Friday, March 26, 2021
Saturday, March 20, 2021
New Build Buyer Representation Steps
Most Important:
I represent almost all buyers at NO COST to the buyer. The builder pays. This cost is factored into the price of a new house. DON'T PAY FOR SOMETHING YOU DON'T GET! Builders' reps protect the best interests of the builders. I protect YOUR best interests.
I've Got Your Six!
This post covers the entire process from a new-build home buyer's point of view. It's long but is considerably shorter than a standard purchase contract. Since it is a step-by-step process, you can read a little at a time.
Buying a house is exciting. It’s also a little overwhelming because it’s the biggest purchase most people will make during their lifetime. I’m here to help. I’m on your side of the transaction. I look out for your best interests. I’ve got your back.
I’m an OPFOR (Opposing Forces) Infantry veteran. In our lingo, “I’ve Got Your Six!”
I’ll be on the lookout for problems, and I’ll do everything in my power to keep you safe throughout the transaction. I’ll give you information about the market prices of comparable properties. I want to ensure everything goes smoothly and stays on track. The mission is to get you moved into your ideal home with the least stress on you. I’m on duty to make that happen.
As a licensed Texas REALTOR, I can help home buyers find and secure houses, complete residential contracts and negotiate terms and repairs to turn a house into a home. In almost all instances, the seller compensates my consultation and activity fees - not the buyer. Please call or text 214-862-7212 or email me (markhancockrealty@gmail.com) when you are ready for my help.
Before we Meet
Prepare yourself to buy a house before you start looking. You’ll probably need to finance part of the home purchase. This means you’ll need to get your finances and paperwork in order to apply for a loan. Please read my post, “Your Credit Score and Options” (link).
If you’re selling a home, there’s much to do (please see Sellers' Guide) before you claim your equity and appreciation to buy your next home. Please call, text or email, and we can discuss some early actions.
If you’re a first-time buyer or don’t need to sell a property to purchase another property, the next steps are the same. You’ll want to save money for your down payment and closing costs. Buyer closing costs - for all loan types – can include lender fees, appraisal, attorney document fees, title fees, recording fees, prorated daily interest from the date you close to the first day of the following month, a full year of homeowner's insurance, initial escrow account setup (can be 3-4 months of taxes and insurance). Other fees may apply depending on loan type.
VA loans don’t require down payments, but there will be closing costs. There is also a one-time funding fee on all VA loans instead of mortgage insurance. It's still good to pay any additional related expenses and pay a comfortable amount of principal early to avoid interest on those funds.
Call, Text or Email DFWmark
When you first contact me about a home purchase, I’ll send you an invitation to my website (DFWmark.com). By creating a password, you’ll be able to save individual properties or entire searches.
My website is tied directly to the Multiple Listing Service (MLS). You’ll have access directly to MLS listings at no cost to you. Unlike third-party websites - which can be far behind the market – DFWmark.com is “live.” If you see an active property, it’s still active in the MLS and wasn’t sold 30 days ago.
If you want help with getting a preapproval letter, I’ll help you talk to the lender of your choice. Here are some trusted options (Link). Otherwise, contact me once you have a preapproval letter from your preferred lender. I will send you a state-mandated Information About Brokerage Services form (see Page 2). It explains how agency works in Texas and lets you know the names and numbers of all my supervising brokers. My company requires it to be initialed. It can be done in person with ink, but it’s better to get digital initials because we will ensure the digital signature system works properly with your preferred email address on your computer or smart phone.
Paperwork
Many lenders will want to see financial documents to preapprove borrowers. Please get your documents in order before you contact the lender to make the process move smoother.
Applicants will need photo identification (these include driver's licenses, passports, military identification and sometimes birth certificates). It should be your current address if possible. Don’t stop the process to get a new ID while the ID is still current. If it’s expired, a different ID will be required.
The lender needs several paycheck stubs as proof of employment and income - count on three months. They need several months of bank statements to show the down payment money is "seasoned" (has been in the bank for 60-90 days). If gift money is involved, it too must be documented and seasoned.
VA applicants will need all pages of their Certificate of Release or Discharge, also known as a DD-214 form (Link). They will also need their Certificate of Eligibility (Link) to secure a VA loan amount.
Applicants may also need documentation on the amounts they owe various lenders and proof they have paid off large-ticket items. Again, check with your lender to see what documents they will require.
Preapproval
By this point, you should have a preapproval letter. You should have a dollar amount that you can effectively handle from your lender. This is mostly based on your income, your housing-expense-to-income ratio and your total-debt-service ratio. Different kinds of loans require different ratio percentages.
FHA ratios tend to have a slightly higher allowance than conventional loans.
Total Debt Service Ratio: The ratio of a borrower’s housing expense (Principal, Interest, Taxes, and Insurance) and long-term debts to his or her gross income are used to qualify applicants for loans.
The applicant's loan preapproval amount helps determine the down payment amount. Depending on your credit score, 3% or more will be the minimum down payment. However, 20% or more lets you avoid paying Private Mortgage Insurance (PMI) for a conventional loan.
FHA loans have a Mortgage Insurance Premium (MIP), which is mortgage insurance for the entire length of the loan for most loans. Both “insurance policies” only ensure the bank gets their money if you default – it protects no property. There is no MIP or PMI requirements for VA loans.
There are a variety of options available through your lender to account for PMI. Talk to your lender to learn which option is best for your financial situation.
As a generic example, for a $300,000 home, a conventional loan with great credit would require at least $15,000 down at 5%. To avoid PMI, it’s at least $60,000 down (20%) - easier to handle with the sale of another home. Again, VA loans don’t require a down payment or mortgage insurance.
Representation (Customer or Client)
At this point, I’m going to ask if you trust me.
If you don’t, I can show you a few properties, but I’m only allowed to provide access with honesty and fairness, but no professional advice. You are a customer.
If you do trust me, I’ll ask you to sign a representation agreement with me. This allows me to become your agent for a real estate transaction for a specified amount of time. You gain my full fiduciary duties (obedience, loyalty, disclosure, confidentiality, accounting, reasonable care and diligence) and representation. You are a client.
