Guide to Buying a TYPE in HOOD
The Buying Process
On 1/1/24, the State of Washington promulgated that all prospective buyers have to sign an agreement with a real estate broker before we can render you buyer services in TOWN. This agreement allows Compass and PNW Residences to legally represent you and your interests. It establishes a formal relationship between us and outlines the terms and conditions under which we represent you in your search for a TYPE in HOOD. In particular, the agreement defines the following:
- The Scope of Services that PNW Residences or our affiliate broker provides you. This includes procuring you TYPE searches in HOOD, showing you properties, negotiation and assistance with the purchaser process.
- The agreement can be restricted to property types and location. It can include details limiting our services to just one product type or within a geographic region.
- It also defines a duration for the agreement - typically 6 months but can be just one day.
- The agreement specifies how Compass will be compensated as it relates to your representation. At the start of each client engagement, we discuss various payment scenarios so that it is memorialized in writing. These rates are negotiable.
While mandated and requiring signature, we will review the agreement in person before we ask you to sign
Before beginning your search, your first step is to get pre-approved for a mortgage loan (unless you are paying in cash). We can recommend some trusted local to TOWN lenders if necessary. You and your lender will work together to determine your price range for your TYPE in HOOD. You will then receive a Pre-Approval Letter which will help guide us in your search and put you in position to start submitting offers. Letters are usually valid for 60-90 days before needing to be renewed.
Lenders will typically ask for the following:
2 months paystubs
2 months of asset statements
2 years tax returns
Protect Your Pre-Approval
Stay Current on existing accounts
One 30-day late notice can compromise your ability to be approved.
Do continue to use your credit as normal
Changing your pattern will raise a red flag and can lower your credit score.
Call your mortgage professional first
If you have any questions or concerns, always contact your mortgage professional.
Don't apply for new credit
Everytime you have your credit pulled by a potential creditor or lender, you will lose points from your credit score. This includes co-signing for a loan or applying for new credit.
Don't max out credit cards
Do not use more than 30% of you available credit limit during the loan process. If you pay down balances, do it across the board.
Don't consolidate your debt
When you consolidate your all of your debt onto one or two credit cards, it will appear that you are "maxed out" on that card and your credit scores will suffer.
Don't close credit card accounts
Closing a credit card account will have negative impacts on your credit history.
Don't payoff collections or "charge-offs"
if you want to pay them off, do it through escrow at closing.
Don't transfer money between accounts
Unless receiving complete documentation from your bank itemizing all transfers, don't transfer money.
Don't withdraw or deposit large sums of money
Unless absolutely necessary, don't withdraw or deposit large sums into your checking or savings accounts.
Don't make career moves
Don't change jobs while obtaining mortgage financing. Should an opportunity arise, discuss the details with your mortgage professional.
Don't let bank accounts go in the red
Any accounts with insufficient funds cannot be used. Be sure to keep all accounts in good standing.
Don't have a friend or relative pay for anything related to the purchase of the home
Gifts are only allowed under specific lending guidelines and must be documented. This includes your appraisal, earnest money, down payment, etc.
Don't keep cash in a safe or overseas account
If you plan to use these funds as a down payment, inquire about how and when would be the best time to put funds into your U.S. bank account if needed.
Don't give you personal information to anyone else who might run your credit report
Be protective of your credit while purchasing or refinancing your home. Additional credit inquiries will hurt your credit scores.
We will meet to discuss your search in order to narrow down your TOWN TYPE search and get you set up with custom search criteria so that new pertinent listings end up in your inbox as soon as they go to market. Then it is time to start looking at the TYPE's that look interesting to you.
We pride ourselves on taking the time to really listen to what you are looking for on the front end so that we send you the right options to choose from and then provide meaningful insight while touring the TYPEs. We will point out things to consider in each TYPE that you are considering because we get that this is not something you do more than a couple of times in your life. We do this everyday and know how to assess a TYPE's condition - that's why you hired us.
