How I Work For The Buyer

This is an outline of the home buying process in Colorado. More specifically, this is how I approach the buying process with the buyer clients I work with.

The Colorado Contract to Buy and Sell Real Estate provides several contingencies for the home buyer. These contingencies are short periods of time to get your financing in order (loan conditions), verify that the property condition is acceptable and to make sure the title is clear and merchantable (title objection).

Once these contingency deadlines pass, the buyers earnest money will become...“at risk”. This is why I work closely with my clients to get through this period with satisfactory results. Although contingencies are an important part of the work I do, they are just a small portion of what I manage during the home buying process. Here is a more comprehensive overview.

>Step One - (Pre-Qualification) Pre-qualification is the beginning of the formal loan application process. At this stage an experienced lender will look at your long and short term financial goals and present you with the appropriate loan programs. 

>Step Two - (Needs assessment) It is important that I have a clear idea of what your priorities are as they pertain to lifestyle, finances, etc...

>Step Three - (View Homes) Once you have applied for a loan and have a pre approval letter from your lender we have determined your favorite areas, then we start to view homes in those areas.

>Step Four - (Locate The Home) When we do find the home you are interested in purchasing, the first thing we need to do is to establish the value, in other words, how much is the property really worth? The tool we use to establish value is called a “Comparative Market Analysis”.

The goal of the Market Analysis is to find similar properties that have sold in the last six months and compare those properties (comps) to the home we are considering (subject property).

It is important to note the CMA is not as scientific as a professional appraisal but renders similar results.

>Step Five - (Prepare Offer) Once we have established value, we discuss how much you would like to offer. This decision is based on a combination of actual market value, your perceived value of the property, property condition as it relates to the amount of inspection items we think we might have to ask for, how long the property has been on the market and how much showing activity has taken place. 

>Step Six - (Contingencies) Once we have the property under contract the due diligence period begins. Our goal during this period is to systematically remove all contingencies. These contingencies are short periods of time to get our financing in order (loan conditions), verify that the property condition is acceptable (inspection objection) and to make sure the title is clear and merchantable (title objection).

>Step Seven - (Full Loan Application) Once we have an accepted offer we are officially “Under Contract”, we send a copy of the agreement (contact) to the lender. The lender in turn starts to process the entire loan application. The loan goes into underwriting. Loan Underwriting by definition is "The analysis of risk and the decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors".

>Step Eight - (Property Inspection) The inspection is our time in the house with a trained professional, time to discover the true condition of the property you are about to buy. This is why the choice of an Inspector is an important one.

Membership in one of the above organizations should be a minimum requirement. The American Society of Home Inspectors (ASHI), National Association of Home Inspectors (NAHI), National Association of Certified Home Inspectors (NAHCI).  Additionally, personal referrals and past experiences can help find a skilled inspector.

After the inspection, we put together a notice of unsatisfactory conditions, per the deadline in the contract addressing any repairs or potential problems.

>Step Nine - (Negotiate Inspection Issues) This is a process of putting together a list, if the inspection yields any unsatisfactory conditions. We present this list to the Sellers agent who in turn reviews it with the Sellers. They have two choices, to agree to all conditions of our requests or to propose an alternative resolution. If they propose an alternative resolution, the buyer has the opportunity to either accept the resolution or walk away from the deal with earnest money intact.

>Step Ten - (Appraisal) The lender will arrange to have the property appraised.  This is an up front charge that the lender will collect at loan application.  A professional, licensed appraiser will research the value of your home.  If the property does not appraise for the purchase price, two options are available.

   1. The purchase price can be renegotiated.
   2. The contract may be terminated.

(Step five) addresses the Comparative Market Analysis. The primary reason we do the CMA prior to making an offer is in order to avoid having appraisal problems at this point in the transaction.

The Title Company provides a current “status” on the title. This is usually where a flag will appear for any potential problems by notifying all parties what liens and/or judgements need to be paid at closing. The Title Company also provides a proposed commitment for your new title policy. This is where your lender will be listed as a lien holder.