Buying a Home

Wednesday, July 13 2005 @ 10:51 PM CDT

So you are thinking about buying a home in Hawaii?There are numerous factors to consider and you may have many questions. Don’t feel intimidated with the intricacies of buying a home. Kurb Appeal is here to guide you through every step of the way. Scary words like “escrow” and “home inspection contingency” can be explained to make you comfortable as possible. After all, buying a home is a distinctly important purchase in a person’s life time. Buying a home should be as comfortable as the house itself. The real estate professionals at Kurb Appeal have successfully helped many find homes on Oahu. Your new address awaits you…Let’s get started!

Pre-Buying Homework

• Do research on what areas you would like to live in. Drive around during different times of the day to familiarize yourself with various neighborhoods. If you like, do additional demographic research to find out more on schools, community activities, and the people. Visit our link at Beyond the Kurb for more helpful information.

• Get Pre-approved for a loan. Most Sellers will require serious Buyers to be Pre-approved for a loan and expect to see a Pre-approval letter with any offer. It’s best to get Pre-approved with a local lender. Not only will you find out what your financial capabilities are, but also allows you to get an idea of what your financial commitments will be (i.e. monthly payments, interest rates, etc.). Having a Loan Pre-Approval in hand will put you in a better bargaining position when it’s time to submit an offer. Having had all your financial questions answered ahead of time will direct the focus on negotiating to get your offer accepted by Seller. For more information on getting pre-approved, click here.

• Get estimates on closing costs. Closing costs are the cash funds required at the close of a sales transaction. These costs include but are not limited to: Title Insurance, Document Preparation Fees, Notary Fees, Recording Fees, Escrow Fees, and Mortgage Fees. Visit our Glossary of Terms for more in depth definitions of these items. The Seller pays the commissions for the Buyer’s Agent, so you will never be responsible for paying any professional fees at closing.

• The Financing Process
• For any Buyer, the financing process may seem overwhelming. With the amount of paperwork required, it is easy to get lost in the shuffle. Outlined below are the basic steps involved with the financing process:

• Provide a completed loan application with necessary supporting documents to the Lender. Some Lenders may require an application fee at this time.
• Once the Lender begins processing the application they will order the appraisal of the property, credit report, employment verification, and asset verification (i.e. other real estate holdings, bank accounts, etc.).
• The Lender will provide you with a good faith estimate of closing costs. The Lender will also issue a Truth in Lending Disclosure Statement.
• The final loan package is reviewed by the Lender and final loan approval is issued.
• The Buyer signs the mortgage documents along with the escrow documents necessary for closing.
• The Lender will normally fund the loan to the escrow company one day prior to the Scheduled Closing Date.
• On the day of closing the necessary loan and escrow documents are recorded and title officially passes to the Buyer and the transaction is finalized.

The Search Begins

• Once you’ve decided which neighborhoods you would like to focus on and what price range you would like to search, we start actively looking at available properties. As a tool to help better service you, Kurb Appeal subscribes to the Hawaii Board of Realtors Multiple Listing Service (MLS). The MLS is a comprehensive database which includes property information on all the available homes in Hawaii. This access allows real time market updates and customized searches can created to find the right property for you. Your time won’t be wasted previewing properties beyond your price range, or homes with features you are not interested in.

• If there are no homes available to your specifications, direct marketing inquiries to various homeowners in the area can be performed to help proactively find a Seller for you. With Kurb Appeal’s specialized Client Services Program, you can be kept updated on all the new listings as soon as they come on the market.

This is it!

• Once we’ve found the right home, there are a few questions you should ask...
• How long has the property been on the market? The length of time on the market may be a good indicator of the Sellers’ willingness to negotiate price and terms of an offer.
• Have there been any price reductions? Price reductions may be a clue into the Seller’s’ price flexibility.
• Have there been any offers on the property? Any existing offers on the property may tell you how aggressive your offer should be. Reasons for a Seller rejecting any past offers will provide insight as to what the Seller is looking for.
• How motivated is the Seller? Knowing the Seller’s motivation is a key element to the negotiation process and may help both parties come to mutually acceptable terms for the purchase.
• What have other homes in the area sold for? You will be provided with comparative market analysis to show what the recent sales history is for the area. That way you can see the market trends and determine what a fair offering price is for the home.
• What is the average “days on market” for properties in the area? The length of time a property stays on the market can be a good indicator of what type of real estate market you are dealing with. When properties are on the market for a short length of time before getting an accepted offer, this may translate into a Seller’s Market and vice versa.

• All offers to purchase property must be in writing and includes the following: Purchase Contract (DROA), Standard Addendums, and Prequalification Loan Letter. (Copies distributed to all parties). All these documents are standard forms distributed by the Hawaii Association of Realtors. Once Buyer signs all necessary documents, the written offer is submitted to the Seller for review and/or approval. A response is usually provided within 48-hours, but may vary on a case-by-case basis. Your agent will be well versed in the language of sales contracts and all the applicable addendums. All contract literature can be explained to you in plain English for your convenience and understanding.

• The sales transaction enters into an escrow period when the Seller accepts your offer. A specific Escrow Company is identified in the terms of the contract. The role of the Escrow Company is to be a neutral third party that helps facilitate the entire sales transaction.

