Home Buyer Guide – the Ultimate Playbook

Buyers need to make big decisions in a very short amount of time.  Being prepared and understanding the process will save you money, time, and stress.  Review this Home Buyer Guide and become a rock star home buyer! Here is the Table of Contents of what will be covered:

PREPARING FOR YOUR HOME PURCHASE

• Get a REALTOR®
• FAQs – working with your broker
• Financing your Home Purchase
• FAQs – getting pre-approved
• Costs to Expect when Buying a Home
• Best Online Sites to Search for a Home
• Best Online Tools for Home Research
• How to Tour Homes (During COVID)

MAKING AN OFFER AND GETTING UNDER CONTRACT

• Making Your Offer Irresistible
• Love Letters to Sellers
• What are Contingencies?
• Home Inspections
• What You Didn’t Know About Appraisals

CLOSING YOUR REAL ESTATE TRANSACTION

• Countdown to your Closing Date
• Signing your Closing Papers is NOT when you get the Keys

Get a REALTOR®

Real estate has changed and so has the role of the REALTOR®.  As a REALTOR®, I’m no longer the gatekeeper of information and listings. Gone are the days where new listings were only publicized to real estate professionals.

Buyers today search online for homes and see photos, virtual tours, maps, school zones, street views, etc. But with this information overload comes more questions and confusion.  This is where I come in. 

My role now is seated firmly as a guide and an interpreter of this information and data into practical knowledge as it applies to you.

The Consultation – getting to understand your home-finding needs and wants is a priority for me so I can help you hone in on that perfect home.

Reviewing Properties – I have access to listing broker notes and uploaded documents to listings that can help discover anything that would be red flags or material facts that may be deal-breakers for you.  I will set up the showing appointments with the sellers.

Valuation Analysis – For any property that you are interested in, I’ll prepare a market analysis for you and discuss the current market conditions.  My goal is for you to feel informed and empowered to make a smart offer.

Writing the offer and negotiating – Negotiation is a crucial service I provide you.  Part of the negotiation process involves learning more about the seller’s needs so we can craft a winning offer. We will also go over the terms of the contract so you have a firm understanding of the agreement.

Managing the offer to closing – there are a lot of steps between mutual acceptance and the closing date.  There will be inspections, an appraisal, deadlines to be met, and lots of paperwork.  I’ll go over with you a “what happens next” checklist and keep you fully informed about the activities leading to the close date.

FAQ – Working with your Broker

Is there a fee to use you as my buyer’s broker?

In nearly all cases, the seller pays the commission to my firm, who then pays me.  There are always exceptions but this is the common practice.

Can’t I get a better deal by going directly to the listing broker?

Some buyers are under the impression that they can “get a good deal” if they do not have representation and work with the listing broker.  The thought is the seller will save on the commission and will pass those savings onto the buyer.  This is false.  The commission amount is negotiated between the listing firm/broker and the seller prior to the home being listed.  Regardless if the buyer is represented or not or is represented by the listing broker, the seller is still paying the previously-agreed upon commission.

Are you paid a salary?

No, I work on commission only and get paid only upon 100% successful close of the transaction.

Do you work weekends?

Yes, I’m available 7 days a week unless I let you know otherwise.  I’m notified immediately if you call, text or email me.

What if I find a for-sale-by-owner? Do I contact the owner myself?

No, I can represent you in a for-sale-by-owner situation. Let me know the house you are interested in and then I’ll contact the seller.

For new construction, should I contact the site-agent/builder directly?

No, I can contact them. Sometimes builders will have clauses in their contracts that if you make the first contact with the builder or site-agent, they will not be obligated to pay me a commission. Please contact me with any property you find and I can help you so you are protected in your purchase.

Here’s my resume and my message to you on how I help my clients.  

Financing Your Home Purchase

The lending process is the most important step in buying a home but is also the most complicated. 

Give yourself the time to talk to a few LOCAL and REPUTABLE lenders so they can counsel you on the best loan products that will fit your needs.  Ask for me a list of awesome lenders who can help you.

Getting pre-approved with a lender BEFORE house-hunting will help you:

Paying Cash for your Home Purchase?

Surprisingly to many cash buyers, cash isn’t necessarily king anymore.  It has been typical that a cash buyer could offer less than a buyer getting a loan. Sometimes this isn’t the case and the seller will take the highest offer, regardless if the buyer is getting financing or not.

Sellers also want to know the source of funds.  Are these funds contingent upon the sale of your home?  Contingent upon a stock sale?  Or are these funds liquid cash, sitting in a savings account?

How Much are Closing Costs? (These costs are paid at closing.)

If you are obtaining a mortgage, you will be charged fees for acquiring a loan and other closing costs.  These fees must be paid in full at closing. Typically closing costs are about 2% to 3% of the purchase price but your lender will advise you.

