Home Buyers Guide 2020 Edition - nyrebate.com€¦ · Home Buyers Guide 2020 Edition 3 Forward The...

Home Buyers Guide 2020 Edition

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Contents

FORWARD ........................................................................................................................................... 3

FIRST STEPS - GETTING PRE-APPROVED .................................................................................... 5

SECOND STEPS - NARROWING LOCATIONS ................................................................................. 7

THIRD STEPS - GETTING AN AGENT .............................................................................................. 9

FOURTH STEPS - FINDING A HOME & MAKING AN OFFER ...................................................... 11

FINAL STEPS - OFFER – CLOSING ................................................................................................. 14

QUESTIONS & ANSWERS ................................................................................................................ 17

SAMPLE FORMS ............................................................................................................................... 18

THE ENDING .................................................................................................................................... 20


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Forward

The 2020 Home Buyer’s Guide is my 11th annual edition, I hope you like it and find it useful. The

last few years have been tough ones for buyers with little inventory and ever-increasing prices. Most

experts are predicting a housing slowdown or crash this year (I incorrectly predicted it for last year in the

2019 edition). The onset of the Corona virus has stood the housing market on its head. With the

staggeringly high unemployment rate prices will have to come down as there will be a lack of qualified

buyers. However, in the short term (I am writing this on May 17, 2020) there is a tremendous shortage

of listings as buyers are out and sellers are waiting for the virus to pass. This has led to a temporary crisis

in availability and hence many bidding wars. If you can wait to buy, wait a few months until the prices

catch up to the unemployment numbers. The housing market will have to drop steeply but the question

is how long it will take to do so. Waiting may save you 20% of purchase price depending on the severity

and length of the current crises. This is not legal advice.

What this book is: an overview and explanation of the home buying process in Suffolk County,

Nassau & Queens; what this book is not: legal advice. Over the years the feedback for my book has been

overwhelmingly positive but some of the feedback I’ve gotten has been that a particular home buyers

experience varied from what I portray in this e-book. That’s to be expected as each deal will have subtle

differences or new wrinkles, but you will be better prepared after having read this and the majority of

readers will go through a very similar experience as described in the book. I do try and give you a good

guide to go by, so you know how the process works and what to expect. If you’ve followed my advice on

selecting the right agent than he or she should be able to guide you through any situations either not

covered or that pop up in a new manner easily and without excessive stress. Remember, the more you

know before starting on this endeavor the more comfortable, you’ll be which will hopefully convert into

a more pleasant and fulfilling experience. This will probably be the biggest purchase of your life up to

this point, putting in the proper time and effort in preparation should lead you to a far better result

even if this is not your first home purchase.

In closing please feel free to contact me at any time if you have any questions or comments or

are looking to buy or sell a home on Long Island. I love to get feedback either positive or negative and

new questions for future editions. Now onto the book and hopefully you will receive a payoff for the

time investment reading it.

Thank you

Thomas Brady

Licensed Associate Real Estate Broker SRES BPOR E-Pro SFR

Retired NYPD Lt., U.S. Air Force Veteran & Notary Public


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631-682-8660

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www.FinestHomeSales.com

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First Steps - Getting Pre-Approved

For the 2020 edition I wanted to make you aware that some banks will no longer give pre-

approvals, only pre-qualifications but they use the term interchangeably so if that’s the case then it’s

fine. If you are 6 months or closer to purchasing a home before you start searching for your dream

home, you need to get pre-approved by a lender. Pre-approval, as opposed to pre-qualified, should

mean that you have submitted documentation to a lender and that they have investigated your credit

and income among other things and are pre-approving you for a loan. All you need do is to find a home

that fits within the price, property taxes and condition (if you are buying a foreclosure, you’ll most likely

need what’s called a 203k or rehabilitation mortgage) laid out by your lender. With pre-approval in hand

you are ready to start your home search.

