After being in the real estate field for almost a decade, the home buying process becomes ingrained in you.
I have had thousands of conversations with prospective homebuyers like you. I have also been involved in hundreds of sold homes throughout Northern VA.
Many buyers step into the process blindly; they find homes online, find an agent to help them, and learn as they go.
Oftentimes it feels as though you are playing catch up when buying a home.
My goal with this guide is to give you a leg up in the process — knowledge is power.
This guide will provide you with some general knowledge that will make the process easier, maybe save you some time and money, and get you the home that you want.
If you are buying your first home, this guide will be especially helpful, but it is for anyone who wishes to learn more about the process of buying homes in Northern VA.
Also included is a home search if you would like to see what is currently for sale in the area.
- Step 1: Researching
- Step 2: Finding Your Home
- Step 3: Writing An Offer
- Step 4: Under Contract
- Step 5: Moving In and Homeownership
- Getting Started
Step 1: Researching
It all starts as a casual dinner conversation — “We need some more space, lets see what kind of homes are for sale.”
Then maybe you drive by a home for sale.
Then at some point, the home purchase decision becomes a reality.
This is when it is time to really get clear on what you want.
The first action to take is to brainstorm your ideal home purchase scenario, assuming it goes according to plan.
Sit down with all the decision makers. This includes anyone on the title and anyone who you want to have input.
It is time to figure out what kind of home you would like to find.
How many bedrooms and bathrooms?
What about basements, level of upgrade, area, yard, style of home, budget etc.
Anything that is important to you, jot it down. I like to use pen and paper, it helps me focus.
There are some topics that will need to be decided later, which is totally fine. For example, you might not know what area you want to live in until you see some properties.
Northern VA has a lot of different towns, all of which cater to slightly different needs and lifestyles.
But you can decide on things such as how long you want your commute to be and what you want to be near, such as a town center or metro.
|Must Haves||Would Like to Have|
|3 bedrooms upstairs||Fully updated kitchen|
|Finished basement||5 minutes to metro|
|20 minute or less drive to work||Wood floors throughout|
|Open concept floorplan||Craftsman style|
|Single family home with fenced yard||Close to dog park|
|Well-maintained||Updated Owner’s Bathroom|
You will not get everything that you write down. Sometimes it is a good idea to categorize them into “must-haves” and things that are a bonus or “like to haves”.
Of course, this list can always change as you go along; but if everyone who is involved in buying can agree (or mostly agree) on a list, that is a great start.
How Long to Own Your Home
The term “starter home” is often thrown around and sometimes it is unclear what this means. When do you buy your “starter home,” and when do you buy your “forever” home?
The fact is, the longer that you own a piece of real estate, the better investment it becomes.
This includes the home you purchase to live in. There are several reasons for this.
•You pay more interest at the beginning of your mortgage. If you look at an amortization table of a fixed rate loan, the payments are not building you much equity in the beginning. The interest is considered “front loaded”.
•Closing costs associated with buying and re-selling. When you buy a home, you will have closing costs to pay. Everything from lender fees, HOA fees, taxes and more will contribute to this final figure.
The same is true when you go to resell. If you own a home for a short period of time and then sell, these costs can easily cut into your bottom line.
•Appreciation. The real estate market is just like any other market. It goes up and down depending on a number of factors that are going on in the world and local economy.
Generally speaking, home values increase slowly over a long enough time period. If you sell soon after buying, you may not get much — if any — appreciation.
•So how long should you own a home? As long as possible. I tell most clients that planning to own 5-7 years is a good idea, but longer is even better.
“Owning” includes being a landlord and renting the property out if you wish to buy another home later and are able to do so without selling.
Of course, there are times when life happen, and you have to sell soon after buying. That should be an unforeseen circumstance, not the plan.
If you need a home to live in for a couple years, many times renting may be a better option.
Connect With a Professional
It is never too early to involve a real estate pro. I have been brought into the picture at various times during the buying process, but the truth is, the earlier the better.
Clients get the most out of a really good consultant during initial conversations, where the Realtor can get a really clear picture of what it is you are looking for, what you want to avoid, and what should be done next.
If you are further along in the process, that is fine. Be prepared to communicate as much as possible about what you are thinking and what you have been researching.
What to Ask, When to Ask
Do not keep any question to yourself at any point. A good real estate agent will give you an answer happily.
If the question involves something outside of their expertise, they should find the answer or direct you to who to ask.
If you are starting to think about buying, let me know how I can help.
Who Pays a Buyer’s Agent in Northern VA
The buyer agent’s broker commission in Northern VA is often (but not always) covered by what is offered by the seller to the selling agent.
Essentially, in most cases buyers are not directly paying their agents.
That is not automatic, however, and there are some circumstances in which you may need to pay the brokerage representing you.
These scenarios are rare, but they do come up in certain situations where the seller is not paying any brokerage fee to the buyer’s broker.
For example, if what the seller is offering does not cover the buyer’s broker fee in the agreement (below), you may be paying the difference at settlement.
The Virginia buyer broker agreement currently has a paragraph outlining how the company will get paid, and how much.
Real estate industry is always changing; should there be a drastic change in how broker’s fees are paid, I will update this article.
Signing a Buyer Broker Agreement
Virginia law currently states that a disclosure about representation should be made before having “substantive discussions about a specific property”.
This is when the professional should tell you whether they represent any other parties (the seller, for example).
The buyer broker agreement allows an agent to fully represent your interests and work on your behalf.
For this reason, the best option is to get this signed early.