Closing costs can include:

The 10 Lending Commandments

What NOT to do prior to your closing date.

Thou Shall Not…..

FAQ on Getting Pre-Approved

Why is it important to have a local lender?

Procedures and requirements vary from county to county and state to state when buying a home.  A local lender obviously understands these regional requirements.

Anecdote:

In most states, a termite inspection report is required for borrowers obtaining a VA loan.  But this report is not required here. Unfortunately, I have had this delay the closing date because the lender would not budge on learning that this report is not a VA requirement here. 

How do I shop mortgage lenders?

There are a variety of companies you can contact for a mortgage including credit unions, mortgage brokers, banks, etc.

When you shop for rates and fees, because the market is volatile, you’ll need to contact your selected lending institutions on the same day and provide them with the same information about your debt, income, and assets.

There is more to the quote than just the interest rate. You’ll want to look at the costs associated with the loan, too.

In order to compare apples to apples, you may want to ask each lender what their costs are for a loan at a specific interest rate. 

Will shopping for a mortgage hurt my credit score?

No, as long as you shop in a very short amount of time.  The credit-scoring companies will treat multiple credit requests for these as a single request.  You would only have one small hit instead of multiple hits to your credit score.

What’s the difference between being Pre-Approved versus Pre-Qualified?

The gold standard is for you to get Pre-Approved.  This means the lender is offering you credit after they have run your credit and examined the documentation you have provided verifying your income, debt, and assets. A seller wants to see a pre-approval letter, not a prequalification letter.

A Pre-Qualification is an informal process and isn’t binding.  The lender will ask you a few questions and based on what you tell them, they will give you an idea of what you can afford and what the monthly payment would look like.

Costs to Expect When Buying a Home

Here are the most common up-front costs you’ll need to have in your cash reserves to get started (but see above for your loan and settlement closing costs):

Earnest Money – this is negotiable and it depends upon the market and the property.  In general, plan on offering 1% of the purchase price. Read my full guide on earnest money, how to use it for your benefit and how not to lose it.

A note about Earnest Money:

Earnest money is used to specify liquidated damages in the event of a breach of contract. You’ll be asked to deposit your earnest money with the escrow company within two days after you reach mutual acceptance with the seller. This money is held until the closing of the transaction. If you successfully purchase the home, the earnest money is credited to you. If you breach the contract, nearly all times the seller would receive your earnest money to cover their damages.

Inspection Fee(s) – a typical home inspection can be $400-$600.  Your home inspector may also suggest specialists for additional inspections such as getting a roof inspection, sewer scope, HVAC inspection, etc., and that may be an added inspection cost.  If you are buying a home with a well, added inspection fees to you would include testing the water and the well pump and equipment.

Lender Fees – your lender will also have upfront fees they will collect from you.  Many times they will collect the fee for the appraisal ($800 or more).  Be sure to check with them to learn what you will need in order to secure a loan.  

Best Online Sites to Search for Homes

There are two main real estate website types consumers go to find homes for sale: brokerage websites and third-party websites. Here is more information about searching for homes online:

The best online website for house hunting is a brokerage website.  This is a site where brokers work, so sites like francineviola.com, ColdwellBanker.com, JohnLScott.com, Windermere.com, Redfin.com are all brokerage sites. 

Why is this important for a buyer?  Because brokerage sites are updated with the most complete and accurate information.  All of the listed homes will be shown on these sites.

Third-party sites like Zillow.com, Trulia.com, Realtor.com have different procedures for updating their information.  Things I have found to be problematic:

• An active listing will show up one day and then be gone the next, even though it is still actively for sale. 

• Or the opposite problem – a home that sold months or years ago erroneously shows up as actively available for sale.

• The information I supply is sometimes not used.  For example, I provided school district information for one of my listings and the third-party site instead used their own information, which happened to be incorrect.

Searching for non-traditional listings?

If you are looking for for-sale-by-owner homes, Zillow is a good source for that along with Craiglist, forsalebyowner.com, and other specialty sites.

If you are looking for foreclosures and auction properties, realtytrac.com is a very good source.

Best Online Tools for Researching Homes in Thurston County, WA

Thurston County, WA has some very good online resources for those buyers that want to research specific properties.  I do this for my buyer-clients but sometimes my clients want to snoop around on their own.  My top online websites for home research are:

To learn more about how to use these sites and for more sites including crime reporting, school rankings, and city websites, click here.

How to Tour Homes

Updated July 2021. The pandemic in 2020 caused changes in how real estate is conducting. The rules are changing but here is the latest of what buyers can expect when touring homes.

• All showings are by-appointment-only regardless if the home is occupied or vacant. This is to prevent overlapping showings and to minimize groups from gathering at one time. I will make the appointment, and for most buyers and properties, the appointment for the specific property will be 15 to 30 minutes.