If you are six months or more from buying, it may be better to get pre-qualified. Pre-qualification

normally entails providing your information to your potential lender (without verification or credit check

by them) and them providing you with an estimated loan amount. Although you may find it difficult to

submit offers with only a pre-qualification, until you are seriously buying it should suffice to give you a

guideline to start your search.

Why do you need to get pre-anything? There are several reasons. The first is that to have an

offer accepted, or even submitted, the sellers need to know that you can back up your offer with

money. That money could either be in cash, which would be proved with bank statements, brokerage

account statements and so on, or in the form of a mortgage. The way you convey your ability to

purchase to the seller when you are going to get a mortgage is with a pre-approval. The pre-approval

tells the sellers that you have been investigated by a lender and that they are willing to lend you the

amount of monies indicated on the pre-approval for your home purchase. Does the pre-approval

guarantee you will get a loan? No, many things can change in the interim: you could take out a car loan,

pay off a credit card, or the bank could have a change in policies. However, the pre-approval explains to

the seller that at that point in time you are very likely to be able to back up your offer with money in the

form of a mortgage from a lender.

The second reason is that many people vastly misjudge their potential buying power either

higher or lower. This leads to problems when buyers are looking in the $500,000 range, for instance,

only to discover that when they are pre-approved it is for $300,000. How many homes will appeal to you

once you’ve looked at homes in a much higher category? Conversely, if you were looking in the

$300,000 range and after pre-approval you find that you can comfortably be in the $500,000 range, you

have simply wasted your time and efforts. Pre-approval will let you shop for a home you can realistically

and hopefully comfortably afford to buy.

When selecting where to get pre-approved you need to do your homework. Be aware that there

are direct lenders, such as banks, and there are mortgage brokers. A mortgage broker will shop around

for a loan that suits your needs. Mortgage brokers tend to be more flexible than banks and can work

with a variety of situations, but you may feel more confident doing business with your local bank or


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credit union. It’s a personal decision, but you need to educate yourself so you can make an informed

decision. Going randomly from lender to lender applying and looking for the best deal will only hurt your

credit rating. You should be able to conduct most of your research online in a reasonably short time.

Getting a pre-approval doesn’t mean that you are stuck with that lender, you can always switch later if

you find more attractive terms. Now with pre-approval or pre-qualification in hand we can confidently

move to step number two.


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Second Steps - Narrowing Locations

Step number two entails narrowing down your search to a reasonable number of locations, even

if you think you know exactly where you want to be, doing a little research can uncover some hidden

gems or unexpected negatives in an area. I’m not suggesting that you must find the exact block you

want to live on but narrow it down to a few areas that suit your needs and wants. Real estate agents are

not allowed to steer you towards or away from an area. Even if an agent did recommend an area to you,

do you really want to depend on someone who may have different tastes or preferences than you? Only

you know what you like and don’t like and what you find desirable or undesirable in an area.

You can start by searching online for different areas that might be of interest to you. Do you like

the water? Search for areas near the water in the county you would like to live in. Are schools your top

priority? There are many excellent websites that let you search for information on school districts and

even individual schools. Once you find a school district or two that you like you can go to their websites

and see what they prioritize or what programs that you may like or dislike. Is crime a main concern?

There are plenty of websites to find information on it. Is commuting your major criterion? Map out how

far you wish to commute, and you will have a good list of places for preliminary research.

My point here is that you should not let other people narrow down areas for you. Each area has

different things to offer as well as different strengths and weaknesses. What is important to you may

not be important to the other people you are getting opinions from. Areas can vary as much as people,

even when they are in close proximity to one another. Some people don’t mind cess pools, others

demand sewers things such as these you may not have even considered but they can play a large part in

your future happiness with your choice of homes. Talk to friends and relatives and ask them what

surprises, or things they didn’t consider when buying their homes, some things won’t matter at all to

you but others that haven’t occurred to you could be deal breakers.

Draw up a list of your top needs and wants in a community and then go online to a mapping site

of the general area you want. Next, write down some names of communities that are in your preferred

areas and get started. It is very easy to do research in the internet era. Some people spend more time

online researching the latest price of gas than they will researching where they may spend the next

thirty or forty years of their lives. Take the time now so that you will not regret it later there are many

great websites out there that provide terrific insight into communities.