It will make sure that you have a representative throughout your transaction, giving them the authority to advise you on pricing of a particular home, etc.
Many agreements will have no penalties for cancelling and can be cancelled in writing.
A buyer agent works for a brokerage with a supervising broker, or a broker can work on their own with a broker’s license.
Talking With a Lender
Most homebuyers need financing to get their home. Thus, the lender will be one of the most important aspects of the home.
They will tell you the maximum you can afford, what your payment will look like at a given home price, and your estimated closings costs.
If you are paying for your home with cash this does not apply.
Should you need a lender recommendation, it is a very good idea to get some from your an active real estate agent.
The lenders they recommend are vetted and have a strong interest to keep everyone involved in the sale happy.
Below is some general information about home loans, also known as mortgages.
For more in-depth information, reach out to your lender. They are the experts on the whole process.
Most likely, you do not need to submit a formal application while you are still in the research phase, as they will pull your credit and start to ask for documentation.
That said, they probably can give you some guidance on a price range to be looking within based on a conversation or online calculator.
There are two numbers you are looking for from your lender to compare quotes: monthly payment, and closing costs.
You will also see what goes into your monthly payment. Below is a rundown of some of the monthly costs that could be associated with your loan.
What Goes Into Your Monthly Payment
•Interest Rate. Interest rates fluctuate and represent the amount of interest that the loan charges per year to borrow the money. The lower the rate, the lower your payment will be (if the following term is the same).
To get an idea of what the rates will be, I like to check FreddieMac’s mortgage survey.
•Loan term. Loan terms vary in popularity depending on market conditions. 30 year fixed rate term is very popular.
That means your rate will stay the same and you will pay off your loan over 360 monthly payments — unless you make any prepayments, which will pay down the principal.
•Fixed rate vs. Adjustable. A fixed rate loan stays the same for the life of the loan. An adjustable rate mortgage will adjust to a different rate at an agreed upon time frame.
A 5/1 ARM (adjustable rate mortgage) will adjust after years to a different (usually higher) rate.
•Principal loan amount. This is the outstanding balance of the loan. Every month, part of your payment will go towards paying this down.
In the beginning of the loan, you pay more interest (it is “front loaded”) and near the end you pay more principal. This is because of how interest is calculated on the remaining principal.
•Taxes. Many times, property taxes are included as part of your monthly payment. At closing, an escrow account is set up and is funded by your payment and the tax bill is sent to your loan servicer.
•Homeowner’s insurance. Homeowner’s insurance is also often paid out of an escrow account, so it is included in your monthly payment. Your lender will want to see your proof of insurance before closing.
•Mortgage Insurance. Mortgage insurance protects the lender in case of default. It is required on some loan types, and others it is required only until you reach a certain amount of equity in the property.
Once you reach that point of equity, a new appraisal can be ordered and the lender must remove it.
•HOA/Condo fees. These fees are paid monthly, but NOT to the same payment as your loan. They are paid directly to the association. Most lenders will include these in your estimate, though.
Homeowners associations (HOAs) care for any common ground in the community and maintain the facilities.
The same goes for condo associations, although in that case there is much more for them to care for since condo unit owners only own inside of their walls.
Associations also have bylaws that control what you can do to your property (usually to the exterior appearance), and community rules. These fees are paid monthly.
When comparing loan options, the other factor to look at is closing costs. These are costs associated with buying your new home that will be due at settlement.
Closing costs include loan charges, transfer taxes, HOA transfer fees, appraisal, etc. If you do not have a loan you will still have closing costs, they will just be lower.
In Northern VA, many times you can get a seller to cover a portion of your closing costs in what is known as a “seller subsidy”.
There are several options for obtaining a mortgage, depending on your situation.
VA loans are for active duty or retired military members. They offer no down payment options and often have a very competitive interest rate.
FHA loans are government guaranteed loans. They generally offer lower down payments and are more flexible with lower credit scores than a conventional loan, among some other differences.
Conventional loans are what most borrowers will look to obtain. These are not guaranteed by any government entity; private investors fund conventional loans. They have varying down payments, but start at 5%.
Owner Financing or a Private Mortgage
I obtained an owner financed deal on my first home, although they are rare.
This is when the seller gives you the loan and you repay them according to terms you agree upon.
You can also have any individual with cash give you a private mortgage and have the terms written out as a note and deed of trust, which are officially recorded.
Here is some more info on owner financing.
Grants and Special Programs
There are occasionally grant programs or other loan programs offered in Northern VA.
VHDA is a very popular one. There are others that have been around for awhile, and others still that come and go.
Most have strict qualification parameters to meet, but if you meet them, they can make for a great option to save on down payment, rate, or both.
Internet House Hunting
This is the fun part. A majority of my clients do their home searching online, with assistance from me on more information on the future growth of the area, home type, and other sorts of questions.
The best photos are high definition and give you a good idea of the home. Usually, the lens makes the house look a bit bigger than it is in reality, but you can get a good idea of finishes.
As you search, feel free to reach out to me with questions.
You can start your search below if you want to see homes that are currently for sale in Northern VA.
There are also listings that do not yet show up online that are in the MLS, known as “coming soon” listings.
Here you can request a list of coming soon listings.
Homes For Sale in Northern VA
Your price range is determined by two factors. First, your lender. They will only loan you out to a certain amount based on your income, debts, and assets.
The second factor is you.
You cannot go above the maximum you can borrow, unless you bring more cash as a down payment. But you do not have to borrow the maximum amount.
Many would rather have a lower down monthly payment.