I am not a lawyer, and I am never allowed to give legal advice. So, read the agreement carefully and consult a lawyer if you don’t understand it.
Because the agreement is written by attorneys from the Texas Realtors association and copyright is strictly enforced, I can’t post it online. If you’re considering this agreement with me, please call, text or email. I can send a secure version for your consideration. Most Texas agents will use this same form.
Your Needs
You and I will determine what your needs are. This is when you need a great agent. You’ll be asked a long series of specific open-ended questions. This helps determine what you need. The results might be quite different than you initially thought.
The home buying process is a matter of elimination rather than addition. You will want to set tight parameters and then eliminate everything that doesn’t work. The first three issues are normally the same considerations used to price properties:
• Location (where it is – city, community, schools, work, shopping, HOA, etc.)
• Price (comparative market analysis – to purchase, upgrade, maintain, etc.)
• Condition (age, maintenance level, building materials, etc.)
First, you must consider the type of home that fits your lifestyle best. Do you need a condo above the cloud line, a lakefront estate or a tiny house at the edge of a horse paddock?
Next, determine where you want the home. Normal additional considerations are number of bedrooms, number of bathrooms, living areas, dining areas, specialty rooms, garage capacity, homeowner associations, and more.
When you’re buying a new house, the builders are normally selected first, then the development and lot locations are considered based on the builder options. There are many more questions here.
Custom builders are the most expensive. They are also too complicated for this guide. Plan to purchase land and structure separately and may combine loans later.
Safety Matters
You will be asked to provide a copy of your photo ID (scan or make a cell phone photo) before you see properties. This is for the agent’s protection. If you know my background, you’re safer with me than you would be with most other folks, but it’s still the common practice to make this request. Your cooperation is appreciated.
Digital Options
After we determine the basics of your home search, I'll initiate an automated search in addition to access to my website. The portal email delivers new properties directly from the MLS to your email inbox as often as you determine is best for you (monthly, weekly, specified days, daily, twice daily or ASAP).
Builders may advertise one house on the MLS, but most aren't. I know how to locate the home you want once we determine the builder and style. Please look at the options you get electronically and narrow your decisions based on your preferred builder and style. Then, I'll find that option near your ideal location.
Tour Properties
Once I have identification and a representation agreement, we can tour properties until you find your ideal location. This is the fun part!
We can schedule a morning or afternoon to see the top five houses or communities on your list. Depending on how far apart the properties are, this won’t take long. However, if you see more than five properties in one day, the details will run together.
We will meet at the property or a neutral site. During the Covid-19 pandemic, I can't drive and tell buyers about the neighborhood like before. However, you can follow my SUV in your own auto.
Ideally, you’ll let me know which properties you want to tour about 24 hours in advance, so I can verify the property is still available and make arrangements for you to see the properties. After I’ve made arrangements, I’ll email a route and timetable to you for the tour.
When we meet for the tour, I’ll provide any available MLS sheets of the properties you’ll see. If you’re already a client, I’ll also generate comparative market analysis to help you make your decisions. I’ll explain the market conditions for the price range of the homes we tour and how this affects the decision speed.
Often, lower-priced homes sell faster. Consequently, decision speed is important at different price points depending on the market conditions.
You Found “The One!”
This is great news! You walked in, and it was your ideal home. Congratulations!
Let’s get it for you before someone else decides it should be their home. At this point, we can start your paperwork. First, you MUST be a Client. I can’t do any negotiation for you or submit an offer without a representation agreement.
Structural Decisions
Please read “New Built Home Basics” (Link) to understand the phase in which your home will be purchased. It's an important step before arranging the contract.
If the purchase is from the ground up, the buyers need to make structural decisions before signing the Sales Agreement. Some might have a change option later, but it will come with an incredibly high price tag. Instead, complete all structural decisions before the next step.
Structural decisions are often listed on builders’ websites as “plan options.” These are big-ticket items that require different structural engineering and possibly reinforcement of the house itself or additional foundation square footage. Sometimes, the builder may need to contact their architect or engineers to ensure it can be built as requested or on the requested lot.
Structural decisions can include: one story or two, media room or bedroom, office or bedroom, covered porch or open patio, hallway or wine cellar, two or three-car garage, swing or straight driveway, storage closet or half bath, tile or shingle roof, brick or stucco exterior, external gas stub or not, house faces East or South, etc.
ALL structural options and lot decisions MUST be on the Sales Agreement, or they aren’t part of the agreement.
Negotiate a Contract
New construction houses are different than preowned houses at this step. I’ll call the builder’s representative and negotiate the price and packages.
Buying a new construction home is more like going to the grocery store rather than the farmer’s market. The price on the product is set. I can get a coupon to save a little more, but there won’t be a “buy one - get two” offer. That said, the same floorplan on the same-sized lot can be a vastly different price in a different location. I’ll let you know all the options I know.
This step is where having an agent on your side becomes valuable. The builder knows that I – and my brokerage colleagues – can bring tens and probably scores of buyers to the builder’s properties over years. It’s best to make our clients happy to keep us happy and to keep them as a favored business in any brokerage.
An individual can negotiate directly with a builder, but the incentive is lower because it’s a one-time deal. Builders understand there’s more opportunity for growth with me and my clients. They also tend to honor their promises since I keep records and notes.
Unlike preowned homes, there is no call for “best & highest offer.” There aren’t the same battles to get a home. Whoever signs first gets the house. That said, more than one buyer may be presented the same house or lot, so it’s good to act quickly once a decision is made. Again, whoever signs first gets the house.
I’ll try to get a great package under the circumstances (incentives are limited during housing shortages). Next, based on the information I provided plus any other factors you know, you determine if you want the house or want to look elsewhere. There aren’t any additional negotiations with new builds. With an agent, you get the best deal at the beginning.
I will ask if you want the house or not. This is entirely your decision. I’m absolutely fine if you say, “No. Let’s keep looking.” I want you to be happy with your decision!
If you want to buy it, the next steps will happen very quickly.
Executing Paperwork
If I haven’t introduced you to the sales counselor yet, you’ll be introduced via email, phone or in person. I will register you with the builder. It is VITAL that I handle this step to link us together so I can continue to serve as your agent. You will need me to protect your best interests later in the transaction.
