The Buying Process

Unless a home is for sale by owner, all sellers have agreed to pay a 6% commission to real estate agents when the actually sell their home. 3% will go to the agent and brokerage firm that were responsible for selling the home, and the other 3% will to the agent that you select to represent you.

Using an agent saves you time and money and provides valuable expertise. Unless you decide to represent yourself and are prepared to fill out the 10 pages required to make an offer, then you will require an agent’s help at some point, so putting one to work for you sooner than later will save you time and a lot of hassle.

Don’t spend your valuable weekends driving through neighborhoods and waste valuable time on the Internet when an agent will organize the process for you and will save you thousands of dollars when it comes time to negotiate an offer.

Here is a snapshot look at the home buying process. Click through the process to get a better understanding, it will save you a lot of time and hassle.

Finding the Right Home

• Identify your priorities
• Understand the market
• Sellers pay all commissions
• Select an agent
• Search properties

Make and Offer

• Contact your real estate agent
• Completing a Real Estate Purchase Contract (REPC)
• Presenting the Real Estate Purchase Contract (REPC)
• Conduct a home inspection

Identify Your Priorities

Finding the right home, or “the home of your dreams,” requires understanding your priorities and expectations. Every family and person has a different connection and definition of the place that they call “home.” Making a list of priorities for your self or your family will make your home search more productive. Here are some things to consider when composing your list prior to searching for homes.

Home Features

• Square Footage / Size
• Price
• Floor Plan
• Number of stories
• Style of home
• Number of bedrooms and bathrooms
• Yard size and requirements (children? pets?)
• Garage size
• Closet Space
• Kitchen / Great Room
• Fireplaces
• Furnace
• Air Conditioning

Neighborhood Features

• Corner lot vs. middle of the street lot
• Traffic count
• Public Transportation
• Distance from work and local attractions
• Sense of Community
• Parks
• Quality of School Districts

Financial Considerations

• Potential for Home Appreciation
• Value of surrounding homes to yours
• Frequency of home sales
• Property Taxes

Understand the market

Every home and its value are directly relevant to the market that they reside in. Understanding that market is critical to making a well-informed decision about any property. Contact a Sotheby’s Utah Real Estate agent to help you understand current market conditions and what to expect.

Slow Market vs. Active Market
In a slow market, houses sell more slowly resulting in a large inventory to choose from. Buyers, therefore, have a great advantage in negotiating great prices and terms. In active markets, competition for available house is fierce and homes get higher asking prices more quickly. Understanding the market that you are participating in is important. Talk to Sotheby’s Utah Real Estate agent to find our more about current market conditions.

Sellers Pay All Commissions

Unless a home is for sale by owner, all sellers have agreed to pay a 6-7% commission to real estate agents when they actually sell their home. 3-3.5% will go to the agent and brokerage firm that were responsible for selling the home, and the other 3-3.5% will to the agent that you select to represent you.

Using an agent saves you time and money and provides valuable expertise. Since the seller of the home you will eventually buy will pay your agent, putting one to work for you sooner than later makes sense.

Select an Agent

Working with a qualified real estate agent can improve your house-finding experience dramatically. As a partner, advisor, and guide, your agent can help you:

• Understand the local market and current house prices.
• Access the Multiple Listing Service (MLS) for available properties, expired properties and actual sales prices of homes that recently sold.
• Organize and complete the necessary paperwork to make an offer and close.
• Present your offer to the seller’s agent and negotiate you the best price.

So, how do you find the right Realtor for you? Meet with them personally to make sure you feel comfortable with them and the way they conduct themselves. Some good questions to ask any real estate agent are:

• What company do you work for and how long have they been in business?
• Number of homes sold in the past year?
• Their knowledge of the specific areas you are interested in?
• How often and by what means will they communicate with you during the process?

At Sotheby’s Utah Real Estate see how we only provide you with the most exceptional agents in the market by viewing, “Attracting Experience.”

Search Properties

Now that you have specified your priorities and have selected a real estate agent from Sotheby’s Utah Real Estate; you are ready to explore the homes that are available. For a productive search, here are a few guidelines to follow.

• Find out as much information about the neighborhoods that interest you as you can. Does that information meet your expectations and priorities?
• Have your agent search your selected neighborhoods for homes.
• Applying your priorities to the homes they find, rule out properties that will clearly not work for you.
• Ask your agent to set up a Buyer’s Tour of the homes that you are interested in seeing. Don’t waste time on homes that didn’t meet your criteria.
• Take notes when visiting homes so you can remember what you saw.