If you can get all of your “must haves” without having to spend at the top of your budget, that is a win — and definitely something to consider.
Where Online Do You Search?
There are lots of options. Big real estate “portals” connect homebuyers to third party lenders and agents who pay to be featured.
There are also large brokerage sites. The best sites have a direct feed to the best data, which currently comes from the multiple listing service (MLS).
You have many options for your search, but the best sites are privacy focused and will not bundle and sell your data.
The home search featured on my site has a direct feed MLS. I do not sell your information, and I take privacy very seriously.
You also can browse without creating an account. Optional premium accounts get more benefits such as listing alerts to your email.
The best feature is that you can ask me a question right from within the search.
Open houses can be a great way to see a home or explore an area if you are still doing research.
A majority of open houses are on the weekends, usually in the afternoon. Sundays are the most common.
Agents at open houses might have you sign in.
If you have a real estate agent who you are working with, putting their information down will make sure that the representative at the open house contacts your agent instead of you.
This can save your inbox from being filled with email and your phone from being called repeatedly.
Remodeled or Fixer Upper
Something to keep in mind is whether you want something that is already completely remodeled, or if you are willing to do some work.
If you are in a very competitive market, many of the homes that are remodeled will get multiple offers. However, the same can apply for a fixer upper home with a low price tag.
If you do not want to do any work on the house, this is something good to decide in advance.
An advantage of buying a home that is fixed up is that the you can finance the “cost” of upgrades because they are already done.
The advantage of choosing a home that needs more work is that you can sometimes find a better price, even considering the necessary upgrades.
Whatever you choose, just make sure you have budgeted for any work needed, should you go that route.
Types of Homes in Northern VA
Northern VA has very diverse options for home buyers; everything from urban, to suburban, to more quiet neighborhoods with large lots are available — all built in a variety of eras, floor plans, and materials.
Below I discuss the three most common types of properties, along with some less common property types that you may encounter during your search.
Townhomes are known as “fee simple” ownership. This means that you will own the land, and the “improvements” (home) on the land as well.
Townhomes have a small piece of land, but it is all yours. Most townhomes have a fenced (or fenceable) small backyard area, as well as a small front yard.
This is nice if you would like to plant some flowers, garden, have an entertaining area or own a pet.
Townhomes are connected to neighbors via a shared wall — either one or two walls depending on whether you are the last home in the row, or the “end unit”.
Townhome communities are plentiful in Northern VA. They are my favorite option for a first home because they have a lower price than a single family home, but still have a good amount of living space.
Many townhome communities also have good history of appreciation (gain in home value over time) and have lower fees.
HOA fees, for instance, are almost always lower than a condo fee.
Northern VA is full of condo complexes. “Condo” refers to the type of ownership of your home. In a condo, you own what is within the walls.
The land that the condo sits on is owned by the condo community.
There are advantages and disadvantages to this.
The advantage is that condos have a generally lower price tag than other types of ownership, and they are lower maintenance.
Exterior maintenance and building maintenance falls on the condo association, usually run by a property management company.
Some disadvantages are the higher monthly fees, as the association maintains more, insures more, and owns more than other types of ownership.
You also do not own any land in this situation.
Condos come in a few different styles.
Some are high-rises like an apartment building, but you own the unit instead of renting.
Others are 2 level or have a loft, and are built on top of another unit.
Some are three level, only share walls on either side like a townhome, but have condo ownership. These started to become more popular in the 2010s.
Condos are very popular choices in Northern VA, especially among first time homebuyers and investors.
Single Family Homes
Single family detached homes are the classic type of home. They come with a plot of land, either large or small.
This type of home gives the most flexibility of size, style and features.
If you are looking for more privacy, a bigger or more unique home with a large yard, then this is the type of property you want to search for.
There is a large variety of styles with this kind of home.
Some have homeowner associations, and the fees vary based on what is in the neighborhood to maintain; other neighborhoods do not have an association.
Single family homes appreciate very well, and in many neighborhoods their value increases the most of these three home types in Northern VA.
Other Less Common Types
A majority of the properties that you will see fall into one of the three aforementioned categories.
There are some rare cases where you might run into some of the following properties, so I will discuss them here.
–Duplexes. There are some duplexes in Northern VA, but most were built a long time ago. There is one community in Fairfax City called the Ardmore that is filled with duplexes, for example.
Duplexes are like townhomes, but are just two units built side-by-side or one on top of another.
They usually have yards as well.
–Co-Ops. A co-op lives like a condo, but you do not own the land OR the unit. Instead, you buy shares of a corporation that come with the right to use your unit.
These are far less popular in Northern VA, though are more common in other parts of the country.
–Mobile Homes. In a mobile home you rent the land from the owner of the lot. Your structure is yours.
When you are researching and discussing your goals, the subject of buying a new home may arise.
Buying a new home offers many advantages.
The process is usually easier because you are dealing with a builder as the seller, there are more warranties, and you are getting the cutting edge of interior finishes.
With that said, new homes usually carry a premium price over a resale home, but this is case by case.
Plan to stay in the home a long time and get the right home, and it can still be a solid investment.
If you have your heart set on building a new home, in this guide I expand specifically on the process of new construction.
When you choose your agent to work with, make sure they accompany you when visiting a new community.
They sometimes will not let you work with the agent if they are not present for your first visit.
A good Realtor with experience in new construction homes can add a lot of value to this purchase; it is a different process than buying an existing home on the market.
Step 2: Finding Your Home
If you decide that it is time to buy after doing some research, then it is time to get more serious about visiting homes.
