In this episode of Mogobe’s Nuggets Of Wisdom Podcast, Speaker, Serial Entrepreneur, Attorney and Property Investor Mompoloki Lerumo Mogobe interviews Estate Agent and Operations Manager at Mogobe Incorporated, Mr Gape Pheto about the process of property acquisition. They discuss Top 10 Nuggets of Wisdom on the subject of Buying Property. The said Nuggets are as follows:
Top 10 Steps in Buying a Real Estate Property
Step 1: Start Your Research Early.
As soon as you can, start reading Web sites, newspapers, and magazines that have real estate listings. Make a note of particular properties you are interested in and see how long they stay on the market. Also, note any changes in asking prices. This will give you a sense of the housing/property trends in specific areas.
Step 2: Determine what sort of Home you can Afford.
Lenders generally recommend that people look for homes that cost no more than three to five times their annual household income if the home buyers plan to make a 20% down payment and have a moderate amount of other debt.
Step 3: Get Pre-qualified and Pre-approved for credit for Your Mortgage.
Before you start looking for a home/property to invest on, you will need to know how much you can actually spend. The best way to do that is to get pre-qualified for a mortgage. To get pre-qualified, you just need to provide some financial information to your mortgage banker, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much they can lend you. This will tell you the price range of the homes you should be looking at. Later, you can get preapproved for credit, which involves providing your financial documents
Step 4: Find the Right Real Estate Agent.
Real estate agents are important partners when you’re buying or selling a home. Real estate agents can provide you with helpful information on homes/properties and neighborhoods that isn’t easily accessible to the public. Their knowledge of the property buying process, negotiating skills, and familiarity with the area you want to live in can be extremely valuable. And best of all, it doesn’t cost you anything to use an agent – they’re compensated from the commission paid by the seller of the house.
Step 5: Shop for Your Home and Make an Offer.
Start touring homes/properties in your price range. It might be helpful to take notes (using this helpful checklist) on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home. Test the plumbing by running the taps to check how strong the water pressure is .
Try the electrical system by turning switches on and off
Open and close the windows and doors to see if they work properly
It’s also important to evaluate the neighborhood and make a note.
Step 6: Get a Home Inspection.
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.
Step 7: Work with a Mortgage Banker to Select Your Loan.
Every home/property buyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still others pick a loan based on the knowledge they will be moving again in just a few years.
Step 8: Have the Home Appraised.
Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The appraisal will let all the parties involved know that you are paying a fair price for the home.
Step 9: Coordinate the Paperwork.
As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.
Step 10: Close the Sale.
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. It typically takes a couple of days for your loan to be funded after the paperwork is returned to the lender. Once the check is delivered to the seller, you are ready to move into your new home!