How to Buy a House

The following guide is for general informational purposes only, and is NOT INTENDED as a source for legal guidance. If you are in need of legal advice, seek the assistance of an attorney. This information is specific to the real estate market in Maryland, only.

1. “HOW DOES THIS WORK?”

First time homebuyers are frequently overwhelmed at the prospect of buying a house.  Often, they stare at me blankly, with that deer-in-the-headlights look.  They’re not even sure what questions to ask about the process.  Relax, I say.  The most difficult part of your job is picking out which house you want to buy.  The lender and I take care of everything else.

 2. “WHAT DO I DO FIRST?”

The first step is quite easy, and is often the hardest thing for me to get my buyers to do.  You have to talk to a mortgage lender!  It’s easy, fast, and painless.  I’ll be happy to recommend two or three lenders who will take great care of you!  The lender will check your credit, tell you how much house you qualify for, how much cash it’s going to take, what your monthly mortgage payments will be...etc.  You will have an opportunity to meet face to face with him.  You will provide him with bank statements, 2 years of tax returns, pay stubs and possibly other items as well.  Then, he’ll give me what is called a letter of approval.  I will provide this letter to the sellers when we make an offer to purchase their home. 

Even in a buyer's market, most sellers will not even consider your offer, no matter how good it is, unless a letter of approval accompanies it.  By completing this step, we are also making sure we’re looking at the correct price range of homes for you.  I feel so strongly about this, that I WILL NOT show you any homes until you have completed this step. 

Here are my favorite mortgage lenders:

Kyndle Quinones First Home Mortgage
410-571-2020 ext. 2119 or 800-549-5300 fax: 410-571-839
send e-mail website

Susan Michael Bank of America
410-384-2626 or 888-231-5003 ext. 2626 cell: 410-404-5964
send e-mail website

Jeff Modeski C&F Mortgage  
410-531-0910 or  888-590-9696 fax: 410-531-0911
send e-mail  website

If you've served in the military, you can also call:
USAA 800-531-8464
Navy Federal Credit Union 410-573-5935

It’s extremely important that you contact your mortgage lender as soon as possible and MAKE SURE you understand the mortgage process!!  You absolutely need to know the answers to the following questions, so write this down and GET THE ANSWERS in writing!! 

1. What do you qualify for?  (Get a maximum sales price)
2. What will that monthly mortgage payment be?
3. How much cash will you need to bring to settlement?
4. What kind of loan are you getting?
5. Get the answers to numbers 2 & 3 for several different contract prices.  For example, if you are looking at houses priced from $350,000 to $400,000, get the monthly mortgage payment and cash required for a sales price of $350,000, $375,000 and $400,000.

3. “I’VE HEARD I’M SUPPOSED TO HAVE A BUYER’S AGENT.”

That’s right.  I can be your buyer’s agent.  We will discuss this in detail when we meet in person.  Basically, you need to know that I am representing YOU.  I am negotiating on your behalf, to get you the best price and terms.  I get paid by the seller at settlement (It doesn't cost you ANYTHING to have me represent you!).  Maryland law requires that at our first scheduled meeting, I present you with a document called "Understanding Whom Real Estate Agents Represent".  This document is NOT a contract...it's simply information that is intended to help educate the public about how REALTORS work.

The most important thing you have to know is this:  DO NOT GIVE YOUR NAME TO ANYONE!  Do not sign-in at an open house.  Do NOT give your name or address to a builder or builder’s representative.  (They have a very innocent way of asking you to just "sign the guest log").  Do not call a REALTOR® from a For Sale sign.  If you do any of these things, the builder or seller’s agent may make it nearly impossible for you to have a buyer agent represent you.  If a buyer's agent doesn't represent you, you will have to work directly with the seller’s REALTOR® (or builder’s representative), whose job it is to try and get the most money possible for the seller.  You don’t want that, do you?  Of course not!  So do us all a favor and call me for information.  Let me go with you to new construction sites and open houses.  Let me show you all the homes you are interested in seeing!  I'm here to answer all your questions!  And I'm easy to get an appointment with!