Once you find the right one, you will get your offer written up and submitted. This process moves quickly once you commit to it.
This is an exciting – and sometimes nerve-racking – part of the process, so refer to your real estate professional if you have any questions or concerns.
It is also a good idea to have a lender helping you at this point. If you submit an application to one, they can provide you with a preapproval letter, which you will need to write your offer.
At this point they will check your credit history and that of any co-borrowers and ask for documentation of your income.
Visiting Homes for Sale
Once you choose an agent, they will begin to schedule tours of homes that are available.
Most popular homes can get multiple tours during the weekend and after work hours.
If this is the only time you are available, which is standard for many, schedule tours during these time frames.
If you have flexibility during the week for daytime, that is great as you will get to see them with a lesser chance of other showings happening at the same time and more ease of scheduling.
I usually recommend a limit of 4-6 tours in one trip.
Any more than that, and it can be hard to remember which house had what features and really have time to take in each showing.
Online vs. Reality
The convenience of looking at homes online is awesome. However, not everything will look the same in real life.
Most real estate photographers make sure the home is shot with a wide angle lens and made to look as bright as possible.
You will be able to see the square footage online. Keep that number in mind and use your current residence for comparison.
It can also be hard to spot how much maintenance a home needs in just a photo.
Square Footage vs. Tax Square footage
Some jurisdictions, such as Fairfax County, count above grade in the tax records, so this number will not include any finished portion of the basement.
The square footage listed online might be this tax assessed number, or it might be an estimate from the agent or other professional.
Most of the time this number is accurate, but occasionally it is slightly off.
Virginia is a “buyer beware” state so if square footage is really important to you, prepare to do some measurements to double check.
Eliminating Down to the Right One
Every house that you see can make progress towards the right house.
Don’t like the area? Cross it off your list. Don’t like the open concept? Look for something with more defined spaces. You get the picture.
A lot of this can be done even before touring homes just by driving around areas on a weekend (or when you have free time) to get a feel for the amenities and the commute.
Oftentimes, by the time you are looking for homes you have done enough research that you are able to eliminate options before going out to look.
How Many Homes Should You Tour Before Buying?
There is “no one size fits all” answer for this. I have had many clients who I helped conduct some thorough research, and they only see 2-3 homes.
They knew what they wanted going in, were ready with a preapproval letter, and when they saw the right one they knew it.
Other clients want to see a few different areas, different types of properties, and different floor plans.
This is totally fine as well – a few clients I have helped visited 20 or more properties.
Eventually, if you are not eliminating down to an area, type of home, and general condition you may want to go back and revisit your goals.
Switching home buying plans is totally fine and happens all the time.
However, if you do not see anything that you like at all (ie: not getting closer to the goal) after going out on a few home tours, you may need to adjust your price range or your expectations of what your “must haves” will be.
If you still are not getting closer, it may be time to ask yourself if this is the time to buy, or if renting would be a better option for awhile until your goals become more clear.
Finding Your Home
Many people have asked me, “How do I know when I find the right home to buy?”.
It is not a simple answer, because it is more intuition-based than anything else.
If you feel excitement about the house you are in, rather than neutrality, that means it is a home you should be heavily considering writing an offer on.
If you begin to plan in your head where your things would go in the home, that is another good sign.
For example, you are mentally placing your sofa and TV in the living room.
One thing that your home will NOT be is perfect. Perfection does not exist.
Even brand new homes have flaws and quirks.
The home you eventually buy and move into is not going to check every single box that you have listed.
You do not want to pass up on a home that you could buy, and are really happy with, in order to search for the perfect one. Again, “perfect” is not out there.
Conversely, do not rush into buying a home that you think you should like. The right one will come along soon enough.
If a home does not give you that excited feeling, I find it best to wait.
Once you find the home that you want to write an offer on, it is time to put something in writing to be presented to the listing agent (seller’s agent).
Preparation: What To Do Before You Write an Offer
You will want to be ready when you go to submit your offer.
The sooner you have these items ready, the easier and more quickly you will be able to submit your offer.
Pre Approval Letter
Ideally, you have this ready before you start to seriously look at homes. There is also a letter that is sometimes known as a pre-qualification letter.
The big difference is that with a pre-qualification letter, the lender goes by what you say to them, rather than verifying all of your documents.
A pre-approval letter is when a lender actually obtains your documentation such as tax returns, bank statements, etc., and may even run it through an automated underwriting program.
A pre-approval letter is the stronger option, as the lender has begun to more thoroughly look at your credentials.
To the seller, it means that you are more likely to get final approval for your loan.
Proof Of Funds
If you are paying cash, the seller will want you to provide a copy of a bank statement showing that you have the funds necessary to close on the property.
In rare cases, a seller may want to see proof of funds for a down payment with your offer, but this is uncommon. If you have a pre-approval letter, that should suffice.
Earnest Money Deposit Funds
Either the title company or the brokerage that represents you will hold an earnest money deposit from you in a holding account called an “escrow” account.
These funds are deposited into an escrow account AFTER an offer is accepted, but some sellers and their agents will want to see a photocopy of the check.
This shows the seller you are serious. This check is your money, and goes back to your down payment and closing costs.
It is only at risk in cases where a buyer does not perform according to the contract – not showing up to settlement, for instance.
There are legal ways out of a contract (contingencies) that are explained in the following section.
An increasing number of title companies are beginning to accept electronic means of deposit for these earnest money funds.
These work much like depositing a check for your bank through a mobile app.