Once we have identified a suitable TYPE in TOWN, we need to decide the best offer strategy to create as strong an offer as possible while staying within your comfort level. Two things are critical in this stage, the first is using the most accurate market data possible to base decisions on. The second is our experience in the TOWN real estate market and analyzing the data whilst comparing the TYPE you're interested in with the TYPEs in the data to see where they are similar and differ.
Armed with this information, the details of the offer that need finalizing are: the offer price, earnest money amount and release, down payment amount, closing date and additional contingencies you might want to include like financing and inspection. Our role is not limited to just ironing out these details with you, we also constantly communicate with the listing agent to keep them informed of our intent to possibly submit an offer, but also to check on the status of the listing and if there is anything the seller is looking for that we could include to strengthen our offer - things like lease backs or ealry earnest money release. Everything needs to be carefully considered, but submitting offers that really match sellers desires goes a long way to being successful!
If we've gotten here that means you had an offer for a TYPE in TOWN accepted! You are now under contract which means all diligence and performance contingencies need to be managed and completed. The goal is to get to closing with no hiccups - especially as your earnest money is under jeopardy if you fail to withhold the contract. All transaction timelines, contingency periods and contact to escrow gets managed on your behalf. The Purchase and Sale Agreement is also shared with your lender to ensure they are up to speed!
Part of your down payment towards your loan is paid to escrow when the contract is signed. This usually needs to be deposited within 2-3 days or your contract is null and void. It is held as insurance by the escrow company and is released to the Seller if the Buyer fails to meet the obligations of the contract. We will coordinate the details and transfer to escrow to make sure you stay compliant.
The State of Washington operates under a "Buyer Beware" status. This means that when purchasing a TYPE in HOOD, it is up to the Buyer to verify all of the details in a transaction. Your contingency period may include one or more other documents including disclosures and a preliminary title report for you to review. We help you comb through these documents to ensure that everything is correct and that you have a full understanding of what you are buying. This process is especially important when buying condos as you also become part of the building association and you will want to see all of their documents - particularly maintenance and financial disclosures. This diligence is also frequently performed before submitting an offer if you do not elect to include these contingencies within the offer.
After all contractual contingencies have been cleared and we are ready to proceed towards closing, your lender will organize an appraisal with the bank. Most appraisals come in at value, meaning that the Bank doesn't have issues with the loan amount and is ready to fund it. However, on occasion, appraisals come in below the contract sales price which presents a problem towards funding your loan.
Notice of Low Appraisal
If you receive a low appraisal, you will want to notify the Seller using this form. This notice has multiple ways that it can play out, but effectively the seller can either reduce the sales price, reappraise the home and hope it meets contractual price or reject the low appraisal notice. Based on the Seller's response, the Buyer can then approve the Sellers proposal, waive the appraisal (make up the difference in cash) or terminate the contract.
Financing contingencies do have protections in place to return the earnest money to the Buyer in case a contract doesn't get to closing because of funding problems. Of all the contingencies however, this is the one that has the highest bar to meet and Buyer's need to be careful with timelines - particularly as they pertain to get information to the Lender. The return of Earnest Money isn't a concrete guarantee and it is important to have your Broker and mortgage professional in constant communication. This is where picking the right team to represent you can really make a difference.
At this point we are almost ready to sign all the final paperwork. There are a couple small steps left:
A day or two before the closing day, we always do a final walkthrough of the property. This is the final step of diligence to make sure that the TYPE is still in the expected condition, that any repair requests have been performed and that all major systems in the home are operating correctly.
Closing documents have been finalized and it's time to put pen to paper. The Lender has performed their final verifications and funds the loan. You need to bring remaining funds to close to escrow and escrow handles the final stages of the transaction before submitting the sale to the County Courthouse to have it recorded. Once the courthouse provides recording numbers, you are officially a homeowner and we can provide you with the keys to your new TYPE in TOWN.