Documents are “executed” via a two-step process. They are both 1) signed by both parties – buyer and seller - and 2) acknowledged by both parties. The agents of both transaction sides count as parties for acknowledgment purposes – but most agents can’t sign without specific additional authorization to do so. The “acknowledgment” component is why agents need proof of transfer for electronic funds and digital signatures.
After a decision is made to buy, you’ll be presented a flurry of paperwork either digitally or in person. You’ll most likely be given an extremely tight deadline to get the negotiated incentive(s). Therefore, you’ll need to read quickly since builder documents are drafted by the builder’s lawyer to protect ONLY the builder unless something is required by the government.
To be blunt, you’ll be presented “yes or no” documents. Modifications to the document aren’t allowed other than variable facts (names, addresses, amounts, etc.). If something in the documents is an absolute “no” to you - don’t sign. Walk away. We will find something else. Otherwise, it’s a “yes.”
Here is the list of possible documents the sales counselor will prepare as part of the sale:
• Sales Agreement (also called Agreement of Sale - AOS)
• Some form of third-party financing assurance from buyer (preapproval)
• REALTOR Addendum (Please acknowledge that I’m your agent)
• Standard Contract Specifications (detailed expectations for house systems)
• Plan Specifications (specifies either standard, modified or upgraded)
• Various notices including utilities transfer and stone addendums, etc.
• House elevations and floorplans (appearance and map of the house)
• Various business disclosures as required by law (builder has majority ownership in related business)
• Various required affiliation disclosures (builder shares administration and/or advertising with another business)
• Builder limited warranty (read carefully)
• PID, MUD, SUD, etc. utility district notices (these cost several hundred to several thousand per year)
• Disclosures and limitations (notices required by government and HOA)
• Incentive agreements (if any) negotiated for inclusion by agent
• Telecommunication services disclosure (seller not responsible for access)
• Primary Residence Addendum (property must initially be owner occupied)
• VA / FHA Addendum (normally limits builder closing contributions and HUD modified warranty)
Once you sign the Sales Agreement (in person or digitally), you’ll need to pay the deposit. Unlike preowned homes, the deposit can be paid via personal check.
Most builders have secure electronic delivery systems now. It’s vital to confirm the correct online addresses and triple check wire routing numbers. Don’t send any money to any address unless you have confirmed the exact address with the builder’s sales agent or your REALTOR.
For local clients, I’m honored to hand deliver your deposits directly from your door to the sales counselor. There is no chance of it being lost in the mail. I’ll have proof of the location and time of delivery. Please allow me to set the correct expectation here. We ALL want the same thing: we want the buyer to buy the house they want and the seller to sell the house with a clean title in as-expected condition. There are no villains here. It’s a transaction.
Texas Contract Deadlines
Deadlines times and days are specific and measured in seconds in Texas. The date a document is executed is Day Zero. The following day is Day 1, Day 2, etc.
In Texas, a commonly important contract deadline time is 5 p.m. local time. However, other contract elements expire at midnight. Some builders may accept a 6 p.m. close-of-business time, but it isn't guaranteed and could be a problem in disputes.
Offer is Executed
An offer is “executed” when accepted, signed by both parties and communicated to the other party and/or their representative agent. This is most often accomplished digitally now and can happen very quickly after acceptance. I’ll need to collect deposit money. I’ll deliver these to the correct locations and have them receipted to ensure contractual agreements are met and valid. Cash will not be allowed in most transactions.
New construction arrangements don’t have traditional Earnest Money. Instead, buyers must pay fees to title as they arise. Some title companies will arrange to have all expenses paid at one time to reduce demands on the buyer.
When dealing with the title company, “good funds” are required. Good funds are cashier’s checks or similar secure banking funds. More sophisticated platforms like Earnnest (two "n"s) allow larger transfers of Earnest Money directly to the title companies.
NEVER electronically transfer funds (wire transfer) without talking on the phone to the receiving party AND verifying all the routing information and amounts.
Role Change
Up to this point, I'm the "shock absorber" between the buyer and the builder. This ensures you get EXACTLY what you want without being pressured by the builder's side. It's much easier to tell me that you don't like something. I have no problem defending your choices and getting you the best deal. That's my job at this point.
However, once there's a contract, we're all on the same side. Everyone's goal is to get to closing with an ideal house for you. To make communication easier and more transparent, I'll now take the role of "guide." I literally have your six at this point.
Please include me in all communications with the builders' representatives (construction foreman, sales counselor, designer, engineers, etc.), but I'll try to be quiet in the background until I'm needed by you. I'll keep records of the emails where I'm included, and I'll give advice in confidential communications between us. However, you'll need to talk/email/text directly to the builders' reps as needed.
Hopefully, you'll invite me to any meetings you have with the builder's reps. Then, I can take notes and ask occasional questions to clarify misunderstandings.
Pre-Drywall Inventory Homes
If your home was purchased after Mechanical, you can skip the next two sections. These decisions were likely made by the builder’s designer and can't be changed.
If the house is an inventory purchase before drywall, some changes may be possible. Consider the flooring. Quality builder-installed wood floors are almost always a good investment. Often, the builder’s designer included upgraded carpet in the inventory home. Get the credit from the upgrade, add an upgrade deposit and get wood floors unless you absolutely love carpet.
Luxury vinyl plank (Lux) is sometimes a builder upgrade option. It’s a good mid-ground option between wood and carpet. It’s possibly the best option if pets will be in the house. Lux is high-quality plastic that looks like wood. It should be less expensive than hardwood floors. It repels spills and pet wetting. It hides scratches very well. It’s also easy to clean with a wet mop or automated mop machine.
Electrical outlets and wiring for lights are also possible at this point for reasonable additional fees. They are easier and cheaper to install without sheetrock.
If wall-mounted TVs are likely to be in the house, consider high outlets in the media room, living room and primary bedroom. If you plan to use the office for work from home, you'll probably want one in there too for virtual meetings or a break during lunch. If not used, the outlets can be covered with art.