Price, Terms and Competition
Before you put the offer on paper, you will want to know some dates and terms of the contract: how much you want to offer, when you want to settle, how much seller subsidy (closing cost help) to ask for, and other such details.
Your real estate professional can also check if the listing agent (seller’s agent) has information about other offers.
In a market with few homes for sale and lots of buyers, multiple offer situations are common.
I have been involved in many competitions over the years helping clients. In the bottom of the next section, I provide advice about multiple offer situations.
Step 3: Writing An Offer
This is a rundown of some of the main parts of the contract that are filled out when writing an offer, using the contracts provided by the Realtor Association.
Northern Virginia Association of Realtors® contracts are most commonly used when buying homes in the area.
This is not all that is included in the contract, and your real estate consultant can help by walking you through the entire contract — or you can review it yourself.
There are occasionally other contracts used when buying a home. For example, for new construction homes in Northern VA, most builders use their own contracts.
Keep in mind that the contract also changes over time. If you are in your research mode and have questions, reach out.
The Virginia Residential Sales Contract
This document contains the bulk of the terms that will be decided between you and the seller.
These are some of the main sections of this contract; there are many more sections and definitions.
In the actual paperwork, the sections are separated by numbered paragraphs for easy reference.
Parties to the Contract
The contract will specify you as the buyer, the seller, and which brokerage is representing which party.
This is how the title paperwork will be drawn up, so make sure spelling is correct.
The home you are purchasing will be identified in the contract.
Both the address and legal description refer to how the land is recorded with the local land records.
To double check this, you can go to the real estate assessment websites – here is Fairfax County’s records.
Price, Financing & Closing Cost Help
This is where you will identify the price you want to offer the seller, what type of financing (if any) you will be obtaining, and whether you would like to ask the seller to pay for any closing costs.
Earnest Money Deposit
The earnest money deposit amount, and where it will be held, are identified in this section.
This can be any amount. In most of Northern VA, 1-3% of the sales price is common.
However, it can be higher for all-cash offers or other situations where you want to show the seller how strong your offer is.
Settlement Date & Title Company
The settlement date is the date in which everyone signs all of the paperwork for the final transfer of title to you as the new buyer.
If all goes according to plan, as of this day you will officially become the owner.
Keep in mind that this date cannot be changed without agreement from all parties.
The title company is chosen by the buyer in VA, so you have your choice. They do a title search and prepare all of the documents for closing.
Homeowner or Condo Associations
In Virginia, the seller will order and provide for you an association “resale disclosure packet” and other financial/bylaw information about the association.
You will have 3 days after delivery to review and void the contract if needed.
Update: the contract does allow you to extend the 3 day review window with parties agreeing up to 7 days.
This section of the contract spell out your rights with these documents. Most properties have either a HOA or a Condo association.
Some have both, such as the condos in Penderbrook in Fairfax, VA.
This section goes over what will be included with the property. There is a list of items where you will specify what will stay when the seller moves out.
It also discusses the items of the property that are assumed convey, such as plumbing and lighting fixtures.
If you are wondering about items you see in the home and not sure if they are going to convey, it is a good idea to write them into the contract.
Lead Paint Disclosure
This specifies whether or not the home was built before 1978.
If it was, then a lead paint disclosure will be required separately.
You as the buyer will then have the choice to do a lead paint inspection if desired.
Here is more info on lead paint from US Dept of Housing and Urban Development.
You can choose who will pay for the termite and wood destroying insect inspection.
If you are getting an FHA or VA loan, this inspection is a requirement on most homes. If it is a condo, check with your loan officer.
You can specify whether you want a third party home warranty, and who will pay for it.
Warranty companies are like insurance for appliances and systems (such as HVAC) in the home.
They have a yearly premium and then deductible to come fix items.
Anything else that should be added to the contract — this section at the end is where it is put in.
If you have a loan, in almost all cases you have a finance contingency.
The contingency says that if you do not get approved for your loan, you can get get out of the contract and get your deposit back, as long as your contingency is still in place.
There are a number of days specified for how long the contingency lasts.
However, it can either continue after those days are up, or automatically expire, depending on the option that is chosen.
This difference in extension or automatic expiration is new as of 2019. Make sure you review this and understand.
Another nuance is the type of financing.
If you are getting an FHA loan, and then choose to switch to a Conventional while you are under contract, then make sure to notify the seller and get a new addendum signed.
Switching loan types is called “seeking alternative financing”.
While perfectly legal within the contract, if you do not get the seller to agree to it, you will can lose the protection of the finance contingency.
So before you make changes to your loan type/terms that you have in your contract, review this section of the contingency.
Within the finance contingency is an option for appraisal contingency. Your lender will require a third party to appraise the home.
That value needs to come in at or above your agreed upon sales price.
If it comes in lower than the sales price, you will need to increase your down payment or have the seller lower the price.
This comes into play often in a market where homes are increasing quickly in value.
Home Inspection Contingency
VA is a “cavet emptor,” or “buyer beware,” state.
This means that the seller only needs to provide you with a residential property disclosure.
It essentially says that the home is being offered as is, where is, and it is up to the buyer to uncover any defects.
The seller cannot actively cover up any latent defects or commit fraud, but that is a rare occurrence.
The overall property condition must be discovered by a home inspection, or other inspections.
Thus, if you are looking at homes in Northern VA it is a good idea to plan on an inspection.
There are cases where a buyer with lots of construction knowledge, experienced buyers, or investors will forgo an inspection.
In extremely hot real estate markets, it is common for buyers to buy a home without an inspection contingency.
