Here is an outline of how the buying process works here in Vermont. There are two steps that I consider to be tied for first.
1(a): Get Pre-Approved
There are numerous banks, mortgage companies, credit unions, etc. that will issue you a written pre-approval for financing, usually at no cost. There are different loans available at the different lenders, so it is always a good idea to shop around for the best "loan product" for your needs. Not sure who to contact - skip to the next section and make "Choose a Real Estate Agent" your first step. A good buyer's agent will be able to suggest a variety of experienced local lenders who can provide your pre-approval letter. You will also have access to recommendations for attorneys, property inspectors and other professional services that may be necessary throughout the process.
It is important to understand the difference between "pre-qualified" and "pre-approved". Lenders "pre-qualify" buyers based on information received by them that is subject to verification. This is somewhat helpful, but does not carry the weight that a "pre-approval" does. When the extra step to "pre-approval" is taken, the seller knows that the information has been verified and that the lender has approved the loan, subject to acceptance of the specific property to be purchased and the fully executed Purchase and Sale Contract. Other than having sufficient funds to make a "cash" offer (no financing required), this is the strongest position you can be in when negotiating with a seller.
1(b): Choose a Real Estate Agent
Here's the part that a lot of buyers don't know:
Traditional real estate agents are working for their seller "client". The seller has hired them as their "agent" and they have a legal "fiduciary" duty to act in their seller client's best interest to get the highest price with the best terms for the sale of their property. It gets complicated because the seller becomes a client of the real estate agent's firm. They have established an agency relationship with every agent in that firm. They have hired a team of professionals to market their property. This "listing agency" is going to spend their time, money and expertise to sell this property.
This is where the buyer needs to be cautious. Don't become a "customer" of the seller's agents. They have a legal obligation to try to sell you their clients' listings. Hire your own "buyer's agent" and get the same client-level service that the seller has. The only way to truly do this is to hire an "exclusive buyer's agent". This is an agent who's firm represents "buyers only" and has no conflicting obligations to any seller clients. Like having that pre-approval letter, this is the best position to be in to move forward with a successful property search. Don't get sold property, buy it!
My firm, Vermont Real Estate Buyers Agency, is the only one in Chittenden county that works with buyers only, 100% of the time.
2: Find The Property
Now you're ready. You know how much you can afford to spend, you have a lender who has committed to loaning you the money, and you have chosen your own buyer's agent to help you successfully navigate the entire process. If you have chosen me, we will begin by starting to search for properties that meet your specific requirements. Your criteria can include price range, location, square footage, number of bedrooms, bathrooms, basement, garage, acreage; we can be as broad or as specific as you would like to start your search. I will enter your criteria into the Realtor MLS (Multiple Listing Service, I am a member of both VREIN and NNEREN) and all of the currently listed properties meeting your criteria will be sent to you in whatever form you find most convenient, usually by email. Depending on the specific terms we have placed in our "Buyer Agency Agreement", a search of For-Sale-By-Owner (FSBO) and other unlisted properties may also be conducted using a variety of sources.
Often it is best for you to then drive by the properties that interest you to narrow your search further, and compile a list of properties that you would like to make an appointment to view. As the process progresses, both you and I will get a better idea of what properties suit your needs and tastes and your search will become more focused. Your search can take days, months, or sometimes longer depending on the inventory of properties for sale, the flexibility of your criteria and how well your expectations match the reality of the current market conditions.
3: Make An Offer
Your search has produced a property that you want to buy. Using all the information that is available from comparable recent past sales, market conditions, the knowledge you have gained during your search, etc., we will establish an overall negotiating strategy. Once you are comfortable with all of the aspects of this plan, it will be formalized in writing by making an offer to buy using a Purchase and Sales Contract signed by you. This is a critical step in the process, especially here in Vermont. It is this offer that becomes the binding contract when it is signed by both the buyer and the seller. It is vital that the original offer is thorough and all-inclusive. It must contain all of the terms, conditions, and protective clauses necessary to minimize your risk as you move forward with the negotiations. Dates and deadlines must be carefully considered and can be unique to each situation. This offer will guide the rest of the buying process and getting it right requires experience and expertise.
4: Satisfy Conditions
Negotiations have been successful, the finalized offer has been signed by both you and the seller and is now the contract. It is now time to satisfy all of the conditions ("contingencies"). This is the opportunity to perform the "due diligence" that will reduce your risk of buying a property that is not what you had hoped for. This can include a wide variety of things including but not limited to; home inspection and testing (water, radon, septic, etc.), document review, boundary identification, obtaining estimates for repairs, appraisal and final financing approval. Managing this process and attending inspections can be complicated and time consuming and is a big part of my job as buyer's agent. Working closely with my clients, I will help make sure that all of the details of this critical step in the buying process get completed correctly and within the terms of the contract. This requires attention to dates and deadlines, scheduling, communication, paperwork and follow-up; I will provide professional assistance at every step throughout the transaction. Failure to execute this properly puts you at risk of losing your earnest money deposit and the property you want to buy.
5: Closing
All of the contract contingencies have been satisfied, your lender has given you a formal commitment to finance the purchase and you are now ready to take title to the property ("close"). The specific closing time and place will be scheduled and details such as obtaining homeowner's insurance, transferring utilities into your name, and final property walk-through (usually the day before or the day of closing) will need to be completed. I will continue to assist with the details and attend walk-through and closing to be sure that you are properly represented from start to finish. At closing your chosen attorney will explain in detail the documents you will need to sign. Once these documents are all signed, you are officially the new owner. Congratulations!
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