• I won’t be able to drive you to the homes that we’ll see; we’ll need to drive in separate cars.

• Some sellers may ask that we wear masks when touring a home. Please have a mask available in case those are the seller’s instructions.

• I and the pricinple buyers can tour homes. This is to limit the number of people in the home. (This is not the time to invite your friends and family to tour homes, nor your pets.) The sellers/tenants are to leave for our showing appointment.

• Expect to remove your shoes or wear the provided shoe coverings. Some sellers may also ask you to use the provided hand sanitizer before entering and limit touching surfaces.

• Many sellers have video security systems, so please be respectful of their belongings and save any conversations about the home and your potential offer until after we leave the home.

Tips to Making your Offer Irresistible to a Seller

There is more to making your offer compelling to a seller than just price.  The terms can be more valuable to a seller in many cases.  In the end, the seller needs assurances that you will close on their home.  Anything you can do to strengthen that will help you be successful.

Step One – understand the seller’s wants and needs. This is where I call the listing broker to ask what is important to the seller.  Is it price?  Is it time? Do they want a quick close? What is the other buyer/showing activity? 

Step Two – understand your competition. The listing broker may not be offering the terms and conditions of the other offers in hand, but I can ask questions that will help us write a competitive offer.  Sometimes I’ll ask the broker, “if my client offers $X with a close date of this and we remove this contingency, would that be competitive?” 

Once we have these questions answered, then we can move forward.  Here are ways you can make your offer irresistible to the seller:

These are just a few ideas and again, you’ll be relying on your broker to guide you through this and discuss with you the pros and cons. This video below talks about the 22AD – this is our form number for putting additional funds down in case of a low appraisal. Watch the video for more details on this and how this can help you win the bidding war.

Let’s Talk About “Love Letters”

Typically, in a seller’s market, buyers will include love letters with their offers to entice the seller to choose their offer. Buyers will often tell the seller how much they love their home and how it would be the perfect home for them.

Love letters are problematic. Listing brokers will caution their sellers that they should choose the offer with the best terms and financial qualifications of the buyer – not the buyer with the best love letter. Too often, love letters highlight a buyer’s membership to a protected class.  It puts the seller in a position where they could violate the Fair Housing Act if they make decisions that appear to violate the Act. Once this is explained to the seller, your love letter and offer may be viewed more negatively than if you didn’t include the love letter to begin with.

I advise my buyers to write a strong offer not a love letter.

What are Contingencies in Real Estate Contracts?

Contingencies are negotiable addenda buyers can add to an offer that do primarily two things:

• the authorization for a buyer to do something (such as having a home inspection).

• the opportunity for a buyer to terminate the transaction.

For a seller, they would like to see an offer with as few contingencies as possible, while a buyer would want as many opportunities for discovery of potential issues and ways out of the contract if necessary.

Contingencies will outline WHO is to do what, WHEN and HOW the contingency is satisfied, waived or expires, WHAT are the consequences for the parties.

For example, the buyer will conduct a home inspection (WHO) and will provide a response to the seller no later than X date (WHEN). If the buyer accepts the inspection, then the inspection is satisfied (HOW) and the parties continue to move toward closing (WHAT).

Some common contingencies include:

• financing contingency
• home inspection contingency
• sale of your home contingency
• title contingency

Every property and buyer has unique wants and needs. The contingencies you may want to include warrants an in-depth discussion with your real estate professional and/or your real estate attorney. This post is just a starting point for educational purposes.

The Buyer’s Home Inspection

The home inspector is another team member on your home-buying team, and I have a list of some excellent inspectors that my past clients have used.

The home inspection is a time for the buyer to have the home inspected and to learn more about the home, how it works, where the water shut-off is, for example, and a time to learn the condition of the property.

This is a time where limited distractions would be most beneficial to you.  This is not the time to bring over friends and family. The inspection is your time to understand the condition of the home you are purchasing. We won’t have access to the home again until a few days before your close date during the walk-thru, so if you want to measure rooms, for example, this is your time to do so.

The boilerplate language in the home inspection addendum* states the buyer has ten calendar days to conduct a home inspection and respond to the seller with the following four options:

1. The inspection contingency is satisfied and the buyer is continuing on to closing.
2. The inspection contingency is not satisfied and the buyer is terminating the contract.
3. The buyer requests additional inspections to be conducted.
4. The buyer negotiates repairs or credits or alternate solutions with the seller.

After the home inspection period, this could be another area of negotiation with the seller.  Again, this is a negotiation.  A seller is not legally required to repair anything in the property except what has already been agreed to, such as the seller agrees to install carbon monoxide and smoke detectors, for example.

If the buyer wants to negotiate repairs, I will offer advice on how to proceed as there are many conditions that will affect how to move forward. 