This is very risky, not recommended and many times there are alternative options to waiving this contingency all together.
The reason is to make the offer more appealing to the seller if they are competing or offering an under market value.
With Repair Negotiation
This the first option in the home inspection contingency.
After the inspection, you can either give the seller a list of repairs you would like to have completed before settlement, or a notice voiding the contract and getting back your deposit.
If you ask for repairs, there will be an agreed upon timeframe to go back and forth with the seller over what repairs will be done.
Often, a credit can be negotiated instead of the seller doing repairs.
Without Repair Negotiation
You can also choose to waive the repair negotiation.
You will do your home inspection, then either remove the contingency and move forward with the contract, or send notice to void the contract.
Why wouldn’t you ask for repairs? It can help make your offer more attractive to the seller.
This is especially true if there is more than one offer or you are asking for the seller to concede in other aspects of the contract.
You can also ask for the right to do a radon test. This test shows the level of radon in the home. Here is more info about radon from the EPA.
If there are high levels, remediation system can be negotiated.
Home inspection and financing contingencies are the two most common.
Here are some others you may see depending on your situation and where you are buying.
Home Sale Contingency
This contingency says that you need to sell your home in order to buy the one you are writing an offer on.
It gives the terms in which you will sell your home, the timeframes, and deadlines.
This is not as common in a competitive market, as it can weaken your offer and be difficult to get the seller of your new home to agree.
Many buyers find alternatives to a contingency in these situations when they have a home to buy and sell simultaneously.
This contingency is usually reserved for homes in poor condition, foreclosure homes, divorce sales, and trustee/ estate sales.
However, occasionally a home will be listed “as-is” because the seller may just not have the funds to make any repairs.
It says the seller will make no repairs whatsoever, and can even delete other aspects of the contract to this effect.
The more commonly used term is “rent back”. This is when you buy the home, but temporarily rent the home back to the seller for a specified period.
This can be helpful to the seller depending on their situation. Again, it is one point of negotiation.
If a rent back is important to the seller, this can be used to make a stronger offer to compete or ask for other terms favorable to you as the buyer.
Septic and/or Well Inspection
Some homes in Northern VA do not have public water and/or sewer. Rather, they run on septic and well.
It is a very good idea if your home has these to include these inspections; there are timeframes, and then repairs can also be negotiated much like the home inspection addendum.
There are more contingencies that can arise, but these are the most common.
If the seller requests something you do not recognize or your situation calls for something else, ask the professionals.
I have seen many unique situations and contingencies.
Submitting Your Offer
It is time to submit your offer to the seller’s representative. Once you review all the paperwork, finalize the terms and prepare to get everything signed.
If at all possible, I use e-signatures to get the offer signed. It saves the paper and can be easily reviewed at your personal computer.
Choosing a Price and Terms
When choosing a final price to offer, I like to show clients all of the properties that have sold nearby (preferably in that neighborhood) and discuss their update levels.
In the “sold” comps directly from the MLS, you can also see whether any seller subsidy for closing costs was given.
You should also know the general market conditions both of Northern VA and what is currently happening with the homes in the town or neighborhood in which you are offering.
This ensures that you know what the market looks like and gives you full knowledge of what you are offering.
At the end of 2020, the Realtor® Association issued a statement to dissuade buyers from writing cover letters or “love letters”, citing liability issues for sellers for unintentionally choosing a buyer in violation with fair housing laws.
Because of this change, I recommend against writing letters. Because of the potential problem it can cause the seller (and/or seller’s agent).
How Long You Will Wait for a Response
There is no timeframe for a response in Virginia. You can set a deadline for your offer if you prefer, such as “void if not responded by ______”. This is effective in certain scenarios but not as much so in others.
I find that most offers are responded to on some level within 24-48 hours, on average; but some take longer and some more quickly.
Sometimes the seller will have a deadline in which they will not review any offers before that time.
Dealing With Multiple Offers
This can be a stressful situation. I have dealt with lots of multiple offer situations and subsequently won many of them.
Although you do not win every bidding war, here are some tips for navigating this situation to your advantage.
What is Important to the Seller?
With multiple offers, you do not want to go in hardballing and asking for too much on price or terms; this is not a good approach.
I always find out what is important to the seller and then craft an offer that is as close to the ideal scenario as possible.
It is not always price-related. For example, a seller may really need 30 days after closing as a rent back period — this this would be something to include in your offer.
This guide expands on this.
How Can Your Offer be Stronger?
More money is obvious, but you do not want to over pay.
So, how else can your offer be stronger?
Higher earnest money deposit, inspection without repairs, a quicker closing with a good local lender…
These are some ideas to consider. There may be others depending on the situation.
An escalation addendum says, essentially, that you will beat any other offer up to _____ price by X amount of dollars.
However, the seller has to prove they had another offer at that price.
Instead of just putting the sales price up to your max, this can save you money if your full escalated price is not met.
Sometimes, the seller may just want your best offer. But many times escalation is a good tool.
In market where home prices are rapidly increasing, some buyers will waive the appraisal. That means if the home appraises low, they will automatically increase their down payment.
There is also a “partial” appraisal waiver, where you can say you will increase your down payment up to (x) amount in the event of a low appraisal.
I recommend my clients only do this in certain situations and when they have the financial comfort to do so.
Losing and Learning
Do everything that you feel comfortable doing to win that particular house.
If you are competing, I do not recommend omitting anything from your offer that you would omitting if you did not get the house.
With that said, once you do everything you can with a really good real estate agent, it is out of your control.
If you do not get the house, ask what happened and what the winning offer looked like.