I can't over-stress how important it is that you do NOT give out your name.  I can represent YOU.  I can work in your best interest and negotiate on your behalf (and still get paid by the SELLER, not you!).  But I can only help you if you do not put yourself in a situation where another REALTOR® might be able to claim they introduced you to a property or a new-home community.

4. “WHEN DO I GET TO START LOOKING AT HOMES?”
 After you’ve gotten a letter of approval from your lender, we start looking at homes.  I will be sending you daily e-mails giving you the new listings and any listings with price changes.  You can also go to my web site, http://www.MarylandHomeoach.com.  Click on "Search Homes for Sale" and put in what you are looking for.  This is the exact same database that REALTORS® have access to.  It is real-time, up-to-the-minute, and gives you access to every single home for sale through any REALTOR®.  If I can see it in my database, then you can see it in this one!  You can go in to the database at any time and see all of the homes for sale.  You can do as many different searches as you want... as often as you want!  After a home has been on the market for about a week, a photo will appear in the listing. 

You can call or e-mail me at any time to get more information on a home that you see.  I can fax, mail, or e-mail the listing to you. 

5. “AM I GOING TO HAVE TO DO A LOT OF DRIVING AROUND?”

Houses can go very quickly in this market.  You will need to monitor your e-mail to make sure you’re notified of the newest listings.  You will do a certain amount of driving around on your own.  You need to get out there and discover what communities appeal to you.   I’ve found most buyers prefer to drive around on their own.  You can go at your own pace.  If you go in to a community and don’t like it, you can turn around and leave.  If I take you out, I’ve made appointments with sellers, who have run around cleaning up their homes for us.  Then I drag you in my car, and you decide you hate the community, or don’t like the house’s curb appeal, and we’ve just wasted lots of people’s time.  If you’ve driven by the house ahead of time and eliminated it because of the community, or because of a lack of curb appeal, we won’t be bothering the seller and wasting appointments.  So…please take the time to educate yourself!  It really pays off! 

***Important!***  I highly recommend that you buy Microsoft Streets & Trips mapping software (approximately $30).  This software allows you to plug in all the addresses of the houses you want to drive by – then it will arrange them logically and give you written directions as well as maps.  Also!  Buy the ADC brand map book of each county you are looking in.  Every property listing that I email to you will have a map coordinate that corresponds to a page and grid in the ADC map book.  You will be able to immediately zero in on where each house is located. Plus, the map book has an alphabetical listing of each street in the county in the back of the book… so if you get lost you will be able to quickly find where you are! Also, MapQuest has recently upgraded their website to enable you to do some of this mapping for free.

6. “IF YOU'RE NOT DRIVING ME AROUND,  WHAT DO YOU DO?”

Many people think a REALTOR's® job is to act as limo driver.  Really, driving you to a house is not an important part of my job.  Any 16-year old with a driver’s license can do that!  My job is providing advice to you.  I help people buy and sell homes.  I have lots of experience doing this.  I will help you decide which house to buy, what offer to make.  I will help you negotiate.  I will get inspections done and help you decide what to do as a result of the inspections.  Of course, I will take you to see the inside of your favorite homes...after you've eliminated the ones you don't want to see.  I will guide you through the entire process and make life as easy for you as possible.  I will be with you every step of the way!   In return, I will expect you to do certain things.  Driving around neighborhoods on your own.  Not giving out your name.  Working with the lender.  Easy stuff.

7. “WHAT HAPPENS WHILE WE’RE LOOKING AT HOUSES?”

