The first thing you do is hire Mike to represent you. Mike has been helping buyers purchase their single family homes, townhomes and condominiums in Chicago for over 25 years, he has seen every situation imaginable and knows how to handle them all.
Think of Mike as the head coach of your team who will be your guide and assist you with the myriad of choices that you have and help you focus on what is most important to you so that you can make the ultimate decision on where and what to buy.
Here is Mike’s checklist when you start your search for your new home.
- CHECK YOUR CREDIT. At least three months prior to your search you must check to see if you have good credit. An easy way to do that is to either speak with one of the top tier mortgage professionals Mike will introduce you to or go to one of the free credit reporting services such as annualcreditreport.com and have your credit pulled. This way you can:
(a) Have enough time to fix any problem that you were unaware of
(b) Which will allow you to improve your credit and get a higher credit score
(c) Which will allow you to get a loan with a lower interest rate
(d) Which will make your mortgage payments lower.
- GET PRE-APPROVED (NOT PRE-QUALIFIED) FOR YOUR HOME LOAN. In today’s uncertain economic environment, sellers only want to deal with buyers that they know can get a mortgage. In the past when the banks would give everyone a loan, a buyer merely had to get PRE-QUALIFIED. That meant that the buyer verbally told the lender what their income and expenses were as well as the size of the loan they wanted. Based on this information the lender would issue a letter saying that “based on the information provided to us Mr. Smith is prequalified for a loan up to $300,000, subject to verification of his income, assets, certain other financial items and appraisal.” In other words, you received a nonbinding estimate of how large a loan you could get. That letter would not do much for a buyer today. Now a buyer should get PRE-APPROVED and give his lender their past two years tax returns, last three months paystubs, last three months bank statements and a statement of their assets and expenses. The lender will run this information through automated underwriting and tell you with certainty that you have a tentative commitment. “John Smith is preapproved for a mortgage for the purchase of 200 Main Street subject only to the appraisal of the subject property.” This means that you CAN buy the property instead of you MIGHT be able to purchase the property. If we go to purchase a home and another buyer is also putting in an offer and all of the terms are similar except that we have a pre-approval letter and the other buyer does not, I am positive that we will get our contract signed and the other buyer just learned a painful and valuable lesson in purchasing real estate. Let’s avoid the disappointment of losing on our bid and be prepared from the start…get pre-approved for your home loan.
- DEFINE WHAT YOU ARE LOOKING FOR. This is where I ask you a lot of questions and I listen to your answers. I am here to help you get what you want. Now that you have been pre-approved for a mortgage and know how much home you can afford, we need to find out what neighborhoods you want to focus in on, how many bedrooms and baths do you need, is garage parking a must or can you live with an outdoor spot, do you need to be close to the train, hi rise v. low rise, etc. Now that we have our search parameters we can start the search for your new home.
- FIRST SHOWINGS. The first time we go out we will see quite a few properties so I encourage my buyers to keep a list of everything we see. At the end of our day, keep a list of the properties you did like and the ones you know you did not like can be thrown into the waste. I just want to know what you did not like about the properties that did not make the cut so that I can refine our search as we go along. If it helps you should rate each home or take digital photos to review later that day.I like to be efficient and I do not want to waste your valuable time so we will probably stay on a schedule of fifteen minute intervals so that we can get a general impression of each property as well as seeing the maximum number of properties in the time period that you have allocated to look. I will also help you focus in on what is most important to you and let you know if it is realistic or not. I know you have six or seven things on your “wish list” but with city living we might only be able to get five or six of your most important needs.
We will probably go out a few more times until we see the entire market of available properties based on the criteria you have selected. Remember, we can always readjust your search parameters if you do not like what you are seeing.
- SECOND SHOWINGS. Now that you have narrowed your search down and selected your favorite homes, you will need to take a deeper look and get more details on these properties. Instead of running through them in fifteen minute intervals like we did on our first showings, we will want to spend more time at each place. After all, for most people this is the largest amount of money they will spend in their life so let’s take a careful look at EVERYTHING. You might see something that you did not see the first time or perhaps seeing the property again will just reaffirm your initial gut reaction that this place feels like home.While you are walking through the real estate visualizing if you can picture yourself in this home, I am always thinking “RESALE.” I am trained to think resale so that if you want to move up to a larger home down the road, you will want to know “how saleable is this place?” In other words, will you be able to get your money out when the time comes to sell. I will give you the only opinion I know which will be an honest one so let’s make a great decision together and get it right the first time.