Additional outlets cost about $75 each from the builder while they could cost $125 each from an electrician. It's money well spent compared to tearing up the walls later. You might consider a ceiling-mounted outlet in the media room for projectors. Again, it's cheaper to get it now before sheetrock is installed.
If you plan to put a freezer or fridge in the garage, you'll want a dedicated non-GFCI (Ground-Fault Circuit Interrupter) outlet for it. GFCI outlets turn off if they get wet. They are typically in wet areas like the kitchen and bathrooms. The exterior and garage outlets tend to be on the same circuit. Unfortunately, this means the freezer could turn off if there's a bad thunderstorm, and you won't know it until you smell the freezer contents a few days later.
Consider wiring with basic lights, and get better fixtures installed later.
Appliances and window treatments are often options too. However, these items almost always cost extra. It’s best to purchase them later rather than including them into the mortgage where they'll acquire interest until the mortgage is paid in full.
Design Center
For buyers who have selected a plan and a specific lot, the design center is in your future. Buyers will get to decide a dizzying array of options during one to three different four-hour meetings at the builder’s design center with a designer. Most design centers have “free hours” to allow buyers access to the options before their actual meeting. Please take advantage of these times and visit the center to see the options in person at least once before the design meeting. These decisions need to be agreed upon before the meeting rather than debated in front of the designer.
Common design center decisions include everything from floor to shingle colors to the grades of stone quarried for countertops. The builder has already selected “standard” options for each item. The design center is where homebuyers turn a standard house into their dream home – at a cost.
Designers have preselected, graded and assigned prices to levels of options from flooring to paint colors. Buyers can select the standard, an upgrade or downgrade a preselection to move those funds to an upgrade elsewhere.
Although you shouldn’t need me there, I’m happy to attend with you to take notes and keep tabs on your budget decisions. I’ll occasionally ask, “Do you want this in your mortgage?”
Light fixtures and mini refrigerators can be selected and installed after you have possession of the house. They will probably not last to the end of a mortgage.
Navigating the Inspection
New homes need third-party inspections. Because houses are constructed in phases, it’s best to have three separate inspections. One is conducted at each phase: pre-pour foundation, pre-drywall mechanical and when substantially completed (about two weeks before closing to give the builder time for repairs).
I can help you order and obtain an inspection. I can’t request the inspection myself, but I provide a list of trusted inspectors. Ask me if I have any discount coupons for the inspector of your choice. I might.
Each phase inspection has an escalating price due to additional time and complexity requirements. While the pre-pour inspection is economical. Other inspections cost several hundred dollars and are non-refundable. This is paid by the buyer and is not reimbursed at closing. It varies depending on the size and complexity of the property being inspected.
While it may cost a few hundred dollars, it can easily save a buyer thousands in unexpected repairs and the assurance of a properly-built house.
Please meet the inspector during the final hour of the inspection time. I’ll be there too to take notes and ask questions. The inspector is a licensed professional and is the best person to interpret their own findings. If you have questions, it’s best to ask the inspector now.
You’ll get the inspection report shortly after the inspection. The report is your property. You must give the inspector advanced permission to share it with me (please allow). I need your permission to send it to the builder (please allow). This is the easiest way to get these items corrected without delay.
Unlike inspections of preowned homes, you’ll want the builder to fix EVERYTHING the inspector found. Typically, these are minor issues, and the builder is happy to have extra eyes help them make the best product.
Occasionally, reported items may be a code violation in a different city or county, but not where the house is located. The builder won’t change these reported items because it is within the code of the location. While the house is under construction, the builder owns it. Similarly, if there is no code violation, the builder is under no obligation to make a third-party requested “correction.”
Other Functions I’ll Help Handle
• I’ll help you secure a loan through your lender of choice. With your specific permission, I’ll ensure the lender will have the funds ready on time.
• I’ll send any executed amendments to the title company.
• I’ll schedule a walkthrough date with you and the construction manager/foreman no later than three days prior to closing and ensure the property is ready for habitation.
• I’ll complete and ask you to sign the Walk-Through and Acceptance Form.
• I’ll notify our concierge service to help you prepare to move (they help arrange movers, utility providers, etc.)
• I’ll read through the closing disclosures that you’ll get before the closing date. If you have questions, please contact me immediately. I’ll answer any questions that I can at this time. Otherwise, I will find the answer ASAP.
Closing
I’ll attend closing to help you. Again, I won't offer advice that's considered “legal.”
At the closing, you'll meet with the escrow officer in person or via Zoom to complete transfer paperwork. There are many documents. You’ve already seen most of them. However, it will come at you rapidly for about an hour as the escrow agent briefs you on the content of each document and asks you to sign and initial.
At the end of the closing there’s time to celebrate and make some photos!
You won’t get the keys to your new home until the seller gets funds from your lender. This often takes a few hours. If it was a morning close, you should have keys in the afternoon. If it’s an afternoon close you may not get the keys until the next business day. I’ll try to get the keys to hold them until funding. This minimizes the time from closing to key transfer.
Most new-home sellers have fun treats to go with new keys. I’ll collect and deliver those too.
When you're ready to move forward,
This post covers the entire process from a new-build home buyer's point of view. It's long but is considerably shorter than a standard purchase contract. Since it is a step-by-step process, you can read a little at a time.
Buying a house is exciting. It’s also a little overwhelming because it’s the biggest purchase most people will make during their lifetime. I’m here to help. I’m on your side of the transaction. I look out for your best interests. I’ve got your back.
I’m an OPFOR (Opposing Forces) Infantry veteran. In our lingo, “I’ve Got Your Six!”
I’ll be on the lookout for problems, and I’ll do everything in my power to keep you safe throughout the transaction. I’ll give you information about the market prices of comparable properties. I want to ensure everything goes smoothly and stays on track. The mission is to get you moved into your ideal home with the least stress on you. I’m on duty to make that happen.
As a licensed Texas REALTOR, I can help home buyers find and secure houses, complete residential contracts and negotiate terms and repairs to turn a house into a home. In almost all instances, the seller compensates my consultation and activity fees - not the buyer. Please call or text 214-862-7212 or email me (markhancockrealty@gmail.com) when you are ready for my help.