After you’ve gotten a letter of approval from your lender, and you’ve driven around a bit and found areas you’re interested in, we’re ready to start going in to homes.  This is a fun day for us!  I recommend you have a full meal before we go out.  House hunting takes a lot of energy, and we're not going to have a lot of time to stop and eat!  We will continue with our house-hunting trips until we find a house that you want to make an offer on.  Please feel free to bring anyone you want with you on our trips.  Moms, Dads, friends…whoever!  All are welcome! 

If you have small kids, please give us all a break and find a babysitter for them.  Kids hate this!  They yell and squirm and knock things over in homes.  Moms and Dads are too busy dealing with cranky kids to pay attention to the houses we’re in.  Sellers don’t appreciate it when we bring in kids.  I get frazzled and cranky.  So… get a babysitter, okay?

While we’re in a house, feel free to look in closets and explore the home.  Please refrain from making negative comments about a house while we’re inside.  You never know who might be home!  Occasionally we’ll run in to a seller who wants to take us on the “grand tour”.  Smile and be patient.  Remember, this is their pride and joy!

8. “SO…HOW DO WE MAKE AN OFFER?”

I love this part!  By the time we are ready to write an offer on a home, you will be an expert on the local market.  I will prepare a market analysis for you on the home you want to purchase.  This is a report that shows you everything that’s for sale, under contract, or sold, within the last 6 months.  My goal is to make you comfortable with home values.  You and I will work together to figure out what offer you want to make.  There are more things to think about in your offer than what price you’re going to offer.  We need to think about how much of an earnest money deposit (good faith money) to make (usually $1,000 to $5,000) what date you want to settle, what inclusions you want to ask to stay, how much if any closing cost help you’re going to ask the seller to provide, what inspections we need to have done on the home, and a number of other terms. 

The important part to remember is:  YOU’RE IN CHARGE!  This is your home…your money.  You can make any offer you want!  We can be creative!  I will be by your side the entire time…giving you advice and guidance.  This is where a buyer’s agent is truly most valuable!  I consider it to be my job to give you advice and information.  What you do with that advice is up to you!

Writing the offer will probably take about 2 hours.  I will write the offer and explain it to you in detail.  If you like to read every word of fine print, I will be happy to provide you with the contract forms ahead of time.  Just ask!  At the time we write the offer I will collect an earnest money deposit check from you.  The check is not deposited until we have a full agreement and have obtained all the necessary signatures and initials.

Let me make a quick caveat:  This entire Guide, and in particular any discussion about contracts and negotiation, is concerning ONLY the real estate market in Maryland, AND is making many assumptions which may or may not actually apply to your particular case.  All of the contract terms are negotiable.

I will present the offer to the sellers’ REALTOR®, who will in turn present it to the sellers.  Sometimes sellers respond immediately with a counter-offer or acceptance.  Sometimes they have to think about it for a few days.  We can revoke our offer at any time until they have accepted our offer in writing.  Most negotiations take place verbally.  The sellers’ REALTOR® will call me and give me their counter-offer.  I will call you.  We go back and forth until we have an agreement.  Then we initial any changes made to the contract.  Once everyone has initialed all the changes we have a legally binding contract, and your earnest money check is immediately deposited in the bank.

9. “OKAY.  WHAT'S NEXT?  WHAT ABOUT INSPECTIONS?”

Next, we get our inspections done.  Home inspection.  Well test.  Septic test.  Radon test.  Termite inspection. Mold test.  Lead paint test.  Chimney inspection.  Buried underground oil-tank inspection.  Whatever we asked for in our contract.  Once again, I’ll be with you every step of the way.  Depending on how we structured the home inspection contingency you may have the opportunity to cancel the contract as a result of the home inspection and/or you may have the chance to ask the sellers to repair or replace certain items.  Then, the sellers will have the opportunity to tell you whether they are willing to complete those items.  If we cannot come to agreement you can cancel the contract and get back your earnest money deposit.  If you cancel the contract as a result of the home inspection the only money you will lose is what you paid the home inspector. (Again, this is all dependent on how we structured the contract…I’m just describing a typical situation for you). 

