time agent who has experience completing transactions similar to yours.
Talk to an agent: Is he or she familiar with the neighborhood you want to live in?
Find an agent who is tech-savvy: today’s transactions move at internet speed.
Ask how much time the agent will have for you: Successful agents are often the most efficient, and have knowledgeable office support available to answer your questions.
Ask about their credentials and education: A good agent will continually strive to improve and gain knowledge of the latest real estate trends. Only agents who are members of the National Association of Realtors can call themselves a REALTOR®.
Does the agent return your calls promptly? Time is money when attempting to buy a home.
Ask for a list of references.
Finally, a good agent will spend more time listening to you and asking you questions about what you want, rather than talking about themselves. Always pick an agent with whom you feel comfortable.
Shopping for a Home
Perhaps one of the most enjoyable stages in the process, shopping for a home is filled with dreams and possibilities. Now to just find the right one!
Time to Go Shopping: Now that you’ve done your homework, it's time to go shopping. Your checklist of the reasons why you want to buy a home will keep you focused on homes that will meet your needs. Your lender’s pre-approval letter will keep you focused on homes you can afford.
Getting to Know the Villages and Neighborhoods: You may want to drive by a number of homes to become familiar with the neighborhoods and what your money will buy. We can take you on a guided tour of homes in several areas. This gives us a chance to really understand what you like and don’t like. Or, if you’re the adventurous sort and already know the areas well, we can give you a list of suitable homes to drive by along with a map.
Selecting Homes & Making Appointments: Select the top few homes and have your real estate agent make appointments to go inside. We look at many properties every year, so we can help you weigh the features and strengths, as well as point out the drawbacks or weaknesses of each. Typically we can provide you with a printed fact sheet for each home, including pictures; this will help you keep track of the homes you’ve seen, what you liked and didn’t like. We’re happy to be your sounding board to compare and contrast your favorite homes to help you decided which home is right for you. We can also offer an opinion as to potential long term re-sale value, based on neighborhood and island trends. We make our clients aware of all the positive and negative factors regarding a property or investment and if you are still interested, then we've served you well.
Make an Offer: Use our knowledge of the market to guide your offering price. We can tell you what similar homes sold for, and we will help you write an offer that is likely to be accepted by the seller. Some homes and properties are listed at a price that may be lower or higher than the price at which it will actually sell. From our years of experience, we can help you understand the possible costs for any deferred maintenance and repairs before you decide to make an offer. We can help you select a title insurance company to ensure you can purchase “clear” title to the property and an escrow company to hold your deposit and ensure your contract terms are met before you buy. We’ll help you put in safeguards to your purchase offer, such as loan contingencies and physical inspection contingencies. Since this can be an emotional situation, it is especially important to have your real estate agent negotiate on your behalf with the seller.
Escrow, Inspections and Appraisal
During this stage of the home buying process, you will have the opportunity to learn a lot more about the property.
What Is Escrow? In a nutshell, escrow begins when your earnest money deposit and purchase offer is accepted by the seller. Escrow ends when you become the official new owner, registered in public records.
Title Company and Escrow Holder: We can help you select a title company and escrow holder (often the same company), whose job it is to act as a neutral third party which holds all instruments necessary to the sale, including funds and deed with instructions as to their use. The title company will research the complete recorded history of this property, to insure 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. You will receive a “preliminary title report” or “PTR” that will show current encumbrances and easements. For example, some properties are subject to CC&Rs (covenants, conditions and restrictions) which may limit various activities from building to parking restrictions. There may be recorded easements and encroachments, where others have limited rights to use your property. We will always explain the title report to you in detail.
How to Hold Title: How will you own the property? By yourself, or with someone else? There are at least half a dozen ways to own property, each with its own legal, estate, and tax implications, particularly with respect to selling or transferring, or disposition upon death. It is advisable to consult with an attorney or your tax advisor to be sure you select the best way to hold title.
Inspections: Once your offer is accepted by the seller, we will recommend a professional inspector to evaluate your home’s major systems. We will even set the appointment for you. Plan on attending all of your inspections and feel free to ask any question that comes to mind. During these inspections, you can learn a lot about how your new home functions as well as anything that may be wrong with it. Your agent may recommend other inspections, including but not limited to roof, air conditioning systems, property boundary survey, septic tank, pool/spa, or mold. Knowledge is gold.
Appraisal and the Loan Process: 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. The lender will often send an appraiser out to the property and you may pay a fee for this service. Appraisers are specialists in evaluating properties, based on a combination of square footage measurements, building costs, and recent sales of comparable properties, all to make sure you are not paying too much for the property. Ask for a copy of your appraisal. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
Closing the Deal
This is the culmination of the buying process. You’ve already started packing and moving. Congratulations! You are now a property owner!
Final Walk-Through Inspection: A few days before you take possession of the property, we can visit the property together one last time. This final visit ensures that the property’s condition meets your expectations compared to its condition when you made your offer. We will have a checklist for you to note any last minute details for the seller to attend to.
Home Services and Utilities: You will need to change the services and utilities into your name: We can provide you with the location of the local utilities and services providers, to put everything under your name as of the date escrow will close.
If Things Get Complicated: Sometimes everything doesn’t go according to plan. This is when you really need an experienced real estate agent. Maybe something doesn’t work in the new house, or the seller can’t move to their next home as scheduled; there are a lot of variables. We have some options to smooth out this transition as much as possible for you.
Close of Escrow: When your transaction is nearly completed, the title company will provide you with a “closing statement” that details all of the financial details of your home purchase (i.e., pro-rations on property taxes and all the transaction-related costs.) We will go over this with you to be sure it is accurate. At the last step in the buying process, the title company will have you sign the final documents, including loan documents (“mortgage”). When everything is complete, the title company will record the transaction for you at the Department of Land Management, Government of Guam, and you will become the official new owner.
Keys: We will coordinate the delivery of your keys to coincide with the recording at the Department of Land Management.
Feedback: A good agent knows there is always room for improvement, and will ask for your written feedback once you’ve had a chance to settle into your new home.
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