How to Buy a Home

This page is written as a guide to the process of buying a home. Our goal is to answer some of the many questions you have, and to help avoid surprises or pitfalls during the purchase of your new home. The process of buying a Dallas home is very similar to many other markets in the country, but there are some subleties that apply to real estate transactions in Texas. During any purchase or sale, a great deal of information is exchanged in a very short time. The tools that we provide on this page will enable you to review some important details as you move through the process. Where possible, we will provide tools, forms, or links to additional web sites for clarifying information.

One of the first and most important steps in buying a Dallas home is obtaining representation. Should you chose to work with Lake Highlands Property, we will be in regular contact with you during the entire process, and will work very hard to keep your transaction as stress free as possible. Finding a new home should be an exciting adventure, and we work hard to make sure that the excitment remains in the process without any additional undue stress.

Agency Law - Who represents ME?

Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner's agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer's agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly.

When you first speak with a real estate broker or agent, you should clarify who they are working for. At the first substantial meeting, the real estate broker or agent should review Information About Brokerage Services with you and have you sign this form. During the discussion, you can again confirm who the broker or agent is representing in the transaction - the Seller, YOU, or potentially is the broker acting as an Intermediary.

At Lake Highlands Property we have great passion for performing Buyer Representation, and will specifically represent you, as OUR CLIENT, in the buying process. To enter into this relationship, the law requires that we have a written agreement, stating our mutual obligations. Under such an agreement, your interests will be represented. Typically, the costs associated with Buyer Representation are paid from the Sellers' funds at closing.

As Your Buyer's Agent We Will:

Know and understand your specific housing needs and budget.
Assist you in obtaining mortgage qualification.
Establish a customized web site portal for presenting and reviewing all MLS listed homes that meet your search criteria.
Contact “For Sale By Owners” and builders should their property meet your needs. We can show you any home that is for sale regardless of the method being used to sell it.
Arrange all details of home tours, and personally accompany you through each property viewing.
Provide information on the area in which you are likely to buy, providing school performance reports, a Comparative Market Analysis to quantify home values in the area, and additional information as you may request.
Develop a strategy for presenting and negotiating a sales contract to purchase the property.
Know and understand your specific needs as we represent you in the negotiation of not only price, but also the additional terms and conditions of the sales contract.
Assist in obtaining access to the property for inspectors, engineers or other 3rd party professionals you may engage during the Inspection Period of the contract.
Manage the closing process, from contract to closing to ensure that all necessary documentation is completed and available before closing date.
Most importantly, we follow your instructions throughout the process - you are the boss. We will always provide you with opinions and information we feel you should know. However, once you are informed, we will execute your exact desires, provided such instructions are legal and ethical.
Disclose all known facts that could affect the transaction.
Provide you with copies of all documents.
Accompany you to the transaction closing. We are there to obtain answers to any questions you may have, and to ensure that the transaction closes according to the terms and conditions you agreed to in the sales contract.
Maintain absolute confidentiality - we have a fiduciary responsibility to act solely in YOUR BEST INTEREST.

As you see, we provide many services for Buyers. However, unless you are specifically represented under a Buyer Agency Agreement, we cannot, under law, disclose anything of a confidential nature about the Seller, i.e. motivation for moving, what Seller will "really take" for his property, etc. Unless you are specifically represented under a Buyer Agency Agreement, all REALTORS® work for the Seller of the property, and our fiduciary duties lie in obtaining the best possible terms for our Principal, the Seller.

REALTORS® are also required to pass on to the Seller anything we learn about an unrepresented buyer's position, for example, his willingness to pay more for the property than his offer suggests. It is therefore important that you realize that you should be careful what you divulge to any agent who is not representing you as a client.

Of paramount importance in the relationship between you and your REALTOR® is trust. The purchase of a home is likely the largest single investment you will make in your life. Be sure that you are comfortable with the representation that you select - it can make the difference between an exciting and pleasant experience, and one that is not.

At Lake Highlands Property, we realize that the needs of each person or family are unique. What may be the perfect home for one is completely wrong for the other. With this in mind we have developed the LHP Home Criteria Assessment, a tool that considers that following aspects of life:

Work Location and Commute Time
Worship and Faith Needs
School Requirements
Family Activities and Community Needs
Hobbies and Interests
Family Size and Space Requirements
Desired Home Ammenities

Once completed, this assessment allows us to recommend specific areas and neighborhoods within the greater DFW area. With the relative geography determined, we are then able to leverage state of the art technology to facilitate the real estate search. A personal web gateway is developed for each client. This gateway can support a large number of custom search criteria. It draws information from the North Texas Real Estate Information System (NTREIS), the Noeth Texas Multiple Listing System (MLS). The results from each search are visible in the personal web gateway, and these results are automatically updated as new properites matching the specified criteria enter the market. Clients are able to note those properties in which they have interest, and just as importantly, those in which they have no interest.

From the results of these searches, home tours are established. We make all of the arrangements and accompany our clients on each tour. Tours are set based on the needs and timetables of each client. For those with pressing relocation dates, we may tour daily. For those with the luxury of time, tours may occur weekly or monthly.

What Price Home Can I Afford?

