Thinking of Buying a Home? Here’s What To Expect
As of March, 2022, we’re still in the midst of an unprecedented seller’s market in the Portland Metro area. But don’t let low inventory and high home prices discourage you. We’re urging buyers to pay attention to affordability. With interest rates at historic lows (and not expected to rise much in the coming year), homes are actually more affordable than they were in 2006, see image below. So get yourself ready for the home buying journey! We could go into extreme detail on the full process, but for the sake of simplicity we’ve crafted a brief overview that includes key milestones, considerations, and tips.
Learn more about affordability in our blog, “Key Market Drivers for Portland Metro Real Estate”.
Find a Trusted Agent
Selecting an agent to represent you is the most important decision you will make during your home buying journey, next to actually purchasing your home. With thousands of active real estate agents in Portland, how do you know who to trust? We recommend meeting with at least 3 agents before making your decision. Take a look at some of our key considerations below.
Read their Reviews: Scrolling through the agent’s reviews on Zillow and Google is a great, quick first step for vetting agents.
Ask Great Questions:
- What services do you offer to buyers?
- Do you work with a team? If so, what are the benefits?
- How do you communicate with your clients?
- What’s your negotiation experience?
- What’s it going to take to get an offer accepted in this market?
- How many clients do you serve simultaneously?
Beware of These Common Red Flags:
- Recommending homes outside of your budget or desired search criteria
- They come off as a salesperson, not a trusted partner
- Failing to maintain consistent, reliable communication
- Not asking you about your goals and expectations
- Real estate is a part time job for them
- Unfamiliar with your desired neighborhood or property type
- Just not a good personality fit
Now that you’ve chosen a trusted agent, it’s time to begin the loan application process so that you can get pre-approved for financing, if needed, by a lender. This is a relatively simple process.
It’s vital that you have a pre-approval letter prior to beginning your home search for a couple reasons. First, you’ll know what your maximum budget is and a lender will calculate how much your potential mortgage payment will be and also give you an idea of how much down payment you will need. One quick note on maximum budgets – This is the total amount you qualify for and you can always spend less, but it is nice to know how much you could spend. Second, with a pre-approval letter in-hand you will be ready to write an offer as soon as you find your perfect home.
One of the biggest myths we bust is that a 20% down payment is required, making ownership financially out of reach for many. In reality, the average down payment is just 6% and conventional loans start at 3% down. Not to mention other specialized loans (like VA loans) that require zero down payment.
Start Your Home Search
Your agent will act as your market and property specialist and work with you to prioritize your housing criteria and get you set up on a home search. Once the search is established, you and your agent will be able to review new or updated listings for suitability. You’ll want to eliminate marginal or unsuitable properties, and adjust your search criteria accordingly.
Once you start finding desirable homes, your agent will help obtain additional details on the property and arrange for a private showing. When evaluating homes, we recommend the 80/10/10 rule: If you find a home that fulfills 80% of your requirements, 10% fixable aspects, and 10% of things you don’t prefer but could live with – it’s a keeper!
Check out our blog on optimizing your online home search.
Make an Offer and Get it Accepted
In today’s highly competitive market it is crucial that your agent knows what it will take to get your offer accepted and be able to strategically market and negotiate your offer. At Green Buck Real Estate we always lead with our client’s best interest and provide honest, transparent, and well-rounded advice. First, we thoroughly research and review recent comparable sales in the home’s area to determine the approximate fair market value. Then we’ll evaluate each scenario and recommend a negotiation strategy, taking into account current offers on the property, days on market, previous sales history, seller motivation, and of course fair market value.
Open Escrow and Deposit Earnest Money
Once your offer has been accepted, your agent’s Transaction Coordinator will open escrow. Escrow helps protect the seller and buyer throughout the selling process, ensuring funds (i.e. earnest money, funds to close, etc.) are held by a neutral third party. Escrow will stay open until all required documents are signed and funds change hands or the transaction is mutually terminated.
Obtain Property Disclosures and Review Preliminary Title Reports
This step in the process is very hands-off for buyers, but ensures that no legal surprises come up at the end of the transaction. In Oregon, property disclosures are submitted by the seller and include very specific information on the property including updates, remodels, issues, or hazards. Disclosures need to be taken with a grain of salt as sellers may not know of lingering issues, or they fail to report them outright. Regardless, it is a good starting point of information for you, your agent, and the inspector.
Preliminary title reports give you insight on the legal status of the property and ownership. For example, knowing if there are specific easements or right of ways on the property, or if any liens or delinquencies exist that could be inherited with the property.
Home inspections help give you a more extensive understanding of the status of the property. The hired inspector will go through the entire home from roof to foundation. Additional inspections can be performed including radon testing, sewer scope, and mold inspections. Buyers are responsible for covering the cost of their inspections (~$500) and must complete them within the agreed upon date as stated in the sales agreement. Our team works with trusted inspectors and will help you make arrangements.
This is another step in the home buying process where an agent’s negotiation skills are crucial. Any issues or notes of concern that may arise in the inspection report can be leveraged to negotiate repairs, seller credits, or a reduction in the sales price, prior to closing.
Your lender will arrange to have the property appraised, a service for which you are charged in your loan application fee (~$800). Appraisals are required for most home loans and serve as a professional assessment of your home’s fair market value. If the purchase price is higher than the appraised value you may have to come up with a larger down payment, renegotiate the purchase price, or terminate the transaction. If any of the terms of the loan, as specified in the loan contingency, cannot be met, you have the right to withdraw the contract and have your earnest money refunded (assuming you include a financing contingency, which many buyers are waiving).
Reinspection and Final Walkthrough
This step gives you the chance for one last look at the property prior to closing and ensures that any work or repairs done were addressed properly and up to standard.
Schedule Closing and Move In!
Once the inspection and appraisal period has closed and there are no further negotiations, we’re off to close. On the closing date, escrow will be complete. Simultaneously, funds and the title will be transferred. Pop the champagne, you’re a homeowner!
While it’s important for home buyers to understand the intricacies of the process, you should count on your agent to address every detail and work as your advocate each step of the way. At Green Buck Real Estate, our mission is to provide you with excellent service through strategic wealth investment planning by utilizing our trusted, transparent systems and our superior, evolving industry knowledge. From purchase to remodel, to listing, and beyond, we’re here to help you every step of the way.
Ready to start your home buying journey? Let’s talk! Reach out to set up a consultation.