Prepare yourself to buy a house before you start looking. You’ll probably need to finance part of the home purchase. This means you’ll need to get your finances and paperwork in order to apply for a loan. Please read my post, “Your Credit Score and Options” (link).
If you’re selling a home, there’s much to do (please see Sellers' Guide) before you claim your equity and appreciation to buy your next home. Please call, text or email, and we can discuss some early actions.
If you’re a first-time buyer or don’t need to sell a property to purchase another property, the next steps are the same. You’ll want to save money for your down payment and closing costs. Buyer closing costs - for all loan types – can include lender fees, appraisal, attorney document fees, title fees, recording fees, prorated daily interest from the date you close to the first day of the following month, a full year of homeowner's insurance, initial escrow account setup (can be 3-4 months of taxes and insurance). Other fees may apply depending on loan type.
VA loans don’t require down payments, but there will be closing costs. There is also a one-time funding fee on all VA loans instead of mortgage insurance. It's still good to pay any additional related expenses and pay a comfortable amount of principal early to avoid interest on those funds.
When you first contact me about a home purchase, I’ll send you an invitation to my website (DFWmark.com). By creating a password, you’ll be able to save individual properties or entire searches.
My website is tied directly to the Multiple Listing Service (MLS). You’ll have access directly to MLS listings at no cost to you. Unlike third-party websites - which can be far behind the market – DFWmark.com is “live.” If you see an active property, it’s still active in the MLS and wasn’t sold 30 days ago.
If you want help with getting a preapproval letter, I’ll help you talk to the lender of your choice. Here are some trusted options (Link). Otherwise, contact me once you have a preapproval letter from your preferred lender. I will send you a state-mandated Information About Brokerage Services form (see Page 2). It explains how agency works in Texas and lets you know the names and numbers of all my supervising brokers. My company requires it to be initialed. It can be done in person with ink, but it’s better to get digital initials because we will ensure the digital signature system works properly with your preferred email address on your computer or smart phone.
Paperwork
Many lenders will want to see financial documents to preapprove borrowers. Please get your documents in order before you contact the lender to make the process move smoother.
Applicants will need photo identification (these include driver's licenses, passports, military identification and sometimes birth certificates). It should be your current address if possible. Don’t stop the process to get a new ID while the ID is still current. If it’s expired, a different ID will be required.
The lender needs several paycheck stubs as proof of employment and income - count on three months. They need several months of bank statements to show the down payment money is "seasoned" (has been in the bank for 60-90 days). If gift money is involved, it too must be documented and seasoned.
VA applicants will need all pages of their Certificate of Release or Discharge, also known as a DD-214 form (Link). They will also need their Certificate of Eligibility (Link) to secure a VA loan amount.
Applicants may also need documentation on the amounts they owe various lenders and proof they have paid off large-ticket items. Again, check with your lender to see what documents they will require.
By this point, you should have a preapproval letter. You should have a dollar amount that you can effectively handle from your lender. This is mostly based on your income, your housing-expense-to-income ratio and your total-debt-service ratio. Different kinds of loans require different ratio percentages.
FHA ratios tend to have a slightly higher allowance than conventional loans.
Total Debt Service Ratio: The ratio of a borrower’s housing expense (Principal, Interest, Taxes, and Insurance) and long-term debts to his or her gross income are used to qualify applicants for loans.
The applicant's loan preapproval amount helps determine the down payment amount. Depending on your credit score, 3% or more will be the minimum down payment. However, 20% or more lets you avoid paying Private Mortgage Insurance (PMI) for a conventional loan.
FHA loans have a Mortgage Insurance Premium (MIP), which is mortgage insurance for the entire length of the loan for most loans. Both “insurance policies” only ensure the bank gets their money if you default – it protects no property. There is no MIP or PMI requirements for VA loans.
There are a variety of options available through your lender to account for PMI. Talk to your lender to learn which option is best for your financial situation.
As a generic example, for a $300,000 home, a conventional loan with great credit would require at least $15,000 down at 5%. To avoid PMI, it’s at least $60,000 down (20%) - easier to handle with the sale of another home. Again, VA loans don’t require a down payment or mortgage insurance.
Representation (Customer or Client)
At this point, I’m going to ask if you trust me.
If you don’t, I can show you a few properties, but I’m only allowed to provide access with honesty and fairness, but no professional advice. You are a customer.
If you do trust me, I’ll ask you to sign a representation agreement with me. This allows me to become your agent for a real estate transaction for a specified amount of time. You gain my full fiduciary duties (obedience, loyalty, disclosure, confidentiality, accounting, reasonable care and diligence) and representation. You are a client.
I am not a lawyer, and I am never allowed to give legal advice. So, read the agreement carefully and consult a lawyer if you don’t understand it.
Because the agreement is written by attorneys from the Texas Realtors association and copyright is strictly enforced, I can’t post it online. If you’re considering this agreement with me, please call, text or email. I can send a secure version for your consideration. Most Texas agents will use this same form.
You and I will determine what your needs are. This is when you need a great agent. You’ll be asked a long series of specific open-ended questions. This helps determine what you need. The results might be quite different than you initially thought.
The home buying process is a matter of elimination rather than addition. You will want to set tight parameters and then eliminate everything that doesn’t work. The first three issues are normally the same considerations used to price properties:
• Location (where it is – city, community, schools, work, shopping, HOA, etc.)
• Price (comparative market analysis – to purchase, upgrade, maintain, etc.)
• Condition (age, maintenance level, building materials, etc.)
First, you must consider the type of home that fits your lifestyle best. Do you need a condo above the cloud line, a lakefront estate or a tiny house at the edge of a horse paddock?
Next, determine where you want the home. Normal additional considerations are number of bedrooms, number of bathrooms, living areas, dining areas, specialty rooms, garage capacity, homeowner associations, and more.
When you’re buying a new house, the builders are normally selected first, then the development and lot locations are considered based on the builder options. There are many more questions here.
Custom builders are the most expensive. They are also too complicated for this guide. Plan to purchase land and structure separately and may combine loans later.
Safety Matters
You will be asked to provide a copy of your photo ID (scan or make a cell phone photo) before you see properties. This is for the agent’s protection. If you know my background, you’re safer with me than you would be with most other folks, but it’s still the common practice to make this request. Your cooperation is appreciated.