Second Visits

Once you find a house you like, take a closer look at the details. Even though you’ll hire someone to make a formal inspection should you decide to make an offer, there are several high-level areas you can examine now to get an idea of a house’s current condition.

Functionality and Flow

• Does the floor plan flow and make efficient uses of space?
• Does the house get good natural light?
• Do the outlets sit where you want them?
• Is the carpet, hardwood, or tile in good shape?
• Are the furnaces and appliances acceptable?

Visible Problems

• Condition of the walls and paint/wallpaper
• Roof? Does it look newer?
• Condition of the yard, trees, etc.?
• Is the basement dry or does it smell moldy?
• Are the windows in working condition?

Making An Offer

Contact Your Real Estate Agent
Once you have finalized on a home that you wish to pursue for purchase, the most important thing that you can do is contact your real estate agent. Talking to the sellers, or attempting to initiate an offer on your own can be costly and can hinder your ability to negotiate successfully.

Call, email, or visit your real estate agent’s office to make preparations to complete a Real Estate Purchase Contract (REPC).

Completing a Real Estate Purchase Contract (REPC)
In order to make an offer on the home that you wish to purchase, you and your agent will complete a REPC. The REPC is a prewritten contract approved by the Division of Real Estate of the State of Utah that contains three separate elements: the earnest money receipt, the offer to purchase, and the document receipt. Inside the REPC are key dates, dollar amounts, and terms that you will be able to decide in an offer.

Some of the items that you and your agent will need to decide are:

• Purchase Price – Your offer could be higher, lower, or equal to the asking price. In order to know what the best purchase price to offer is to investigate houses that are currently active, recently sold, recently expired or withdrawn, or longstanding homes on the market. Homes that have been up for sale for a long time in an active market could mean that either the house may be either overpriced or have serious problems. It is during this process your agent will be of enormous value.
• Earnest Money Deposit – The deposit that you make as a buyer when submitting an offer to purchase real property. It shows your intent, or earnest, in buying the property. Usually, the earnest money is 3-5% of the purchase price and is only cashed if your offer is accepted. If your offer is accepted, the earnest money is applied to your down payment or closing costs at settlement. If your offer is not accepted, your check will be returned to you. In the event that you default on the REPC, the earnest money will serve as liquidated damages to the seller.
• Important Dates – While filing in the REPC you will need to determine four key dates that will determine when you will close on the home, when you will complete all necessary inspections, when you will complete your loan application, and when the seller will provide you with the Seller Disclosure Documents.
• Contingencies – Ask your agent how pending financing, your current home’s sale, and any other contingencies might be included in the REPC when completing it.

Presenting the Real Estate Purchase Contract (REPC)
After you and your agent have completed writing your offer using the REPC, your agent will present your offer to the seller’s agent. Once the seller has reviewed your offer, one of three things will happen. First, the offer will be accepted as your agent presented it to the seller(s). Second, the seller(s) will reject the offer. Or third, the seller will present a counteroffer to the terms that you submitted through your agent.

Counteroffers are common, and sometimes there are multiple counteroffers by both you and the seller(s) in order to come to an agreement. For example, the seller(s) may agree on the price of your offer, and may disagree on your timing to close and move in. Counteroffers require negotiation and skill, allowing your agent to guide you and help you obtain the best possible deal is important. Until you and the seller(s) have come to agreement on all terms and a final offer is accepted, nothing is considered legal binding for you or the seller(s).

Conduct a Home Inspection

Every offer to purchase real property allow you to have a professional, physical inspection completed before your earnest money becomes unrefundable and before you finalize your deal. Inspectors help buyers minimize the negative consequences of not knowing too much about the property before moving in. You will pay for the inspection and your agent can help you identify a certified inspector that you can trust.

Inspectors will look for various things, including, but not limited to:

• Structural problems with foundations or walls
• Outdated or defective wiring
• Faulty plumbing
• Potentially leaky roofs
• Poor drainage

After your inspector has finished his physical inspection, your inspector will issue a report, which you then can review independently and with your agent. If the report reveals problems with the house then you can exercise one of the following options.

• Make a counteroffer asking the seller to fix the problems.
• Make a counteroffer asking the seller to compensate you for correcting the problems.
• Conduct additional inspections for further information.
• Accept the problems and move forward under the REPC (if the problems are not that serious, or you can accept them.)
• Reject the offer, get your earnest money back, and continue to search for an alternative house.