There has been a lot of negative publicity about home inspectors.  I am very picky about who I recommend to my buyers.  I want an inspector who is not afraid to find every little problem with the house.  My philosophy is that a picky home inspector not only protects you, but protects me, as well!  If the home inspector finds all the faults in a house, you’re never going to wonder if the sellers, sellers’ REALTOR®, or I were trying to cover up anything.

Here is my favorite home inspection company:

Joe Fraser Property Inspections
Ofc: 410-604-3777 Joe's cell: 443-463-5634
www.joefraserpi.com/

Many sellers do not like to allow buyers back in the house after the home inspection takes place.  Therefore, I recommend that you bring a tape measure to the home inspection so you can take room dimensions and measure for drapes.  With the seller’s permission, bring a camera and take pictures of the house, inside and out.  Bring a note pad.  Bring relatives.  This is your day! Also... if you are planning on having work done on the house immediately after settlement, you may want to arrange for your contractors to come to the house during the home inspection to prepare their estimates. This way we don't have to make separate appointments with the sellers. Just let me know in advance who will be coming so I can notify the sellers.

I will make arrangements for the termite test and most of the other tests and inspections.  We usually wait until 30 days before settlement to have the termite test done.  You are not present for the termite test (It’s usually done during the work day, and often we’re just given an open window for their arrival, i.e. “We’ll be there sometime tomorrow morning.”)

By now, you will have paid your mortgage lender for a credit report and appraisal.  This is typically around $450.  After we’ve gotten through the home inspection, the lender will order the appraisal.  You are not present for the appraisal.  The seller’s REALTOR® meets the appraiser.  Your lender will give you the appraisal results.  If there are any problems as a result of the appraisal, I will guide you through that process.

10. “WHEN DO I HAVE TO PAY FOR THINGS?” "And how much?"

Good question.  Most things are paid for at settlement.  Your earnest money deposit check ($1000 to $5000) is collected from you when we write the offer, and then cashed when we have a signed contract.  Next, you pay for the home inspection at the time you have the home inspection done.  The home inspection is typically about $350 depending on the size of the house and the number of inspections done.  Then, as soon as we have gotten past the home inspection, you will need to pay your lender for the credit report and appraisal (about $475).  This is very important!  Many buyers delay sending in that check, and as a result, we don’t have the appraisal done until the last minute.  We can’t go to settlement until we have the appraisal.  If you wait too long to give your lender that check, we might even have to delay settlement.    The termite test is paid for at settlement.

About a month before settlement you need to purchase a homeowner’s insurance policy (also known as hazard insurance)...this dollar amount varies greatly, depending on the value of your house, and what you're insuring.  It’s a good idea to shop around for your insurance policy.  Usually if you insure your car through the same company, you will receive a discount.  I recommend USAA, Nationwide, Allstate, and Erie. (Insurance company phone numbers ) You will need to bring your receipt for insurance with you to settlement. 

Shopping for homeowner's insurance is very important and shouldn’t be put off until the last minute.  Recently many homeowner's insurance companies have drastically raised their rates or dropped service in certain areas.  For this reason it is important to shop early and compare companies!  I saved hundreds of dollars by calling several companies to compare prices!  Before you call the insurance companies you may want to call the non-emergency phone number for the fire department and ask them how close is the nearest fire station, and how close is the nearest fire hydrant.  The non-emergency phone number for Anne Arundel County's fire department is 410-222-8200.  For other counties, call 411 or look in the blue section, or government pages, of the phone book.

When you talk to your mortgage lender he will give you a total dollar amount for how much money it's going to cost to buy a house.  All of the above expenses are included in his estimate, except for the home inspection fee.

11. “DO I GET TO SEE THE HOUSE AGAIN BEFORE SETTLEMENT?”