Digital Options
After we determine the basics of your home search, I'll initiate an automated search in addition to access to my website. The portal email delivers new properties directly from the MLS to your email inbox as often as you determine is best for you (monthly, weekly, specified days, daily, twice daily or ASAP).
Builders may advertise one house on the MLS, but most aren't. I know how to locate the home you want once we determine the builder and style. Please look at the options you get electronically and narrow your decisions based on your preferred builder and style. Then, I'll find that option near your ideal location.
Once I have identification and a representation agreement, we can tour properties until you find your ideal location. This is the fun part!
We can schedule a morning or afternoon to see the top five houses or communities on your list. Depending on how far apart the properties are, this won’t take long. However, if you see more than five properties in one day, the details will run together.
We will meet at the property or a neutral site. During the Covid-19 pandemic, I can't drive and tell buyers about the neighborhood like before. However, you can follow my SUV in your own auto.
Ideally, you’ll let me know which properties you want to tour about 24 hours in advance, so I can verify the property is still available and make arrangements for you to see the properties. After I’ve made arrangements, I’ll email a route and timetable to you for the tour.
When we meet for the tour, I’ll provide any available MLS sheets of the properties you’ll see. If you’re already a client, I’ll also generate comparative market analysis to help you make your decisions. I’ll explain the market conditions for the price range of the homes we tour and how this affects the decision speed.
Often, lower-priced homes sell faster. Consequently, decision speed is important at different price points depending on the market conditions.
You Found “The One!”
This is great news! You walked in, and it was your ideal home. Congratulations!
Let’s get it for you before someone else decides it should be their home. At this point, we can start your paperwork. First, you MUST be a Client. I can’t do any negotiation for you or submit an offer without a representation agreement.
Please read “New Built Home Basics” (Link) to understand the phase in which your home will be purchased. It's an important step before arranging the contract.
If the purchase is from the ground up, the buyers need to make structural decisions before signing the Sales Agreement. Some might have a change option later, but it will come with an incredibly high price tag. Instead, complete all structural decisions before the next step.
Structural decisions are often listed on builders’ websites as “plan options.” These are big-ticket items that require different structural engineering and possibly reinforcement of the house itself or additional foundation square footage. Sometimes, the builder may need to contact their architect or engineers to ensure it can be built as requested or on the requested lot.
Structural decisions can include: one story or two, media room or bedroom, office or bedroom, covered porch or open patio, hallway or wine cellar, two or three-car garage, swing or straight driveway, storage closet or half bath, tile or shingle roof, brick or stucco exterior, external gas stub or not, house faces East or South, etc.
ALL structural options and lot decisions MUST be on the Sales Agreement, or they aren’t part of the agreement.
New construction houses are different than preowned houses at this step. I’ll call the builder’s representative and negotiate the price and packages.
Buying a new construction home is more like going to the grocery store rather than the farmer’s market. The price on the product is set. I can get a coupon to save a little more, but there won’t be a “buy one - get two” offer. That said, the same floorplan on the same-sized lot can be a vastly different price in a different location. I’ll let you know all the options I know.
This step is where having an agent on your side becomes valuable. The builder knows that I – and my brokerage colleagues – can bring tens and probably scores of buyers to the builder’s properties over years. It’s best to make our clients happy to keep us happy and to keep them as a favored business in any brokerage.
An individual can negotiate directly with a builder, but the incentive is lower because it’s a one-time deal. Builders understand there’s more opportunity for growth with me and my clients. They also tend to honor their promises since I keep records and notes.
Unlike preowned homes, there is no call for “best & highest offer.” There aren’t the same battles to get a home. Whoever signs first gets the house. That said, more than one buyer may be presented the same house or lot, so it’s good to act quickly once a decision is made. Again, whoever signs first gets the house.
I’ll try to get a great package under the circumstances (incentives are limited during housing shortages). Next, based on the information I provided plus any other factors you know, you determine if you want the house or want to look elsewhere. There aren’t any additional negotiations with new builds. With an agent, you get the best deal at the beginning.
I will ask if you want the house or not. This is entirely your decision. I’m absolutely fine if you say, “No. Let’s keep looking.” I want you to be happy with your decision!
If you want to buy it, the next steps will happen very quickly.
If I haven’t introduced you to the sales counselor yet, you’ll be introduced via email, phone or in person. I will register you with the builder. It is VITAL that I handle this step to link us together so I can continue to serve as your agent. You will need me to protect your best interests later in the transaction.
Documents are “executed” via a two-step process. They are both 1) signed by both parties – buyer and seller - and 2) acknowledged by both parties. The agents of both transaction sides count as parties for acknowledgment purposes – but most agents can’t sign without specific additional authorization to do so. The “acknowledgment” component is why agents need proof of transfer for electronic funds and digital signatures.
After a decision is made to buy, you’ll be presented a flurry of paperwork either digitally or in person. You’ll most likely be given an extremely tight deadline to get the negotiated incentive(s). Therefore, you’ll need to read quickly since builder documents are drafted by the builder’s lawyer to protect ONLY the builder unless something is required by the government.
To be blunt, you’ll be presented “yes or no” documents. Modifications to the document aren’t allowed other than variable facts (names, addresses, amounts, etc.). If something in the documents is an absolute “no” to you - don’t sign. Walk away. We will find something else. Otherwise, it’s a “yes.”
Here is the list of possible documents the sales counselor will prepare as part of the sale:
• Sales Agreement (also called Agreement of Sale - AOS)
• Some form of third-party financing assurance from buyer (preapproval)
• REALTOR Addendum (Please acknowledge that I’m your agent)
• Standard Contract Specifications (detailed expectations for house systems)
• Plan Specifications (specifies either standard, modified or upgraded)
• Various notices including utilities transfer and stone addendums, etc.