Take some time to be disappointed, but remember that more homes will become available. You will be even more prepared for the next offer.
Part one of the celebration starts now! Go out to dinner, do a little dance, go see a movie, or indulge in your favorite way to unwind.
Contract acceptance by both you and the seller is called having a “ratified contract”.
The real celebration starts when you sign all the final documents and get the keys.
Homes in Northern VA are usually under contract between 21-45 days on average before going to closing.
It could be longer or shorter than this, depending on the terms you work out with the seller.
This period is a flurry of activity, paperwork, negotiations, and decisions. If you are working with a good real estate agent, it will go quickly and be as painless as possible.
There is also a big reward at the end.
Step 4: Under Contract
Contract to Lender and Title Company
The first thing you want to verify is that your lender and the title company have the contract.
Real estate professionals will usually take care of this immediately after you have a ratified contract so they can begin to work on your closing and loan.
The contract will specify how much time you have to perform a home inspection; 7-10 days is typical.
In this timeframe, you will want to get your inspection done, make a list of repairs you want to request (if you have that option), and deliver it to the seller.
If you have no home inspection contingency, this does not apply.
Finding an Inspector
I often give buyers 2-3 good inspectors, if they need recommendations.
You can also look up your own by perusing online reviews or via recommendations from friends who recently bought homes.
Pricing varies by inspector, square footage of the home, and the addition of radon tests and other inspections.
An inspector will be able to give you a price when they have a conversation about the size of the property and any unique features like extra structures on the property.
What to Expect
I recommend that my clients plan on attending the inspection. It is a great time to learn about your home and also get insight into any deficiencies in person.
Some clients absolutely cannot attend the inspection. If this is the case, I will go instead, and we do a thorough review of the report together afterwards.
Inspections last anywhere from 1-4 hours depending on the size and scope of your home.
Most inspectors schedule either in the morning or early afternoon.
Ask your inspector as many questions as you can, because this is your chance to really get to know your property.
If you do a radon test, usually the test is placed ahead of time and you will be emailed the results 48 hours or so after the test is placed.
The report gives you a detailed look of all the aspects of your home. Usually, it is split into sections such as exterior, interior, electrical, plumbing, etc.
Most reports will highlight deficiencies or items to monitor.
This is convenient when asking for fixes from the seller and/or deciding what you need to focus on when you move in.
After you get the report, you have to communicate with the seller. If you have the option to ask for repairs, this is when you make your list to give to the seller.
This is done in contract form through an inspection removal addendum.
If you do not have repairs, you notify the seller that you are removing the contingency and moving forward with the contract.
Alternately, if there are issues with the home that you feel you cannot move on, you can also void the contract and get back your deposit with this contingency.
Your lender will want you to order an appraisal; it is a good idea to get it ordered as soon they request one.
An appraiser is an independent professional who will come out and give an evaluation of the price of the home.
They use nearby sales as similar and as close as possible to justify the sales price.
You home will need to appraise for at least the contracted price in order to satisfy the lender.
Working Through Low Appraisal
Occasionally, an appraisal will come back lower than the contract price. This is more common for homes in Northern VA areas where prices are rising and comps have not caught up yet.
At this point, you have three options. First, you can request the seller to lower the sales price down to the appraised value.
Second, you can bring more money towards your down payment to make up the difference.
Or third, do a combination of the two and meet somewhere in the middle.
This is the time for an honest review of the appraisal and a conversation with your real estate team so you can decide what the best approach may be.
Usually, most scenarios start with asking the seller to lower the price, and go from there.
If you cannot work it out with the seller, the contract will become void.
This is rare, and more likely to happen if there is a significant difference between the sales price and appraised value rather than a smaller one.
HOA and Condo Docs
If you are buying in a community with a Condo and/or Property Owners Association, at some point you will receive the resale documents.
You have a 3 day right to void period after receiving these documents to review them (can now be amended to 7 days if parties agree).
So if there are things that are very important to you (pets, parking spaces, financials, etc.) it is a good idea to browse through the rules and documents.
Look at the Compliance Inspection
I always check this first. The association will do a compliance inspection on the property to make sure that there are no items in violation of the community rules.
If there are, the seller will need to fix them in order to convey clean title according to the contract (unless an as-is addendum was added).
You definitely do not want to discover right after moving in that you have violations that need to be addressed.
The title company is responsible for preparing everything for closing.
They do not represent either party, but rather are a group of attorneys that facilitate the final documents and arrange for settlement.
Early in the process, someone from the title company will reach out to gather your info.
They will ask for your information either via a secure portal or paper form so that they can prepare documents for closing and make sure they know who should be signing the final documents.
Lenders require you to pay for their title insurance premium.
You also have the option to purchase title insurance for yourself. You can find out a little bit more about what is covered on this title company’s page.
You can also get a survey done on the property ordered through the title company.
It will show where your land is in relation to the house and any other structures, easements, fences, restrictions and more.
This can be a good idea to get more information about your property. If you are in a condo, you do not own any land.
Wood Destroying Pest Inspection
For some loan types, this will be required, but you can also elect to have one done anyway.
If any wood destroying insects are found, the seller contractually will have to treat the problem and also fix any damage (unless an as-is addendum was signed).
The loan is usually the last hurdle to get past on the way to your new home. If you are lucky enough to be paying cash, then you will not have the thrill of navigating the final loan process.
Documentation and Underwriting
Your lender will request documentation for all aspects of your financial life to give to the underwriter.
Some buyers find this process a bit burdensome and it also depends on government regulations at the time.