- PUTTING YOUR OFFER IN. You must be patient when looking and take all of the time you need. However, when you find the right home for you PUT THE OFFER IN with an initial earnest money check. You stand nothing to gain by waiting and everything to lose. Let me guide you through what most people consider the emotional part of the buying process: writing the initial earnest money check, filling out the contract and then negotiating it. I will explain the entire contract to you as we fill it out together as well as negotiating strategies I will employ depending on the circumstances at that time. I have been doing this for a long time with very good results so don’t worry, be happy and let me do what I do best.
- THE EAGLE HAS LANDED. After years of saving your money for your down payment, being dependable and paying your bills on time to maintain good credit and spending weeks of your life looking at properties I have some good news for you: the seller accepted your offer. Congratulations! You now have a fully executed contract and as soon as your heart stops racing there are just a few more things for you to do before you can get to the closing table.
- LET THE PROFESSIONALS DO THEIR JOB.
(a) Attorney. Give a copy of this contract to an attorney who specializes in residential real estate. There are nuances to every deal and although we have a binding contract it does not cover everything. We typically have six to seven business days to complete this so please get this to your attorney as soon as possible. If you do not have an attorney I can suggest several very good ones.
(b) Inspector. Hire an inspector who specializes in residential real estate. Unless you are a licensed contractor I would not try to save money on this. Even if this is new construction I would hire an inspector. There are things they are trained for that your untrained eye would never pick up and this will give you piece of mind as to what you are buying. We typically have five to six business days to conduct our inspection so if the inspector should uncover serious issues with the property please make your attorney aware of this so that they can get this corrected during the attorney review period. If you do not have an inspector I can suggest several very good ones.
(c) Lender. Give a copy of this contract to your lender. Since you have already been pre-approved for your mortgage the bulk of the work has been done. Your lender might need some details like how much money is in the condominium association or are there capital improvements/special assessments planned this year in the townhome association. Barring any surprises this part of the transaction should go rather smoothly.
- FINAL TO DO LIST.
(a) Balance of earnest money. Now that your attorney has finalized your contract and you are finished with your attorney approval period, it is time to hand over the balance of your earnest money to the listing agent. The listing agent will deposit this money into an escrow account where it will sit until closing. Your initial earnest money check is in this escrow account as well and this money will be used as all or part of your down payment on your new home.
(b) Homeowner insurance. Your lender will require that you purchase homeowner’s insurance. Even if you are paying cash for your home I would encourage you to buy homeowners insurance. Remember that an ounce of prevention is worth a pound of cure. If you do not have an insurance agent I can refer you to several insurance professionals.
(c) Hire a mover. Unless you travel lightly there will probably be some items that you own that will require the services of a professional moving company. Some of them even pack and unpack you. This can often be the most stressful post purchase activity and if you do not have a relationship with a mover that can also provide you with storage services please ask me so that I can refer you to professional moving companies we have worked with in the past.
(d) Utility companies. I have provided a link on my home page for the City of Chicago so that you can contact the electric, gas and cable companies.
(e) Schools. Remember if you have children to make sure they are registered for the school in your neighborhood or if there is time you can apply to one of the magnet programs or private schools. I have provided a link on my home page for the Chicago Public School website as well as information on Chicago private schools.
(f) Certified/Cashier’s check. Call your attorney and get the final dollar figure of how much money you should bring to closing and who the check should be made out to. The check is usually made out to the seller or the title company.
(g) Final walkthrough. We will schedule a time to walk through the property just prior to closing to make sure any defects that we found at our initial inspection and the seller agreed to fix were taken care of and also that no new defects has occurred since then such as leaks, damage to drywall from moving out, etc.
- Closing. This final part of the transaction usually takes place at a title company or an attorney’s office. You will sign many legal documents per your attorney’s instructions and when the last item on the closer’s checklist has been finished you will receive the deed and keys to your new home. Congratulations again! MK