Once you finish, you should have a reasonable list of communities. Go onto a site such as Zillow,

MLSLI, Trulia, Realtor.com etc. and check the prices in the area. There is no sense wasting time with an

area of million-dollar homes when your budget is $300,000. Hopefully if you’ve made, you’re list and

have narrowed it down to five or so areas (don’t feel bad if it’s less or more) in your free time take a

drive around each of them at different times of day, and different days of the week. Do a little walking

and shopping in each of them; you’ll be surprised at the feel you can get for a place just by spending a

little time there. The key to stress-free home shopping is to be practical: do not waste time, effort, or

thought on things that cannot or will not happen. Those that stray from this principle will be in for an


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emotionally bumpy ride. Now that you’ve narrowed your list down to about five or so communities, it is

time to find an agent.


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Third Steps - Getting an Agent

Unfortunately, this step is not going to be as easy as you might think. My opinions in this

chapter are not consistent with most other agents, but I didn’t write this guide for other agents: I wrote

it for homebuyers. This is where the ‘knowledge is power’ principle will pay off for you.

There are basically three kinds of agents that homebuyers will encounter:

1. Seller’s Agents. They can also be called the listing agent; they work for and should be paid by the

seller.

2. Broker’s Agents. I won’t waste much time on them, for the purposes of this book you can consider

then kind of a neutral third party. They do not work against your interests as a buyer, but they do not

work for you either. They only owe you “honest dealings”. They should also be paid by the seller in most

cases.

3. The best agent for most homebuyers is a “Buyer’s Agent”. The Buyer’s Agent works to get the best

price and terms for the buyer, but should be paid by the seller, how neat is that? Some Buyer’s Agents

will try to get the buyer to guarantee them a certain percentage. For example, if the seller is offering X%

the buyer would pay Y% to give the agent a total of Z%. Do not go for it: get an agent that is willing to

take what the seller is offering and nothing more. Make sure that you get a full-time agent, do not make

the mistake of getting an agent that treats his or her job as a part-time hobby. You need a full-time

professional. Get an agent who will be available when you need them. If you like to look at homes on

weekends, ensure in advance that your agent works on weekends (most do).

Many buyers work with seller or broker’s agents’ every day and do just fine, it’s not unethical or

wrong; it’s just that there is usually a better choice for buyers. When you go to an open house and put

in an offer, you are doing it through the seller’s agent. Say you make the comment “We’d like to put in

an offer for $400,000, but I really love this house, I’d gladly pay $500,000”. Guess what? The seller’s

agent is legally bound to inform the seller and you may very well pay the $500,000 when you could have

negotiated a better deal or had a buyer’s agent negotiate one for you. Did the seller’s agent do anything

wrong? Not at all, if he or she had you sign a disclosure form indicating that they were representing the

seller. He or she works for the seller and did exactly as they were supposed to; they got the best deal

possible for the seller. I liken it to buying a car. The seller’s agent is the car salesperson, and you’re the

buyer. Do you want them to negotiate for you on the car purchase? No, they are on the other side.

Would you tell them that you would pay sticker price because you love the car so much? I doubt it.

What if you had someone that would be working to get you the best price for the car, a professional

negotiator, and he or she was paid by the car dealer? Pretty sweet deal huh? That person is a Buyer’s

Agent.

That is how a Buyer’s Agent operates. The Buyer’s Agent works for the buyer but should be paid

by the seller. You can confide your financial limitations, goals and strategies and they are legally bound

not to disclose them to the other side. Better yet, they will work to get you the best deal possible. A


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Buyer’s Agent can - among other things - find properties for you, show you properties, prepare market

reports on their opinion of the value of those properties, submit offers for you, negotiate for you, and

guide you through the whole process. What’s not to love?