Yep.  Either the day before settlement or the morning of settlement, we’ll go back through the house for a final walkthrough.  We make sure the house is in the same condition as it was the day we wrote the offer.  We check to make sure any required repairs were done and that the sellers have removed all their possessions.  We check all the systems and appliances to make sure they’re working properly.  This is our last chance to make sure everything is as it should be!  Once we go to settlement the house is yours.  You can move in immediately!

12. “HOW DO I SET UP PHONE, CABLE, POWER, WATER...?”

About a month before settlement give the appropriate companies a call.  Click here for the companies and phone numbers.

13. “WHAT DO I BRING TO SETTLEMENT?”

Bring your drivers license, proof of homeowner’s insurance, and your money.  Money must be in the form of a bank check, or certified check, made out to you.  At settlement you will endorse the check over to the settlement company.  Your lender will tell you how much money to bring.  Many buyers are frustrated that the lender can’t give an exact dollar amount.  The lender will generally give you a dollar amount that is within $200 or $300 of the amount you will need.  If you bring too much money to settlement the settlement company will issue you a check the same day we settle.  If you don’t bring enough, you can write a personal check for the difference.  Almost always you get a small check back at settlement.  Lenders can’t be exact with you because many of the figures that determine your expenses don’t come in until the last minute (Hey, a lot of this stuff comes from the local government…what do you expect?).  Things like exact property taxes, front foot assessments, homeowners’ association dues, etc., don’t come in until just prior to settlement.  The lender makes an educated guess based on recorded information and is usually very close. 

Even though your lender will have a copy of the contract, they usually don't check it to see if there are any terms in the contract that would change the amount of money you need to bring to settlement.  When you ask the lender for the dollar amount you will need at settlement, remind them of any special terms, like seller closing help, you may be getting.

If there are two of you buying the home you both have to come to settlement.  If one or both of you can’t make it to settlement we can use a power of attorney.  It’s a good idea to designate someone who you trust and who has no financial ties to your settlement to act as your power of attorney. 

14. “WHAT HAPPENS AFTER SETTLEMENT?”

You own the home after settlement.  You can go straight from settlement to your new home!  You can start moving in immediately.  I recommend that you immediately change all the locks.  This is not to say I don’t trust sellers…it’s just that you don’t know how many neighbors have keys.  Better safe than sorry!

You can call me any time with questions or concerns.  I truly want to make sure you are happy!  If you want recommendations from me for a plumber, appliance repairman, veterinarian, etc., give me a call or use my Referral Directory.  I put my Referral Directory together based on the recommendations of my clients.  Every business in my directory has been highly recommended to me!  If you’ve lost the directory either go to my website http://www.MarylandHomeCoach.com and use the one online, or ask me for another copy.

15. “WHAT CAN I DO FOR YOU?”

I work by referral.  It is my goal throughout this process to provide you with superior service.  I genuinely want you to be thrilled with your home and with me.  I hope you will recommend me to all of your friends, relatives and co-workers who need a REALTOR®.  Most people are hesitant to pick up the phone and call a “salesperson”.  Ask them if it’s okay for you to call me and give me their name and phone number.  I will call them!  I’ll give them the same great service I gave you!

Most REALTORS® spend a great deal of their workday prospecting for new clients.  They make cold-calls, knock on doors, answer the phones at their company’s front desk, etc.  I don’t do any of that stuff.  I devote my time and energy to serving my clients…before, during and after the sale.  All I ask of you is that you refer me to people who need a REALTOR®.  Wouldn’t you rather work with someone who came highly recommended to you?  Chances are it was a friend who told you about me.

Since I don’t have to go out and spend hours every day prospecting like other REALTORS®, I can do a much better job working for you!  That’s because I’ll have the time to answer your questions, solve and avoid problems, keep you informed, and be there for you when you need me!

If you know someone who is ready to buy or sell a home all you have to do is two things:

1. Tell people about your experience with me and give them my name and number.
2. Call me and let me know who I should call and I’ll take care of the rest!