Part 3: Buying your First Home

First Time Home Buyers - Biddeford Savings Bank

Okay, you have a good idea of your price range and what type of property and what town you wish to look at.  Now it is time to find a realtor in the town you have chosen – recommendations from friends or family can help find a good Realtor – and meet with them.  One thing to keep in mind, the Realtor works for the seller unless you sign an agreement with them so that they work for you, which is highly advisable.  Know who your Realtor is working for and keep that in mind.  For example, if they are working for the seller you may not wish to disclose your maximum price on a property as that could hurt you in the negotiation process.  The Realtor will want to be sure you are capable of getting a mortgage so have your prequalification letter with you.  If you have specific homes you want to see, let the realtor know.  They will likely come up with some others they think you should consider based upon your preferences and their knowledge of the market.

As you visit homes for sale take good notes about layout, condition, location, pluses and minuses.  Believe me, once you have seen a dozen homes you will need good notes to keep them straight.  Again, the web is a big help as a wealth of information is available on the realtor’s web site.  Don’t be overly concerned about any mechanical issues at this point, the home inspection will address all that.

Once you have settled on a home the Realtor will help you draw up a Purchase and Sale Agreement (P&S).  In many cases there will be a couple of rounds of negotiation as you and the seller reach agreement on price, closing date (typically 45 – 60 days after the P&S is signed), and any sharing of closing costs.  Once the P&S is signed you will want to schedule a home inspection and speak with your bank to move the mortgage application process forward.  Your Realtor should be able to provide you with the names of a couple of Home Inspectors.  They are licensed and you can typically check them out online to find one that suits you.

If the Home Inspection finds defects with the house you may either walk away from the P&S or negotiate with the seller to determine if they will either pay for the repairs or reduce the sale price and sell the house as is.  Just keep in mind that if the price is reduced but repairs are needed you will have to fund those out of pocket.

Once you have successfully moved past the Home Inspection the bank will order an appraisal of the property.  The Appraiser will be looking at the condition and location of the home and comparing it to similar properties recently sold in the immediate area.  As long as the Appraiser values the home at or above the contract price you will now be ready to close.  In the event the appraised value comes in below the contract price you will again be faced with a choice – either come up with a larger down-payment or negotiate with the seller to reduce the price to the amount of the appraisal.