Two pieces of caution when dealing with a buyer’s agent: do not sign an exclusive agreement

and do not agree to pay anything at all. Most - but not all - agents will try to get you to sign an exclusive

agreement that runs for a period of time and may include a minimum percentage guarantee for them. It

is like a listing contract that sellers sign, but it’s a buyer’s contract. This binds you to that agent even if

you find that they are not up to your standards, think they are ignoring you, or are simply incompetent

etc.. The burden will be on you to get out of the contract. Other agents will totally disagree with me on

this point, but I see a buyer’s contract as a crutch for bad agents and paper handcuffs to be used against

buyers. Find an agent that doesn’t require you to sign one, a good agent should be able to bind you to

them with honesty, integrity and hard work, not paper handcuffs.

One last but crucial piece of information about Buyer’s Agents bears repeating. Do not agree to

pay anything above what the seller offers. Here is how I have heard this spiel from an agent I would

not let my worst enemy do business with “I almost always get Z% buyer’s commission, but just in case

on the off-chance that they are offering less, which almost never happens, I’m sure you wouldn’t mind

making up the small difference. It comes out of the proceeds of the sale so you don’t even feel it.”

Don’t go for it. There are differences in agents, but you can find one that will take what is offered by the

seller to Buyer’s Agents. This does not happen often, and it is quite legal, but you get no added value for

it. If your agent works hard for you and does a good job, he will more than make up for any short-term

lost profit with long-term referrals from satisfied clients.

Also keep in mind when selecting an agent there are a lot of agents out there and not everyone

will mesh well with you personally or professionally. If you sign a buyer’s agreement based on a first

meeting, you will consequently be bound to that agent for whatever time period the contract stipulates.

Many people find that after signing such an agreement the agent is far less responsive to them than

before they signed. Ultimately, I want to say that although I know many fine agents who will not work

with buyers without a buyer’s contract, there are plenty of fine agents that will so why take the chance?

Ok, now you have your pre-approval, target areas, and agent, it’s on to the fun/ stressful stuff.

This is where your agent should earn their money with honest advice and a thorough education about

the process. Feeling comfortable with your agent and a firm belief that they are on your side will help

you get through the next stages far more easily than if you have an agent you don’t communicate well

with or don’t trust.


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Fourth Steps - Finding a Home & Making an Offer

Now the hard part is behind you and we can get to the fun stuff. You’ve already made good

decisions by researching banks and brokers, getting pre-approved, checking out areas and narrowing

them down, and finding a great Buyer’s Agent (hopefully me). Those things will make your search less

stressful and more successful in almost every case. Being pre-approved means you’ll be looking in the

right price range and you can make an offer (or offers) when you find something. Having done your own

research as to which areas suit you should leave you more confident as the search proceeds that you are

making good decisions. Having a buyer’s agent means that you can get expert advice on everything to

do with the home buying process and not pay a dime for it. Now it is time to find the perfect home.

This is where the beauty of having a buyer’s agent comes into play. Give him or her your criteria

such as, areas, price range, taxes, bedrooms, bathrooms, basement, garage, and any other parameters

you have and let them get to work for you. Keep in mind that you may have to be flexible and your list

should be divided up into must-haves and like-to-haves. A buyer’s agent should also be fine tuned to the

general market, 2019 was still a strong sellers’ market but 2020 should transition into a buyers’ market

at some point. The way an agent packages and presents offers and the advice they give their clients can

vary greatly depending on the current market conditions.

Your agent will email you lists of potential homes, and new listings as they come out but don’t

be afraid to send him or her some that catch your eye even if they don’t match what you told your agent

you want, people are allowed to change their minds. Go through the list and let the agent know what

you think about the properties, the more feedback you provide the more accurate the listings they send

you should become. Let your agent know which homes you would like to see and your availability. Do

not be disappointed if you cannot get to see all of them when you’d like, some owners aren’t very

flexible on their showing times. If it’s your agent that can’t fit you in, get a new agent. Currently homes

are moving quickly so don’t be surprised if several homes you’d like to see are already gone, you must

act fast in a seller’s market.

