If you have been watching the news or looking closely at the local market, you know that this market is not friendly for first time buyers. Cash is king along much of the Front Range and investors rule in this environment, but there ARE ways to find your dream home. Over here at Cobalt Realty, Ltd. our Brokers understand what its like to be in your shoes and know every trick of the trade to keep you competitive and make sure that your offer stands out! There is a tremendous amount of misinformation on the internet, take the time to contact one of our experienced, full-time, real estate professionals to leverage our actual knowledge and the tools of the trade.
Here’s some tips to help you get started:
Step-1 – Select a Broker
The terms Agent, Broker, and Realtor® are often used interchangeably – BUT have very different meanings.
In Colorado a person selling real estate for others, must be a licensed “Broker.” The education and examinations needed to become a licensed “Broker-Associate” are established by the State. Further training, education, and at least 2 years of supervised experience are required for a Broker to work independently or unsupervised.
A Brokerage is the name of the real estate company e.g. Metro Brokers
An “Agent” is a person hired to represent your interests in important financial dealings or legal matters, and may act on your behalf. Colorado real estate contracts allow Brokers, and Broker-Associates to be your Agent.
“Realtor®” is the Brand Name, or designation, given to members of the National Association of Realtors®. Members must pay to be part of this organization, agree to abide by the Realtor® Code of Ethics, and belong to a local Association. Realtor® membership is optional for Brokers, and may or may not be required for Broker-Associates.
Step 2 – Get a Loan!
The process of buying a home starts with determining your buying power: that is, your cash available plus your borrowing capacity.
This is a vital step in the buying process – often, the difference between having your offer accepted or rejected. It is our policy for each Buyer to obtain a “Pre-Approval” letter from a reputable Mortgage Lender which will be included with any purchase offer you wish to submit on a home. We will assist you in this process.
As a first step, we will ask you a series of questions such as: your available cash reserves, income, current debt, cash to be freed up on the sale of your existing home, employer provided allowances for moving costs, and so on.
In this way, we can provide you with a good estimate of your purchasing power and recommend you to a mortgage lender most suited to help you whether you require: FHA, VA, Jumbo, Conventional, or a first time home buyer program. W will do this for you whether you are Credit Perfect or Credit Challenged!
Step 3 – Prepare a “Wish List”
The one common starting point we have for working with all Buyers is to receive from you a description of the home you would most like to have (within the constraints of your financial capability).
We ask that you prepare and send us your desires for the home which ideally you would like to find.
We want you to tell us what you consider important!
Consider many factors including:
- price of home
- size of home
- number of bedrooms and bathrooms
- garage size
- lot size;
- commuting time to work place
- access to recreational activities
- age of home
- time until you plan to move in
- neighborhood conditions
- style of home: contemporary, traditional, ranch, 2-story
- length of time you expect to live in this new home
- new home versus previously owned home, etc.
This is an excellent opportunity to get input from your family.
We will use this as my starting point to help you locate the house which most closely meets your requirements. We will also use this as a basis to make you aware of some features, which may be unique to the Area’s homes and neighborhoods, which you may find desirable.
Step 4 – Visit Properties
Within a few days after receiving your “Wish List”, we will prepare a report for you of all homes that most closely match your “Wish List.”
Included in this report will be maps specific to the area where the homes are located.
After getting feedback from you on which homes most appeal to you, we will schedule appointments for us to personally visit the selected homes.
Please keep in mind that in today’s market good homes, well priced in a good location, seldom last more than 2-3 weeks on the market.We will get daily reports on homes matching your criteria as they become available. You will be notified immediately as particular homes meeting your needs come to our attention.
Step 5 – Learn About the Neighborhood
Once you have visited a variety of properties and decided which properties you feel you would like to make an offer on, I will prepare a detailed report for you on the Neighborhood for that home – just to make sure you are knowledgeable on ALL aspects of the home (and neighborhood) you wish to buy.
The report, at a minimum – data permitting, will include the following up-to-date information:
- Neighborhood demographics
- Public and private schools
- Climate reports
- Houses of worship, by denomination, (if requested)
- Proximity Maps to Shopping centers, country clubs, museums, airports, schools, etc.
- Comparisons with other neighborhoods you choose to look at (locally or nationally)
Step 6 – Making the Offer
In Colorado, licensed Real Estate Agents are authorized by the Colorado Real Estate Commission to prepare contracts to purchase real estate if the forms used are approved by the Real Estate Commission.
Once you decide which house you wish to place an offer on, you will have many decisions to make including:
- Purchase price you wish to offer
- Financing terms . Cash down payment, earnest money deposit, type of loan, interest rate, pre-approval letter
- Time period for inspection of property
- Time period for appraisal of property by your lender
- Time period to review title opinion of property
- Contingencies you wish to include – for example, the sale of your current residence
- Time period for loan approval
- Setting the date and time of closing
- Presenting the offer to Sellers
- Negotiating and finalizing any terms and conditions which the Sellers may wish to modify from the original offer presented to them through a counter-offer
Through this entire process of preparing, offering and negotiating the Purchase Offer, we will work closely with you to maintain timely responses and provide market savvy answers to questions as they come up.
Step 7 – Due Dilligence
Now that you have a negotiated agreement, the clock starts running for many items needed to meet the requirements of the agreement and your protection. We will assist you finding qualified responsible professionals to do most of these investigations and provide you with written reports.
Specifically, you will want to have an inspection of the property for such things as: the mechanical, plumbing, and electrical systems, the foundation, walls, flooring and windows. You will want to see a preliminary report of title on the property to determine any easements or issues of title. Your mortgage lender will require an independent appraisal of the property.
Any problems noted during the inspection are subject to additional negotiations between you and the Sellers. We will help facilitate this process. If you are not comfortable with the inspection resolution with the Seller, you will have the right to terminate the contract, if acted upon in a timely manner.
Step 8 – Closing / Possession
Closing on the property is usually handled by the title company which issued the title opinion. We will be with you to provide answers and assistance for you during this process which usually takes from 30-90 minutes. I will be sure to review all settlement statements for you as Buyer for accuracy and reasonableness.
Time of possession is established at the time of negotiating the original offer. In Colorado, it is customary for the Buyer to take possession at closing or up to 2 days after closing.