Home Buyers Tips

A Step By Step Look at Home Buying

Some real estate laws and customs differ depending on where you live, but there are many home buying steps that are standard, even though they might not be accomplished in the same order in every location. Here are the 11 steps to buying a home:

Step 1 - Get Your Credit/Finances in Order

Your credit score is one of the primary factors in determining the interest rate you will receive and the amount the banks are willing to loan you toward the purchase of the property. So, make sure you check it and ensure there are no issues before starting the property search process. Know your financial history before you apply for a mortgage. Errors on credit reports are common and often require time to clear them up.

The minimum middle credit score of the three scores considered "average" to get a loan today is 620, anything below that you  will not get a loan.  In addition to the minimum score, you must have at least two years of stable employment in basically the same industry. These are the two most important factors in being able to get a mortgage loan today, if you do not have this do not waste your time looking at property.

In the event you determine your credit score is below 620 and you do not have two years of stable employment or, have a short sale, foreclosure or bankruptcy in your past tell your realtor. If you have been turned down for a loan, and you are not paying cash for a property, the ethical and polite thing to do is inform your realtor so you are not wasting their and your time.

CASH OFFERS:  All Cash offers require, before offers can be presented "Proof of Funds". The most common Acceptable format of proof of funds is:

A. It must be Clear and Legible

B. On Bank or Credit Union Letter head with authorized signatures, current date, full contact information via: Name, address, telephone numbers.

C. Bank or Credit Union Statements with Institutions name, current date - Mandatory that all account numbers be  "Blacked out" before being sent.

D. Proof of funds must show Account holders name and that name must match Buyers name on any Offer.

E. General Letters - (other than a statement or printout) Sellers will not normally accept phrases such as "sufficient funds" or vague references to balances.  The Letter must indicate an amount at or over the offer price.  It must be Dollar specific, current date, on letter head, signed and complete contact information from the person issuing the letter.  

Step 2 - Get Familiar with the Mortgage Industry

Have at least a bit of background about the loan process before you talk to a lender (if you do not already have a lender, as a realtor I can assist you in the process, call or e-mail me). My Cell Telephone: 904-608-5681 e-mail: tomsells@bellsouth.net  Find a lender that you are comfortable with and that fits your needs.  If you are a veteran and want to do a VA and or a USDA loan, please call me at 904-608-5681, I can recommended a list of lenders specializing in VA and USDA type loans.

Buyers today are experiencing longer than normal time to get loans approved because of new Federal regulations. Loans for primary residence and second homes are difficult enough however, investment property loans are being put under the microscope. For investment property be prepared to pay higher rates, providing personal financial statements, original documents front and back, possibly the last two years of income tax records, higher closing costs and possibly higher down payments.  If you have no history of managing investment property (landlording) be prepared to show enough income to cover payments on the new investment property during times of vacancy.

Having a good credit score, stable employment history are no longer enough to get financing on second homes or investment property.  Be prepared for loan approval on investment property to take from 60 to 180 days after acceptance by the seller. It is highly recommended to get all the required documentation in to the lender and the financing approved before getting a contract accepted.  After acceptance without having loan approval. you may be putting down payment or earnest money at risk of being lost if the loan does not get approved in the time negotiated. 

Saavy listing brokers are all inviting back up offers on property under contract to protect their sellers. Failure to perform in the time periods negotiated can put your home inspection money, appraisal, survey, binders, earnest money at risk of being lost if you cannot perform and the seller is not willing to extend the time for loan approval. By taking back up offers the lisitng agent may find an offer  higher than yours or a cash deal, which the seller or bank is going to take rather then give you more time to get your loan approved.  

I cannot emphasize enough the importance of getting the financing approved as soon as possible to avoid the risk of losing the home you are bidding, possibly your binder, earnest money and other money spent doing your due diligence on the property.  If you cannot get a loan and you have a home under contract, you risk losing money spent and in escrow if you cannot perform in getting the loan in the time negotiated.  The best course of action is to get the financing and a pre-approval  or "Proof of Funds " letter before you start bidding homes.  Further, in multiple bid situations having your loan approved or "Proof of Funds" letter puts you in a better negotiating position to get your offer accepted.   