This is a fundamental question that should be answered very early in your home search process. Virtually all home owners finance at least a portion of their home purchase. There are two basic types of professionals that can assist you in this process, mortgage bankers who lend directly to you and mortgage brokers who will introduce your need to a lender to help you obtain financing. Amerisave, a national mortgage lender, maintains a web site that automates the loan approval process, and generates a very quick response. The process of qualifying for a mortgage does not obligate you in any way to actually borrowing from that source. We recommend that our clients obtain mortgage qualification at the very beginning of their search. Knowing the answer as to how much home can I afford provides substantial focus to the search process.

Lake Highlands Property also maintains relationships with both mortgage bankers and mortgage brokers and will gladly refer you to a professional that can assist your with mortgage needs.

We Just Toured THE Perfect Home, What Next?

At this point, its time to focus on negotiating strategy. The obvious negotiation involves the purchase price of the home, but there are many other factors that should also be considered. Needed repairs, closing costs, closing date, property turn over date, and an inspection period are just a few of the items that will be negotiated in the purchase contract.

To prepare our clients for negotiation, Lake Highlands Property performs a Residential Value Analysis which presents the sales history of the neighborhood for similar homes. Beyond just the sales price, we identify the market trend in the neighborhood. To further assist in determining a good price, we obtain the Seller's Disclosure to see the history of the home and any substantive issues that may be a part of its history. Finally we incorporate what we learned about the home as we toured it.

Together with you, we will formulate and draft a contract, the document that will be the basis for the entire negotiation. Texas has a standard contract that covers the purchase and sale of most residential properties, and we will recommend the use of that document. However, if there are unusual circumstances surrounding a particular property, we maintain relationships with real estate attorneys to assist as needed.

Before the offer is submitted to the Seller, we will review all of the details of the contract with you. It is our fundamental belief that you should be both well educated and well aware of the offer that is being made.

Contract Negotiations

Let's begin this discussion with a quick view of the end objective - a valid contract for the purchase of your perfect home. To have a valid real estate contract in the state of Texas, a Buyer must be willing to buy, and a Seller must be willing to sell a specific property in exchange for valuable consideration, and the terms and conditions of this agreement must be in writing. That is our goal, a written contract that you, the Buyer, and the Seller have signed. To show good faith, this contract is also secured by Earnest Money which we will discuss in further detail.

As a standard practice, Lake Highlands Property will conduct this negotiation on your behalf with the Seller's agent. We have found that there is additional leverage gained by having you in the background of the negotiation - it allows us to take a firm stance on issues while leaving you in position to be the "good guy" when we reach the close of the discussion. That being said, there are occassions where it is helpful to have you directly involved in the negotiation, if that is your desire. As with all other points of our service, we seek to tailor the negotiations process to fit your specific needs.

Once an offer has been presented, there are only three basic outcomes that can occur:

The Seller can accept the contract exactly as it has been written. (unlikely)
The Seller can make changes to the terms and conditions of the contract and present them as a counter-offer (very likely)
The Seller may outright reject the contract. (very unlikely, but possible)

In most cases a counter-offer is extended. At this point, you have the same three choices that the Seller initially held. The process will continue until a final, mutually acceptable agreement is reached.

Earnest Money

Once an acceptable contract is signed by both parties, you must be prepared to write a check (Earnest Money) which will be used to secure the contract until it is closed. Genreally, the amount of the Earnest Money is in the neighborhood of 1% of the transaction value, and certainly at least sufficient to cover the mortgage payment that the Seller will incur if the contract does not close.

Option Money

In the contract, we will also negotiate an Option Period. This Option gives you the right to exit the contract for any reason. The Option Period is generally about 10 days, and is generally purchased for $100 to $150. This time allows you the opportunity to have the home inspected by a licensed Home Inspector, an action that we highly recommend every Buyer take. In the event that the Home Inspector identifies a defect in the home which required repair, this period also gives us the opportunity to renegotiate the contract.

If a mortgage is required (true with most home purchases), you will have to file a mortgage application within a “reasonable period” after signing the contract. Your purchase is contingent on being able to secure mortgage approval within a specified period of time, usually 30 days. After this period, the contract becomes firm, regardless of whether you have received financing. Therefore, it is important to be ready to file the mortgage loan application as possible after signing a contract. It is also possible to get your loan pre-approved before you enter into a contract. This measure relieves a little stress with regards to timelines for you, and gives the Seller great confidence that you will be able to perform on the contract.

The mortgage application process requires a great deal of personal, financial and employment data. You should be prepared to provide two recent pay stubs, past two years tax returns, bank account numbers, approximate account balances, credit card numbers, creditors' addresses, and personal references.

In addition to providing your lender with all the information required, you should be prepared to pay for the appraisal fee and credit report when you make loan application. As costs change over time, ask for current fees. Currently, the amount is approximately $350.

For purchasers who are self employed, the lender will require that you furnish a great deal of documentation to support your income history. It is recommended that you contact your lender immediately to obtain a list of current requirements. It is certainly wise to do this before you begin your search for a new home.

Most loans take at least 7 days to approve, and generally the required time is in the range of 30 days. Before you execute the loan, the lender is required to provide you will a full list of the costs of the loan, and will provide a commitment to fund the loan under the disclosed terms and conditions for a certain period, usually 30 to 60 days. You will frequently hear this referred to as an “interest rate lock”.

In real estate matters, TIME IS TRULY OF THE ESSENCE! In order to ensure a smooth purchase, the loan application must be completed in a timely manner, and all dates on the contract strictly adhered to. As the lender verifies the information you have provided, he will sometimes ask you for more information. Please make sure that you provide all additional information promptly. This will help in making the loan process as speedy as possible.