Once you find a house that you like (or several), have your agent prepare a market analysis that

will show you similar homes in the area and what they have sold for. The report should also include

some comparable for sale homes, and your agent’s opinion of the market value of the home. In today’s

market what was overpriced last month could be fairly priced this month with prices ascending in some

areas rapidly however if we change into a buyer’s market the converse will be true. Many buyers

automatically think that homes are overpriced, and the owners will always come down, not so in most

cases these past few years, you’re just as likely to see a bidding war and the home selling for over asking

price. Do not assume, go through the information provided by your agent and see what a fair price is.

You will run into situations where homes are overpriced and your Buyer’s Agent should be able to advise

you accordingly, but you may also run into situations where homes are underpriced, or priced quite

fairly, when a full price offer (even over asking price in some cases) is called for. The agent should be

able to justify an offer recommendation with the market report. Keep in mind that sold prices are much

more important than for-sale prices: one represents hopes and dreams, the other facts.


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You put in an offer at where your agent recommends is market value and someone else pays

more for it, what gives? Does this happen? Yes, situations like this occur every day. What your agent

prepares is a report on what he or she believes would be a fair price to pay for a buyer of average

motivation and attachment. Not everyone however is of average motivation or attachment and receives

good advice. If the buyer is using the listing agent (who works for the seller) the buyer is only due fair

and honest dealings, but the listing agent’s job is to get the highest price and best terms for the seller,

they do not work for or operate in the best interests of the buyer.

Why do people overpay for homes? For one example, say that the house for sale across the

street from Johnny Jones’s mother’s house goes for sale. Johnny Jones wants to move out, but he can’t

bear to be separated from his mother. Will Johnny Jones pay more than the average buyer will for that

house? Yes, he will, and gladly. So, your agent wasn’t wrong, his price opinion is based on the average

buyer. You might get into a situation where a house that you must have for some reason comes on the

market, your motivation increases the value of the home to you, and so paying more is not necessarily

paying too much. Conversely you can have an owner that must sell, he sells for a lower price, but the

lower price was still an appropriate one for him based on his need to sell. The key is not getting attached

emotionally to any home at this stage. You can put in a full price offer and get beat by a higher offer, or

an offer of slightly less money but on better terms to the seller. Letting your emotions get the better of

you can leave you feeling exhausted and that the whole process is rigged against you. Keep the faith, if

you lose one house a better one usually comes along.

The negotiating process varies depending on the owner’s flexibility, the buyer’s desire for the

house, and any one of a dozen other factors. Suffice to say that when negotiating it is best left to your

Buyer’s Agent to handle the path of getting where you want to be both in terms of price and conditions.

It is up to you to tell the agent how bad you want the house and what you are willing to pay for it. The

agent advises, but you make the decisions, always remember that and don’t let it get twisted around.

This is one of the reasons that it is hugely important to have an agent that you can trust and speak with

honestly and openly. An honest, hardworking, strong negotiating agent can make or break a deal for

you, pick your agent wisely and don’t just go by company affiliation. I’ve seen great agents working in

mom and pop shops and I’ve seen terrible agents working at the biggest names.

Short Sales/ Foreclosures

I just want to put in a note on short sales and foreclosures here. Many buyers think that short

sales and foreclosures are the be-all and end-all of bargain hunting. In most cases, they aren’t. Most

short sales won’t close. You enter into a contract with the homeowner and wait for the bank’s decision,

the bank can take up to a year (even longer in some cases) and all that time your good faith money that

you put down on contract is tied up. When the bank finally replies they may accept the offer, reject the

offer, or counter the offer. In many instances, the buyer has given up and moved on which sometimes

creates, for a short period of time, what is known as a pre-approved short sale. This means that the

agent now knows the amount the bank is willing to take and in some cases the bank will allow the agent

a window of time to find another buyer that will agree to the pre-approved price and terms. For many

home buyers this maybe the only terms under which to proceed with a short sale with a reasonable


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chance for success and an acceptable closing date. Beware the short sales, they have sucked in many a

consumer looking for a bargain.