Step 3 - Get Pre-Approved for a Mortgage

Once your credit/finances are in check, apply for a pre-approved mortgage, it only takes a few minutes on the telephone and will establish how much house you can afford so you know what price range to be looking at.  If you are ever involved in a bidding war for a property, the potential buyer that has already been pre-approved will get preferential treatment from the seller and will probably get the first opportunity to buy the property. Today, offers submitted without proof of funds or letters of pre-approval will not be accepted or even considered. In this market, A well priced hot property will sell very quickly and may have multiple offers. If you do not have your letter of pre-approval or proof of funds on a cash offer you will not be able to respond fast enough to be considered.  If you need a letter of pre-approval contact me at 904-608-5681.

Step 4 - Determine Your Wants and Needs

Grab a piece of paper and divide it into three columns. If you'll have a co-owner, have that person make a list too, but don't share ideas just yet.

Column 1 - List Must-Have Features:

  • If the house must be located in a specific neighborhood or school district.
  • If the house must have 3 bedrooms, a 2 car garage, a large kitchen, a view.
  • If there must be no restrictions against a home-based business or parking extra vehicles. 
  • If the home must be one level, with few or no steps.
  • List every feature you feel is a must.

Column 2 - List Features You Would Like:

  • A deck or pool. 
  • Whirlpool tubs, walk-in closets.
  • A certain type of architecture.
  • Gas or electric heat,
  • Central air conditioning.
  • List all features that are important to you--but that you might be flexible about.

Column 3, List Features You Do NOT Want:

  • A home located next to a highway or in a congested area.
  • Certain types of architecture.
  • Homes that need a great deal of work.
  • List all features you absolutely cannot accept.
  • No (CDD) fees, Community District Development or impact fees.

Review your list. If your co-owner made a list, (Significant other, Wife or Partner) compare them to see if your priorities match. If they don't, you'll need to compromise, revising your lists so that both of you are happy.

Making a list is a good exercise because it forces you to think about your wants and needs, but I can almost guarantee you that the list will change and evolve when you actually begin to look at houses. Even home buyers with an unlimited budget rarely find the "perfect" home.

Step 5 - Select a Qualified Real Estate Agent

Basically, there are many agents, most that are designated as Realtors adhere to the professional standards or code of ethics established by the National Association of Realtors (NAR).  Here are some reasons of what you should look for in an agent and why you should do business with me. Find an agent that you feel comfortable with, their personality, professionalism and ability to serve or assist you in your home buying/selling process – like me!

  • Find an agent who has a good website that provides you with ample educational resources, information about the area, offers services and has a good MLS search and information on listings that you are interested in.
  • Find an agent who will offer you prompt professional service. Obtain copies of all documents and contracts you sign. 
  • Find an agent who is knowledgeable and will help guide you through the real estate process
  • Ask me for referrals.  Go to "Meet Tom Stanko" on this website, click on the link to the right "Testimonials" and see what some of my past customers have said about my service.  
  • Make an appointment and interview me, ask me about my marketing tactics, placement in MLS, services offered, commission rate, etc.
  • Get a feel for my knowledge and experience of the industry by reading the link to the left "Meet Tom Stanko" and click on "Credentials."  
  • For additional things to consider in choosing a Realtor go to "Why a Realtor" on this website, click on the link to the right "What to look for in a Realtor." 
  • NAR and most real estate practicioners believe the more education and additional training an agent obtaines the better they can serve their customers.  Look for an agent that has designations, has taken special courses, training or has studied and obtained advanced licenses such as a brokers license, the highest attainable.  

Step 6 - Start Searching for a Home

As a Realtor, I have many tools at my disposal to help you through the process. I can help you by searching the multiple listing service (MLS) system to find listing that match your desired criteria, providing you with Comparative Market Analysis (CMA) reports, lend my knowledge of the area, school systems and more.

Hint: You can use my website to search and find and then I can show you any property in the area!