After the financial crisis in the early 2000s there are much stricter guidelines on residential loans.
As the lender requests documents, get them as quickly as you can; this helps the process go more smoothly.
Your lender will also tell you not to make any large purchases during this time. Consult with your loan officer before making any changes that will affect your credit, assets, etc.
This usually comes a few days out from closing (but occasionally, it is close to closing). If your lender reaches out to you and says your loan is “cleared to close”, congratulations!
You can rest easy knowing that you got your loan and are that much closer to your home.
Your lender will reach out to you at some point to provide proof of a home owner’s insurance policy.
If you are not getting a loan, this is something to look into on your own while the home is under contract.
Utilities and Mail
With all the excitement going on, this is something that can be forgotten.
The seller will be switching the utilities (electric, water, gas, etc) out of their name as of the settlement date.
You will want to get your accounts set up to start on the settlement date. This way there are no gaps in service or extra restart fees.
Keep in mind any other utilities that you need to shop around for, like internet.
Remember also to change your address to forward your mail!
This is a four letter word in real estate. The contract spells out what happens if a party defaults.
Default would mean that you did not perform on the contract.
There are a few different ways this could happen. For example, not showing up to settlement as a buyer or seller.
If you are in a situation with a contract default at your doing, you could risk your earnest deposit, or more via a lawsuit. If necessary you will want to seek a real estate attorney.
Keep in mind your timelines and remember your rights within the contract. Always ask questions if you are not sure what a part of the contract means.
Final Settlement Statement
After the loan gets approval, the title company will send you a settlement statement.
This has all of your expenses (closing costs, down payment, etc) and also any credits that you are receiving, all in one document.
You can finally see the final amount you need to bring to closing. This amount will need to be either wired (not an ACH transfer, but a wire transfer) or you can bring a certified check to closing.
Wire fraud is a real issue in real estate, so make sure that you verify and also call the title company from a number on their website to verify their account info.
Final walkthrough is for checking that the property is in the same condition that it was when you wrote the offer, or when you did the home inspection (depending on if you had an inspection).
The house is about to become yours, so be as thorough as you would like.
The contract states the property will be broom clean, and substantially the same condition.
So while the home may not be perfect and shining, it should look about the same that it did last time you were there.
Any issues should be addressed prior to signing the final paperwork.
Usually, the closer to settlement, the better for the final walkthrough. This insures that there is as little time as possible that you do not see the home before it is yours.
If there are problems, there are a few different ways to address them. It will depend on what the issue is.
Receipts For Repairs
Before the walkthrough, receipts for any work negotiated for the seller to do should be provided.
Do not forget to also take a look at these items during your final walkthrough.
Working Through Issues
Although it is not common, sometimes things do come up. Be ready to work through this with the seller in a timely manner.
There are several ways to do this and each situation is different.
Staying solution-oriented and keeping the end goal in mind is a good approach to finding a solution.
This is it! Settlement day is always an exciting time. This is when the real celebrating can begin.
Plan a housewarming party and get ready to settle in!
The lender’s funds will combine with the funds that you sent to the title company to close the transaction, and it will then be recorded on public record and all money is sent to the parties where it is owed.
What to Bring
Bring a valid driver’s license, and it is also a good idea to bring a personal checkbook. This is just in case a number is off and they need to adjust the amount you owe.
Title companies almost always accept small amounts by personal checks for these circumstances.
You will sign lots of important documents for the title of the property and for the lender.
If you want to read documents ahead of time, ask your title company contact or agent.
Some documents are legally binding and you may want to give them a more thorough review than merely at closing.
Settlement usually will last about one hour for you as the buyer. It could be shorter or longer, depending on the lender and how carefully documents are reviewed.
Tips for a Smooth Transaction
Here are some general tips for making sure this phase goes smoothly.
•Be available. Communication is key to getting successfully to the closing table. There are a lot of moving parts at times. For the couple months that it takes to buy a home, you will have to make it a priority.
•Keep the big picture in mind. Focus on what you said your goals were in the beginning of the process. Do not get sidetracked by a small part of the transaction that is frustrating you.
•Face problems head on. Be open and honest with your real estate team of professionals and let them give feedback. A good lender and agent can make the process so much better.
Together, you can handle issues that may arise in a transaction.
•Let go. Buying a home involves a lot of people with a lot of different tasks. Do your best with what is needed on your end, and then trust that things will work out as they should. I have found they always do!
Step 5: Moving In and Homeownership
Now that you have closed, it is time to move in! Or, if it is an investment, to get it ready to rent. Either way, the objective has been completed.
Updating if Needed
Right before you move into your home it will be totally vacant. This is an ideal time to do any work that you have been planning.
If your budget allows, an empty home is a good time for renovations because you can avoid getting paint and dust on your things, do not have to live around construction, and do not have to move furniture all around the home.
Moving companies can move you from your old place into your new home. Or you can grab some friends, rent a truck and go for it.
Once you are moved in, it is really time to celebrate — just make sure you invite me.
Maintaining Your Home
If this is your first time owning a home, it will take some time to get used to maintaining the property.
Setting reminders in your phone for some of the repetitive maintenance items can be helpful.
Many home inspectors often will give you some tips on maintenance that you can find in your report.
As you have contractors do any repairs on the home, they can also give you good tips.
As you find trusted contractors it becomes easier to maintain the home, because you have trusted people coming to take care of it.
Are you ready to get started with the home buying process? Have additional questions? Not sure where to start? Fill out the form below and I will be in touch with you.
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