Foreclosures are generally another type of distressed property that isn’t a good fit for most

buyers. They sound great on the reality shows and late-night infomercials, but the truth is somewhat

different, and the competition can be cutthroat. You can see some of the things that need repair but

with many foreclosures it is what you do not see that will bankrupt you. With the advent of online

foreclosure auctions, there are foreclosures bid up over the price of similar re-sale homes in good

condition. There seems to be a gamblers spirit that grabs some people during these auctions, and they

drive the price far over what the true worth is.

To summarize, if you’re set on a short sale or foreclosure, I strongly suggest you have a good

Buyer’s Agent and a strong stomach. In most cases, short sales and foreclosures are much more closely

aligned with investors goals and operating methods than with normal homebuyers. In my experience,

homebuyers looking for a home to live in will find better deals in estate sales far more often than with

foreclosures or short sales. The key with estate sales is that they tend to go quickly, and you need vision.

Most estate sale homes are in livable condition but need substantial updating. The main goal is usually

to sell them quickly hence the prices are generally discounted, but you need to move fast and be willing

to accept that they won’t be in perfect condition. Searching for estate sales is a bit harder than

searching for short sales and foreclosures so if you are considering an estate sale get an agent that can

find them for you.

Rehabilitation Loans

With most foreclosures, and some short sales, estates and even normal resales the buyer will

need or want to get what is called a rehabilitation loan or mortgage (an FHA 203k loan is a rehabilitation

loan backed by the federal government, many lenders have their own programs which are essentially

the same thing but privately backed). What that basically means is that the home is not up to mortgage

standards or needs other permissible work (changes based on lenders criteria) so there needs to be a

special loan made that will pay to make repairs/ upgrades after closing. Some generally permitted uses

would be roof repairs, windows, kitchens, bathrooms, adding living space and on and on. The home

buyer will make one monthly payment which contains the purchase price plus the cost of repairs/

upgrades, with the main caveat being that the home must appraise for the purchase price plus repair/

upgrade price as well as meeting the banks standards. If you are interested in a home needing a rehab

loan you’ll need to shop around as standards and rates can vary greatly, in almost all cases the rate will

be higher than a conventional loan.

Short Sales Scenario

Because I have received many questions on what a short sale is (it’s also briefly addressed in the

Q&A section in the back of the e-book) here is a basic short sale scenario. A homeowner becomes sick

and can no longer work (the key is it wasn’t foreseeable and not through their own fault as gambling

losses would be for example). The homeowner can no longer pay the mortgage, starts falling behind and

decides to sell their home. Unfortunately, this home owner’s home is only worth $300,000 and they


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owe $400,000. They list their home for sale as a short sale because its market value is less than what’s

owed on the mortgage. A home buyer comes along (we generally recommend short sales to investors)

and puts in an offer. The homeowner will likely accept the offer as they cannot profit from a short sale,

so the purchase price is not an important consideration for them. Now the homeowner and potential

home buyer go into contract pending third party (the mortgage holders) approval of the deal. Keep in

mind the mortgage holder, generally a bank, will take a loss, in this example if they accept the terms

they would lose over $100,000 with closing costs. The mortgage holder will usually do a carry cost

analysis to see if they will make out better financially by foreclosing or approving the short sale (if there

are multiple loans on the home than all the lien holders may need to agree to the sale). This can take

time, sometimes a lot of time, several months in general just to get the banks reply which can be to

accept the offer, reject the offer or counter the offer. Let’s carry it one step further and say that the

mortgage holder countered the offer at $325,000 but the buyer has since found something else

(possibly forfeiting their good faith deposit on the short sale) now if the bank is willing to grant the

listing agent a grace period to find a buyer at $325,000 you would have a rare thing called a pre-

approved short sale. Pre-approved short sales are a much different animal than non-pre-approved short

sales. Normal short sales have a very poor closing rate, but it increases substantially for pre-approved

short sales. There are many other elements that can come into play in short sales, but now you have the

basics, time to move on.