Start looking for two types of real estate:

  1. Houses that seem to match the one you'd like to buy
  2. Houses that are similar to your current home.

Step 7 - Handle Pre-Offer Tasks

Deciding whether or not you want to buy a house involves a look at its structure and its features, but there are many other topics that are every bit as important to your purchase.

Step 8 - Make an Offer

Here are some tips that can help you get the best deal when it’s time to make an offer on a home. No matter what your strategy is, you should have a very good idea of the home's market value before you make an offer.

  • Lowballing it: Be realistic, some seller's take a lowball offer as a personal insult and may not be as anxious to deal with you on your next offer. That's fine if low is all you'll go, or if the property is truly overpriced, but it can create problems with future negotiations.
  • Being generous: Come in too high and you may not find the seller's low point.
  • Helpful Advice from your Agent: One area I can help you is to provide you with enough information and advice to assist you in determining the best price to offer. I can run comparables for you, and will be involved in offer strategies.
  • Finding Sales Information – Courthouse/Local Tax Collector Website: Ask the staff to explain how to decipher deeds or other records that indicate sales prices, find out the selling history of properties in the area and often get sketches and facts about a home's structural components.
  • Asking prices: Advertising gives you a feel for average asking prices, but your focus should be on sales prices. You'll find them recorded as explained above or on multiple listing recaps of sold properties.
  • Should You Have an Appraisal?  You can order a market appraisal before making the offer, but make sure the results will not be shared with others (and keep in mind that opinions from different appraisers can vary). Further, if you are getting a loan your lender will want to order their own appraisal and may not accept the appraisal you purchaed before you had acceptance on the offer. 
  • What about tax values? Tax valuations are not a good measure of a property's market value. Your community might have a general guideline, such as tax value = 80% of market value, but the figures are not usually reliable. Ask your local tax assessor for details about your specific area. Take a look at a home's tax value, but never assume it matches the market value of the property. Today some properties are selling below tax values.  Some tax values may be based on the original high purchase price and will be lowered in the future.                                                                                                                  
  • Other factors that affect price:
  • How long has the house been on the market? If only a short time the sellers might not be too motivated.
  • How does the house compare with others for sale in the same neighborhood?
  • Is the house in need of repairs or massive updates? Updating items such as insulated windows, plumbing and electrical systems, kitchens, and baths can be costly.
  • How much time is left in the roof?  Most lenders want an economic life of at least five years, some require more. 
  • What about the neighborhood, do you foresee home values climbing, staying the same, or possibly taking a downturn?

Bottom line

Analyze each home's condition and compare it to others on the market, but your final offer will likely involve a good deal of gut instinct. Is it the house for you? If you've been searching for a home for awhile, you will probably know the answer to that question the minute you walk in the door.

Step 9 - Home Inspections and Other Tests

In some states, home inspections are accomplished before the final purchase contract is signed. In other states, inspections take place after an offer is finalized. No matter when you do them, it's critical to decide which inspections and tests you want to perform.

Today, insurance companies often require a special five point separate inspection before they will quote a home owners or hazard insurance policy on older built homes.  The inspection must be conducted by a licensed home inspector or contractor to evaluate the roof, structure, electrical, plumbing and HVAC system. This is a cost the prospective buyer must incur and have the inspection done prior to closing in order to obtain the insurance. 

Talk with your real estate agent  to find out when inspections should be handled and if additional types of testing are important for your specific area.  Most agents including myself highly recommend having a home inspection and have lists of licensed Home Inspectors they can provide for you to select one.

Step 10 - Avoiding and Correcting Last Minute Problems

As your closing date nears, everyone involved in your real estate transaction should check its progress on a daily basis, because staying on top of things means you'll know immediately if there's a problem that must be dealt with. Here's a bit of information that focuses on a few common problems that some home buyers must deal with before they close on a house.

Step 11 - You're on the Way to Closing

Most of your home buying problems are behind you now and you're on your way to closing, also called settlement, the event that transfers ownership of the property to you, here the realtor and the closing agent (can be broker, lawyer or closing specialist) will help guide you to your new home.