• House elevations and floorplans (appearance and map of the house)
• Various business disclosures as required by law (builder has majority ownership in related business)
• Various required affiliation disclosures (builder shares administration and/or advertising with another business)
• Builder limited warranty (read carefully)
• PID, MUD, SUD, etc. utility district notices (these cost several hundred to several thousand per year)
• Disclosures and limitations (notices required by government and HOA)
• Incentive agreements (if any) negotiated for inclusion by agent
• Telecommunication services disclosure (seller not responsible for access)
• Primary Residence Addendum (property must initially be owner occupied)
• VA / FHA Addendum (normally limits builder closing contributions and HUD modified warranty)
Once you sign the Sales Agreement (in person or digitally), you’ll need to pay the deposit. Unlike preowned homes, the deposit can be paid via personal check.
Most builders have secure electronic delivery systems now. It’s vital to confirm the correct online addresses and triple check wire routing numbers. Don’t send any money to any address unless you have confirmed the exact address with the builder’s sales agent or your REALTOR.
For local clients, I’m honored to hand deliver your deposits directly from your door to the sales counselor. There is no chance of it being lost in the mail. I’ll have proof of the location and time of delivery. Please allow me to set the correct expectation here. We ALL want the same thing: we want the buyer to buy the house they want and the seller to sell the house with a clean title in as-expected condition. There are no villains here. It’s a transaction.
Texas Contract Deadlines
Deadlines times and days are specific and measured in seconds in Texas. The date a document is executed is Day Zero. The following day is Day 1, Day 2, etc.
In Texas, a commonly important contract deadline time is 5 p.m. local time. However, other contract elements expire at midnight. Some builders may accept a 6 p.m. close-of-business time, but it isn't guaranteed and could be a problem in disputes.
An offer is “executed” when accepted, signed by both parties and communicated to the other party and/or their representative agent. This is most often accomplished digitally now and can happen very quickly after acceptance. I’ll need to collect deposit money. I’ll deliver these to the correct locations and have them receipted to ensure contractual agreements are met and valid. Cash will not be allowed in most transactions.
New construction arrangements don’t have traditional Earnest Money. Instead, buyers must pay fees to title as they arise. Some title companies will arrange to have all expenses paid at one time to reduce demands on the buyer.
When dealing with the title company, “good funds” are required. Good funds are cashier’s checks or similar secure banking funds. More sophisticated platforms like Earnnest (two "n"s) allow larger transfers of Earnest Money directly to the title companies.
NEVER electronically transfer funds (wire transfer) without talking on the phone to the receiving party AND verifying all the routing information and amounts.
Role Change
Up to this point, I'm the "shock absorber" between the buyer and the builder. This ensures you get EXACTLY what you want without being pressured by the builder's side. It's much easier to tell me that you don't like something. I have no problem defending your choices and getting you the best deal. That's my job at this point.
However, once there's a contract, we're all on the same side. Everyone's goal is to get to closing with an ideal house for you. To make communication easier and more transparent, I'll now take the role of "guide." I literally have your six at this point.
Please include me in all communications with the builders' representatives (construction foreman, sales counselor, designer, engineers, etc.), but I'll try to be quiet in the background until I'm needed by you. I'll keep records of the emails where I'm included, and I'll give advice in confidential communications between us. However, you'll need to talk/email/text directly to the builders' reps as needed.
Hopefully, you'll invite me to any meetings you have with the builder's reps. Then, I can take notes and ask occasional questions to clarify misunderstandings.
If your home was purchased after Mechanical, you can skip the next two sections. These decisions were likely made by the builder’s designer and can't be changed.
If the house is an inventory purchase before drywall, some changes may be possible. Consider the flooring. Quality builder-installed wood floors are almost always a good investment. Often, the builder’s designer included upgraded carpet in the inventory home. Get the credit from the upgrade, add an upgrade deposit and get wood floors unless you absolutely love carpet.
Luxury vinyl plank (Lux) is sometimes a builder upgrade option. It’s a good mid-ground option between wood and carpet. It’s possibly the best option if pets will be in the house. Lux is high-quality plastic that looks like wood. It should be less expensive than hardwood floors. It repels spills and pet wetting. It hides scratches very well. It’s also easy to clean with a wet mop or automated mop machine.
Electrical outlets and wiring for lights are also possible at this point for reasonable additional fees. They are easier and cheaper to install without sheetrock.
If wall-mounted TVs are likely to be in the house, consider high outlets in the media room, living room and primary bedroom. If you plan to use the office for work from home, you'll probably want one in there too for virtual meetings or a break during lunch. If not used, the outlets can be covered with art.
Additional outlets cost about $75 each from the builder while they could cost $125 each from an electrician. It's money well spent compared to tearing up the walls later. You might consider a ceiling-mounted outlet in the media room for projectors. Again, it's cheaper to get it now before sheetrock is installed.
If you plan to put a freezer or fridge in the garage, you'll want a dedicated non-GFCI (Ground-Fault Circuit Interrupter) outlet for it. GFCI outlets turn off if they get wet. They are typically in wet areas like the kitchen and bathrooms. The exterior and garage outlets tend to be on the same circuit. Unfortunately, this means the freezer could turn off if there's a bad thunderstorm, and you won't know it until you smell the freezer contents a few days later.
Consider wiring with basic lights, and get better fixtures installed later.
Appliances and window treatments are often options too. However, these items almost always cost extra. It’s best to purchase them later rather than including them into the mortgage where they'll acquire interest until the mortgage is paid in full.
For buyers who have selected a plan and a specific lot, the design center is in your future. Buyers will get to decide a dizzying array of options during one to three different four-hour meetings at the builder’s design center with a designer. Most design centers have “free hours” to allow buyers access to the options before their actual meeting. Please take advantage of these times and visit the center to see the options in person at least once before the design meeting. These decisions need to be agreed upon before the meeting rather than debated in front of the designer.
Common design center decisions include everything from floor to shingle colors to the grades of stone quarried for countertops. The builder has already selected “standard” options for each item. The design center is where homebuyers turn a standard house into their dream home – at a cost.
Designers have preselected, graded and assigned prices to levels of options from flooring to paint colors. Buyers can select the standard, an upgrade or downgrade a preselection to move those funds to an upgrade elsewhere.
Although you shouldn’t need me there, I’m happy to attend with you to take notes and keep tabs on your budget decisions. I’ll occasionally ask, “Do you want this in your mortgage?”