Final Steps - Offer – Closing

You’ve found two homes you like and want to put in offers (it’s fine to put in multiple offers, in

many cases it helps during the negotiations). You have your pre-approval and proof of funds for the

down payment (usually a bank statement) so it’s time to sit down with your agent and go over the terms

of each offer. Home one is asking $400,000 is vacant and has been on the market for over a year. To me

this could indicate that it’s overpriced because it’s been sitting so long, but it also could indicate a

stubborn owner who won’t face reality. We decide to offer $340,000 with 10% down on contract,

another 10% down at closing, an inspection within 3-5 business days (the inspection is a contingency), a

contract date of approximately 10 business days from the offer, and a proposed closing date of 45 days

from the contract date. This offer sheet should not be binding and the language on the offer sheet your

agent uses should indicate that.

The second home has only been on the market for two days at an asking price of $340,000 and

your agent values it at $380,000. We don’t know why it’s on the market at less than market value, but

we can assume that the owners want to get out as quickly as possible. There are of course a few ways to

go and each offer and negotiation is different but for these purposes I’ll take one tact. We offer

$340,000 with 20% down on contract, an inspection the nest business day, contract asap and closing

asap. Yes, the second home has accepted our offer, the first home countered at $395,000 (now we

know they aren’t serious sellers anyway). It is now time to book our inspection which you will be paying

for.


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Congratulations! You’ve got an accepted offer. Please read this carefully –an accepted offer

means nothing Another offer can trump yours or any host of other scenarios can still take place. You

need to get into contract, then you have protection. Unfortunately, an accepted offer is not usually

legally binding upon anyone so the quicker you can get the inspection done and into contract, the

quicker you can feel some sense of security.

Usually about three to five business days after the accepted offer, you’ll have an inspection

performed on the house. Picking an inspector is a huge part of the home-buying process. Pick an

inspector that doesn’t do a thorough job and you will be paying through the nose for the things he

missed, pick a ‘Chicken Little’-type inspector and he’ll make you think molehills are mountains and the

house is a money pit.

You should not go with the inspector your realtor recommends if you can help it. You are buying

one home, your realtor is probably selling many homes, who will the inspector’s loyalties lay with? We

aren’t saying the inspectors or realtors are unethical, but I’d prefer to pick my own home inspector if I

am buying a home. Get recommendations from friends and family and then thoroughly research those

recommended inspectors online. This is a critical step, do not treat it lightly.

You’ve got the inspection report, what are your options? Unlike some people may have you

believe this isn’t a time to renegotiate your offer, it may be a time to fine-tune it though. Minor things

on an inspection report are normal and to be expected, the major unexpected ones such as roof leaks,

plumbing, electrical, foundation, termites etc. are where adjustments are made. Based on the inspection

results you can go forward with the deal as is, request the home owner make some repairs, request that

the home owner reduce the price or credit you the anticipated cost or repairs, request that the owner

leave a sum of money in escrow, or walk away. Your buyer’s agent should be able to handle most of the

negotiating for you (obviously not the seller’s agent, you’ll have to negotiate for yourself if you used the

seller’s agent).

Now that the inspection is out of the way, it is time to get into contract. The seller’s attorney will

confer with your attorney (I try not to involve the lawyers until the inspection issues are worked out as

you may have to pay something for their time even if the deal falls apart after the inspection) then

draws up the contracts. You’ll go to your attorney’s office and sign and give him your down on contract

money (the rest of the down payment will be due at closing), then it will go back to the seller’s attorney

for the seller’s signature. Do not delay in signing the contract, the house should still be shown and

marketed until the home is in contract; meaning both parties (buyer & seller) have signed. If a better

offer comes in before all the signatures are complete the seller may take the new offer and you’ll have

lost your inspection fees.

You are now in contract! Now it’s time to hurry up and wait while the lending process plays out.

There will be a title search and appraisal as well as several other tasks performed before the closing.