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 10 Things Not To Do

1. Don't Make a Major Purchase

If you are depending on a mortgage to move in, don’t make any major purchases until after the closing on the home (fight the urge to get a new car to put in your new driveway). An increase in your debt to income ratio reduces the amount of monthly income available for your mortgage payment. Using cash to purchase the car could also create a problem, since banks consider cash reserves when approving your mortgage. If you must make a major purchase before closing, talk to your loan officer before you do it.

2. Don't Change Jobs Unless It's Necessary

Lenders like to see a consistent job history. They aren't usually as nervous if you change jobs within the same field, but it's better to stay put until the keys to the house are in your hand.

3. Don't Let Your Emotions Take Over

Be realistic. No home is perfect, especially older homes. If the seller refuses to do a small repair, don’t let it kill the deal on a home you truly love, realize It's not unusual for new owners to take care of some repairs themselves. Keep a cool head during the entire home buying process, especially during and after an inspection.

On the other hand, don't fall so much in love with the house that you'll buy it no matter what needs to be done--unless you're absolutely sure you can handle it emotionally and financially.

4. Decide what type of repairs you can realistically tackle, then stick with the decision.

Repairs such as electrical, plumbing, roofing, HVAC and structural best be handled by a licensed professional.  Minor repairs such as painting, small wood damage, wall paper, small holes in walls, adding insulation etc., could be handled by yourself if you are familar and comfortable with doing such tasks.  

5. Don't Forget to Switch Utilities

That sounds simple, but you'd be surprised how many people forget to apply for utility service at their new home. Call the utility companies as soon as you have a contract. Find out how many days lead time they need to switch the service, then get back with them when you have a firm closing date.

Don't forget to discontinue services at your old home.

6. Line Up Your Hazard Insurance

A no-brainer, right? Acquire hazard insurance as early as possible, as it’s another often forgotten task that buyers scramble to take care of at the last minute. Lenders will ask to see an insurance binder showing you have coverage at the closing. During Hurricane season, (June 1 through November 30) it is very important to obtain a commitment on home insurance early because after a geographic area is under a Hurricane watch, Insurance companies stop writting policies until the Hurricane watch is lifted.  If you do not have the Insurance commitment and you are scheduled for your closing, you will not close on the transaction which could bring about other problems. The financial institution doing your loan needs the insurance coverage in place before they can grant your loan.    

In some locations, additional types of insurance coverage might be necessary such as flood insurance. Talk to your lender about insurance requirements well before the closing date.

7. Don't Become Best Friends with the Seller

While it's great to be friendly, but don't get into too many long discussions with the sellers, because it could cloud your judgments.

Remember, this is their home. A casual statement about "ripping up that ugly carpet" might be enough to keep the seller from negotiating with you about repairs or other issues that crop up.

8. Don't Panic if the Appraisal Comes in Low

At least not at first. There are some things you (and your agent) can do to correct the problem.

9. Don't Go It Alone

As your agent, it's my duty to track many of the day to day details that involve the lender, the seller, or the seller's agent.

10. Don't Ignore Lender Requirements

Know what is expected of you and take care of it. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That's something you must handle yourself however, if you are having problems obtaining it contact me, I may be able to help you.  Answer lender questions and provide required paperwork as quickly as possible--your closing depends on it.

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 Advice for 1st Time Home Buyers

Even for experienced home buyers, it can be a confusing process, but can be especially intimidating for the 1st Time Home Buyer, so here are some tips to help guide you through the process

Get knowledgable in Home Buying Basics

Before you begin, get educated about the home buying customs where you live. Relatives or friends who live in another state might have some good general advice for you, but chances are the process is very different in their area, so avoid the mistake of relying solely on their advice to make important decisions.

So How Do You Learn the Basics?

Talk to a real estate agent such as myself, for advice about the typical home buying scenario.  It is a good opportunity for you to gain some knowledge off of an expert who deals with these transactions on a continuous basis and allows you to get a feel for me as your potential agent when you are ready to make that decision.

Use this web site and read about buying a home, the importance of having at least a 580 credit score, getting pre-qualified for a loan, things to avoid and how and why you should work with a full time experienced realtor.