Light fixtures and mini refrigerators can be selected and installed after you have possession of the house. They will probably not last to the end of a mortgage.
New homes need third-party inspections. Because houses are constructed in phases, it’s best to have three separate inspections. One is conducted at each phase: pre-pour foundation, pre-drywall mechanical and when substantially completed (about two weeks before closing to give the builder time for repairs).
I can help you order and obtain an inspection. I can’t request the inspection myself, but I provide a list of trusted inspectors. Ask me if I have any discount coupons for the inspector of your choice. I might.
Each phase inspection has an escalating price due to additional time and complexity requirements. While the pre-pour inspection is economical. Other inspections cost several hundred dollars and are non-refundable. This is paid by the buyer and is not reimbursed at closing. It varies depending on the size and complexity of the property being inspected.
While it may cost a few hundred dollars, it can easily save a buyer thousands in unexpected repairs and the assurance of a properly-built house.
Please meet the inspector during the final hour of the inspection time. I’ll be there too to take notes and ask questions. The inspector is a licensed professional and is the best person to interpret their own findings. If you have questions, it’s best to ask the inspector now.
You’ll get the inspection report shortly after the inspection. The report is your property. You must give the inspector advanced permission to share it with me (please allow). I need your permission to send it to the builder (please allow). This is the easiest way to get these items corrected without delay.
Unlike inspections of preowned homes, you’ll want the builder to fix EVERYTHING the inspector found. Typically, these are minor issues, and the builder is happy to have extra eyes help them make the best product.
Occasionally, reported items may be a code violation in a different city or county, but not where the house is located. The builder won’t change these reported items because it is within the code of the location. While the house is under construction, the builder owns it. Similarly, if there is no code violation, the builder is under no obligation to make a third-party requested “correction.”
Other Functions I’ll Help Handle
• I’ll help you secure a loan through your lender of choice. With your specific permission, I’ll ensure the lender will have the funds ready on time.
• I’ll send any executed amendments to the title company.
• I’ll schedule a walkthrough date with you and the construction manager/foreman no later than three days prior to closing and ensure the property is ready for habitation.
• I’ll complete and ask you to sign the Walk-Through and Acceptance Form.
• I’ll notify our concierge service to help you prepare to move (they help arrange movers, utility providers, etc.)
• I’ll read through the closing disclosures that you’ll get before the closing date. If you have questions, please contact me immediately. I’ll answer any questions that I can at this time. Otherwise, I will find the answer ASAP.
I’ll attend closing to help you. Again, I won't offer advice that's considered “legal.”
At the closing, you'll meet with the escrow officer in person or via Zoom to complete transfer paperwork. There are many documents. You’ve already seen most of them. However, it will come at you rapidly for about an hour as the escrow agent briefs you on the content of each document and asks you to sign and initial.
At the end of the closing there’s time to celebrate and make some photos!
You won’t get the keys to your new home until the seller gets funds from your lender. This often takes a few hours. If it was a morning close, you should have keys in the afternoon. If it’s an afternoon close you may not get the keys until the next business day. I’ll try to get the keys to hold them until funding. This minimizes the time from closing to key transfer.
Most new-home sellers have fun treats to go with new keys. I’ll collect and deliver those too.
When you're ready to move forward,
I've Got Your Six!
Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212 (call or text)
markhancockrealty@gmail.com
DFWmark.com
#DFWmark #REALTOR #NewBuild #NewHome #NewConstruction #process #StepsInvolved #BiggerBetterNewer #builder #relocation
REALTOR, New Build certified
214-862-7212 (call or text)
markhancockrealty@gmail.com
DFWmark.com
#DFWmark #REALTOR #NewBuild #NewHome #NewConstruction #process #StepsInvolved #BiggerBetterNewer #builder #relocation
Friday, March 19, 2021
Wednesday, March 17, 2021
Stimulus Options
We survived a year of the pandemic! Most of us need ways to celebrate at home. As stimulus checks are deposited into bank accounts this month, many of us can make home repairs, improvements and increase curb appeal!
If you've waited to make these changes and don’t know the approximate costs, I’ve Got Your Six!
Most U.S. tax filers, who earn less than $75,000 per year, will get a $1,400 stimulus check from the government as part of the COVID-19 Relief Plan. Couples, who file jointly and earn less than $150,000, will get $2,800. An additional $1,400 may be paid for each dependent in the household.
Most U.S. tax filers, who earn less than $75,000 per year, will get a $1,400 stimulus check from the government as part of the COVID-19 Relief Plan. Couples, who file jointly and earn less than $150,000, will get $2,800. An additional $1,400 may be paid for each dependent in the household.
If this is windfall income, below are some good options to use the money for home repairs, curb appeal or home value while stimulating the economy.
You can contact the vendors who contributed to the list and many other contractors through my referral blog at dfwreferral.blogspot.com
Feel free to share this information with your friends and family.
I’ve Got Your Six!
Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212 (call or text)
markhancockrealty@gmail.com
You can contact the vendors who contributed to the list and many other contractors through my referral blog at dfwreferral.blogspot.com
Feel free to share this information with your friends and family.
I’ve Got Your Six!
Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212 (call or text)
markhancockrealty@gmail.com
DFWmark.com
#DFWmark #REALTOR #Stimulus #StimulusOptions #HomeImprovement #CurbAppeal #SpendWisely #SpringProjects #contractors #vendors
#DFWmark #REALTOR #Stimulus #StimulusOptions #HomeImprovement #CurbAppeal #SpendWisely #SpringProjects #contractors #vendors
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Welcome to the DFWmark Blog!
Welcome to the DFWmark Blog! This is a collection of content by Mark M. Hancock, a REALTOR with Keller Williams North County in Celina...
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(Photo Mark M. Hancock / DFWmark.com ) This is the index to the DFWmark blog. It's the fastest way to locate the real estate content you... -
I was a pro photojournalist for 25 years and book editor for a decade. When I became a REALTOR, I applied these skills to educate my client...
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Welcome to the DFWmark Blog! This is a collection of content by Mark M. Hancock, a REALTOR with Keller Williams North County in Celina...