In Escrow

• The Initial deposit check is to be made payable to the Escrow Company and submitted to the Buyer’s Agent upon submission of the offer. The Initial Deposit will be deposited in the Escrow Account after the acceptance of the offer. The Additional Deposit is usually due upon acceptance of the term C-51: Home Inspection Contingency deadline of the DROA. Deposits can also be wire transferred directly to the Escrow Company; wire transfer instructions to be provided to Buyer from Escrow. At the close of escrow, the Buyer’s deposit money is applied towards the down payment or closing costs.

• During the escrow period, there are many milestones that the Buyer must overcome in order to keep the transaction running smoothly. Your agent will walk you through the entire transaction. You will not be left on your own, or be expected to know what to do.

• The formal loan application process begins once the offer is accepted. The Lender will be working in cooperation with the Buyer, Buyer’s Agent, and the Escrow Company in order to ensure that the financing contingency is met and all deadlines are adhered to.

• If the property is a Single Family Home, a property Survey will be conducted prior to closing at Seller’s sole cost and expense. A copy of the Survey Report will be provided to the Buyer for review. A survey can uncover any existing encroachment issues so that the Buyer and Seller can address these issues prior to the close of escrow.

• The written Seller’s Disclosure Statement will be provided to the Buyer as specified in the terms of the DROA and should be reviewed and approved within a defined time frame. Any questions on the items listed on the Disclosure should be addressed in writing prior to the deadline date.

• The Condominium Documents, Homeowners Association, Lease Agreements, Covenants, Conditions and Restrictions (CCR) Documents etc. will be provided to the Buyer as specified on the Escrow Timeline and should be reviewed and approved within the proper time frame.

• The Home Inspection will be scheduled immediately upon acceptance of offer to ensure the C-51 Contingency deadline is met. The Buyer may select their own professional home inspector or, upon request, Kurb Appeal can recommend trusted inspectors. At Buyer’s sole cost and expense Buyer may (a) inspect the property, (b) inspect all major appliances and fixtures included in the sale, (c) inspect all public records relating to the Property, and (d) inspect all applicable laws and regulations affecting the Property. The Buyer may elect to either (a) remove the Home Inspection Contingency, (b) request the Seller to make certain corrections to the property, or (c) cancel the DROA based on unsatisfactory results of the inspections. Buyer’s response must be in writing and completed within the time frame specified in the DROA.

• The Termite Inspection Report will be delivered to the Buyer as specified on the DROA. The Termite Inspector is selected by the Buyer and is paid for by the Seller. If further termite treatment for active infestation is recommended, either in the form of spot treatment or tenting, the Seller is responsible for scheduling and payment of the treatment. This treatment is to be completed prior to the close of escrow and an invoice will be submitted to the Escrow Company. Any warranties will be transferred to the Buyer.

• A Conditional Loan Approval letter is due to the Seller in accordance to the time frames stated in the DROA which states that Buyer has been approved and the Lender will make the loan under specified conditions. A Final Unconditional Loan Approval is due to the Seller after Buyer has satisfied all conditions specified by the Lender except conditions which cannot be satisfied by Buyer until closing.
• At any time, if the Buyer chooses to cancel this transaction, a cancellation request must be made in writing. Cancellations can be based on unsatisfactory results of any of the contingencies within the DROA. For example, if the Buyer is not satisfied with the results of the Home Inspection and the Seller refuses to provide any credits or repairs, the Buyer has the right to cancel the transaction with no penalty. Upon cancellation, the Buyer’s deposit will be returned less any sunk costs incurred.

• Signing of Mortgage and Escrow Documents will be scheduled with the Escrow Company after the Final Loan Approval has been provided by the Lender. Buyer can expect the following charges at this time: Escrow Fees, Mortgage Fees, Home Inspection (will be charged at this time if it has not already been paid), any other miscellaneous charges incurred during escrow. Buyer will be provided with a Settlement Statement from Escrow with the break down of all costs, etc. Buyer is required to either directly wire transfer funds or provide Escrow with a cashier’s check for required cash funds for closing.

• Recording (close of escrow) will take place two (2) to three (3) days after mortgage and escrow documents are signed. Lender will transfer necessary funds two (2) days prior to the close of escrow.

• The Seller is to provide the Buyer with all existing warranties, plans, brochures etc. at or prior to closing. Seller will remove all personal belongings and have the interior cleaned at Seller’s expense.

• Congratulations! You are now a proud new home owner! Your Agent will hand over the keys to your new home on the day of closing. You will need to be sure that you transfer all utility services (electric, water, cable, gas and telephone) under your name as of the day of recording to ensure continuous service.

Moving In

• You can start moving into your new home right away. For safety reasons, it is highly recommended that you immediately change the locks on your new home. You never know who may have keys to the home, especially if the home was previously a rental.

• If possible, try to live in your new home for a few months before doing any major renovations. This way you can get a better feel for the functionality of the home and determine what works best.

• Get to know your neighbors and get involved with the community.

• For Home Improvement projects visit our information link at Beyond the Kurb.

• Home Maintenance . There are a lot of things to consider in keeping your home well-maintained. By having pride in ownership you can ensure the longevity of your home, protect your investment, and also increase its market value. When you are ready to sell your home, you will find that potential Buyers appreciate a home that has been well-maintained and are willing to pay for that extra care you took. Visit Sell Your Home 101 for more information and tips on selling your home and getting the most value.

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