You can also talk to a bank loan officer or mortgage broker, they look at home buying from a different perspective, but can usually give you a basic overview of the process. I have access and work with numerous mortgage brokers and can recommend a number you can talk to and get  pre-qualified for a loan. Call me at 904-608-5681 or e-mail: tomsells@bellsouth.net  



To obtain additional information about protecting, maintaining, and increasing the value of your home go to the following web site provided by The National Association of Realtors (NAR);




Home Buying Questions to Ask

  • Will the agent help you compose your offer to purchase a home? In Florida as your realtor I absolutely help write and present your offers. 
    • If the agent uses fill-in-the-blank forms, ask for a blank sample copy to take home and study.
  • What types of disclosures are sellers in your area required to give to buyers? Can the agent give you a sample copy of typical disclosures? Home Owners Association (HOA), Mold, Sink Hole, Latent Defects, Lead Paint just to mention a few. You will get copies after the buyer and seller both sign.
  • What types of home inspections are standard in your area? Are there other inspections that the agent recommends?
    • How much do the inspections usually cost? In Florida, they are usually regarded as a buyer expense and can cost from $300 to $500.
    • When are inspections done? In Florida usually after acceptance of the offer and before closing.
    • Special 5 point insurance inspection on older homes: Roof, Structure, Electrical, Plumbing, HVAC and cost from $125 to $200. Often required by the insurance company and usually paid by the buyer and could be used to determine home owners insurance rates.
    • WDO Wood Destroying Organism inspections (termites) if the lender requires and generally a good idea for all property, done before closing. Costs vary on the size of the building from $125 to $250 or more. 
  • Is a survey required for most transactions? If so, who typically pays for it? Not required however, most lenders require and it is a good idea for all property to be sure there are no encroachments. In Florida usually the seller pays and they have been costing from$300 to $450 depending on the size of the property.    
  • Does an attorney or title company do a title search to verify that the deed is problem free? Either an Attorney or Title company does the title search and writes the title insurance. Cost vary depending on the size of the transaction.
  • Who acts as settlement agent, the person who puts together final paperwork for you to sign? (attorney, title company personnel, real estate broker, other)?
  • Other than loan costs, what's the average total cost for other closing fees? For a buyer in Florida, total closing costs vary from 2.5% to 5% of the purchase price. Taxes, settlement agent fees, title insurance etc. vary on the geographic area and the purchase price of the property.
  • How long does it usually take to close on a home once an offer is accepted? Historically it has been 35 to 45 days after putting a home under contract however, today most normal transactions take 45 days, cash sales can be less. Short sales and pre-foreclosures have been taking substantially longer sometimes as long as six months or more just to get a decision, Foreclosed or REO property can close faster possibly within 45 days especially if it is an all cash offer.    

That's a good start. After you have the answers to those questions, you'll have a better feeling for the basic customs in your area.

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Understanding Your Local Real Estate Market

It's important to study your local real estate market before you seriously look at houses so that you can make educated decisions through out the process.

As your agent, I can get you a report of sold comparables and we can look at what current listings are being priced at to reveal the mindset of sellers in your market.

Start browsing the real estate market and contact a realtor in your town now, before you talk to a For Sale by owner seller, builder or listing agent.   My e-mail address: tomsells@bellsouth.net  Cell Telephone: 904-608-5681

  • Browse listings on my website, local and of the entire MLS market
  • Pick up real estate for sale books in your area.
  • Read real estate ads in the local newspapers.
  • Take adventure drives and look for For Sale signs. Note which neighborhoods you like the best.
  • If you stop at a For Sale by Owner, Open House or Builders Model, tell them you have a realtor and give them one of my business cards. It becomes very difficult for my broker and I to be inserted into a transaction and represent you as your realtor, negotiate and submit a contract and eventually get paid, after you have made initial contact with a seller, listing or site agent and do not disclose you have a realtor.
  • In your travels, gather information off  brochures, especially contact information and addresses. As your realtor I will make contact with the sellers agent which is why the seller hired an agent to represent them.       
  • Make changes to your Wants & Needs list if necessary.

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