• There may be circumstances where asking for a credit or a price reduction may be more applicable than asking for repairs. 
• Maybe the cost can be split between the two parties. 
• Maybe the seller will agree to leave the riding lawn mower in lieu of repairs.  There are many, many options available and each situation is unique.

Also, note that home inspections are not required by lenders.  This is a misconception that some buyers have, especially VA borrowers. The VA does not require you to have a home inspection. The home inspection is voluntary on your part. 

*The home inspection addendum I am referring to is from the Northwest Multiple Listing Service (most of Western Washington).  If you are outside of this region, your language and options most likely are different. 

Pre-Inspections – Can this win the bidding war?

In this seller’s market, many buyers will have pre-inspections done before submitting an offer. There are pros and cons for a buyer to do this but essentially, the function of a buyer doing a pre-inspection is to submit an offer without an inspection contingency (or at least understand the condition of the property and submit an offer based on the condition and/or negotiate repairs). Check out this video on the pros and cons of pre-inspections:

What You Didn’t Know About Appraisals

The appraisal is another type of inspection but this is ordered by your lender and its purpose is to determine if the agreed-upon sales price is at fair market value.

What does the appraiser do?

The appraiser will visit the home and will take pictures of all the rooms and the exterior of the home, and will look for specific items on behalf of the lender.  For example, they will look to see there are earthquake straps on the hot water tank.  Or they will look for obvious repair issues like a failing roof.

I like to call the appraiser the eyes and ears for the lender.  The lender is buying the home – you are just paying the lender back.  The lender wants to make sure the house is in reasonably good shape that meets their lending standards.

The appraiser then will look at comparable properties and take exterior photos of those homes. 

The appraiser then takes all of that data to create a report to determine if the agreed-upon price is a fair market price.

What happens if the home doesn’t appraise for the agreed-upon price?

There are several options:

1. Buyer and Seller agree to lower the sales price at the appraised value.
2. Buyer will bring in more of a down payment to cover the difference. (This is where our form 22AD comes into play. See above for more details on this form.)
3. Listing and Selling brokers will submit market information and maybe other comparable properties to ask the appraiser to revise their original report.
4. Buyer will get another lender.
5. Buyer will terminate the contract.

Your situation will vary and there will be several options to pursue if the appraisal comes in low.

What happens if the appraiser calls out a repair item?

If this happens, then we would go back to the seller and ask them to fix the items.  If the seller is unable or unwilling to make these repairs called out by the appraiser, then the short answer is you cannot move forward with the transaction. Your lender will not offer you a loan on this property until the repairs are done.  This is a very simplified answer to a very complex problem and there are many variables, options, and solutions that will be unique to your situation.

The Countdown to the Closing Date

About a week before your close date, you can:

• Do your final-walk through of the property to make sure agreed upon repairs were completed and the home is still in working order.
• Sign your closing documents at the escrow company – see more details below.
• Set up utilities in your name.

Signing Day is Here But I Can’t Give You the Keys Just Yet!

We finally made it to the closing table!

The signing:

• You’ll be signing (in person with “wet” signatures – not e-signatures) your closing documents with your escrow officer or mobile notary. 

• The signing of the closing paperwork is typically a day or two prior to the Close Date.  Your signing appointment is NOT the day you get the keys.

• You also will NOT be sitting with the sellers when you sign your paperwork.  You most likely will never meet the sellers.

What to bring with you to the signing appointment – your current ID and if you need to bring funds, bring the cashiers check or you will be given wiring instructions.  Or if you are getting money back, bring your bank account and routing numbers.

Once you have signed, the paperwork gets sent back to your lender for one last review, and then the lender will instruct the escrow company they are cleared to get the transaction recorded at the county. 

On the close date, your transaction will officially be recorded at the county and funds will be distributed.  You will then be the official owner.

When do I get the keys?

The boilerplate language in the contract says you will have possession at 9 PM on the close date.  In many cases, we can negotiate for the keys to be released to you before 9 PM (but not before the close date). 

The signing of the paperwork is a “housekeeping” item and does not declare you as the new owners – yet.  It is part of the process to become the new homeowner. 

Only after the transaction is recorded and funds are distributed do you become the official owner.

In Conclusion

As you can see, buying a home isn’t as easy as they make it seem on HGTV!  There is A LOT that happens with a home purchase, but I am here to guide you every step of the way.  Contact me today if you will be making a home purchase in the greater Olympia, Lacey, and Tumwater, WA area!

P.S. For more information, be sure to check out my YouTube channel for weekly videos here.

Note: Nothing in this post shall be construed as legal advice. The purpose is to offer a general overview of common home-buying processes in the Thurston County, WA real estate market. Your circumstances will be unique. You are encouraged to seek out the advice of a real estate attorney for your particular situation.