One of the final hurdles you will face will be if the appraisal comes up short which we have seen very

little of in the current market but was a persistent problem several years ago. If it does come up short


16

your usual options will be to walk away, make up the difference, or have the seller lower the price.

Somewhere between 45 and 60 days, give or take 30 if the stars are in alignment you should close and

be the owner of a new home. Congratulations, you have navigated through the potentially murky waters

of home-buying with no stress, or at least hopefully less stress if you read my e-book.

Hopefully you are in your new home now and reflecting on the process that got you there.

Please contact me with suggestions, criticisms, questions or if your buying or selling a home. I try and

make improvements to the guides each year. I rely on the opinions, questions and comments from past

clients, current clients, and some people who just read the book and didn’t buy with me or didn’t buy at

all to make additions and adjustments.


17

Questions & Answers Q1. What is a short sale?

A1. A short sale is when someone encounters an unexpected economic catastrophe and can no longer pay their

mortgage; and the market value of the house is worth less than is owed on the mortgage. While these guidelines

have been loosened in many cases, they are still the general standard. One thing to keep in mind is that the

unexpected economic problem can’t just be a bad business deal (such as you paid too much for the house).

Generally, it will be where someone has become seriously ill or lost their job through no fault of their own, etc.

Q2. Why shouldn’t I use a Broker’s Agent?

A2. As I stated earlier, a Broker’s Agent is kind of a neutral third party, there is nothing wrong with using one but

there is a better option. A Buyer’s Agent is working to get you the lowest price and best terms as well as doing

research and using his or her expertise to get you the best deal possible. A Buyer’s Agent is working for you, but if

you follow my way, you’ll pay nothing for this valuable, and often overlooked, benefit.

Q3. I heard the best deals are to be had in short sales?

A3. As I discussed in the book, there are deals in short sales but the vast majority will never close and they are

more suited for investors. If you can find a real pre-approved short sale then it may be a good option for home

buyers, but they are few and far between.

Q4. I’d like to get into real estate sales, do you recommend it?

A4. Real estate can be a lucrative career, but it takes some time and money to get started. I think in most cases it’s

better to start off part-time and see how you like it.

Q5. Should I go with a realtor from a large company or a mom-and-pop one?

A5. I think it depends on the realtor more than the company. You want a realtor that you feel comfortable with,

who is full-time, knowledgeable and honest.

Q6. Can I make offers on multiple homes at the same time? What does it cost to make an offer?

A6. Making an offer is free. You will need a pre-approval for the offer to be considered. Depending on the situation

sometimes making multiple offers can work to your advantage. If there are two homes that you like equally,

making two offers will afford you the ability to see which homeowner will be more flexible.

Q7. Am I committed if my offer is accepted?

A7. Generally, no, an accepted offer unfortunately means very little. You normally aren’t committed until both the

buyer and seller has signed the contract.

Q8. I own a home already, when should I list it if I’m looking to buy a new one?

A8. Immediately. Consider someone buying your home, if they have a home to sell and haven’t listed it yet, how

strongly would you consider their offer if they must sell to buy? Not very. In fact, unless you’re in contract to sell

your home, many sellers won’t entertain your offer, or will give you a verbal acceptance but not go into contract

until you are in a contract to sell your home.


18

Sample Forms

Generally, for most buyers the disclosure filled out with buyer’s agent checked will be the best choice.


19

Sample offer sheet containing the necessary components, each company tends to use its own version.


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The Ending

I’m continuously updating the guide throughout the year so if you feel I’ve left anything out or have a question you think others may benefit from please let me know.

Thank you for reading and best of luck with your home purchase.

Thomas Brady SFR, e-PRO, SRES, BPOR NYS Licensed Real Estate Associate Broker Notary Public, Retired N.Y.P.D. Lt. 631-682-8660 [email protected] www.LIHomeBuyerRebate.com www.FinestHomeSales.com

*All opinions expressed are mine and do not reflect those of any company, entity or another person. This guide does not offer nor is it a substitute for legal advice.

mailto:[email protected]



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