BUYING AUSTIN REAL ESTATE
While all transactions are unique, the process of buying a home in Austin can be explained in a few basic steps common to all purchases.
Buying a home takes place in four short phases:
- The Preparation Phase
- The Shopping Phase
- The Offer and Inspection Phase
- The Closing Phase
Phase 1 - Getting Prepared
Assembling Your Team
The first step in finding the right Austin home is getting your team together.
That means finding a great Realtor and a great Lender.
You can rely on your Davis Company representative to provide the contacts, guidance, and experience to make the home buying process as simple and comfortable as possible.
If you don't already have a lender in mind, your Davis Company agent will be happy to recommend a few possible mortgage sources to you, so that you can prepare to secure the best loan on your future piece of Austin real estate.
After a little bit of paperwork and a conversation, your lender will determine your price range and provide a Prequalification Letter for you to include when we make our offer.
This is a critical part of the process, since many sellers won't consider offers that arrive without an accompanying Prequalification Letter. There's nothing worse than losing a dream house to another Buyer because of a failure to prepare.
This first phase can be completed in under a week.
It is important to remember not to do anything that might change your credit score during this period. Avoid big purchases like automobiles or furniture that will cause your credit card balances to rise.
Phase 2 - Finding Your Home
Once your team has been established and you have been prequalified, you will work with your Realtor to combine personal preferences and financial criteria to narrow the options until we find the home that meets all your requirements.
Thanks to the resources available to Davis Company clients, you can be as involved in this part of the process as you like. In particular, we encourage our clients to use our online tools, which include the most sophisticated property search application available to Austin homebuyers.
Using these resources, Davis Company clients can save favorite properties, and virtually tour as many properties as they like. They can even tour the neighborhood itself via the integrated Google Street View application.
While you are shopping online, your Davis Company representative will be previewing properties, speaking with other agents, and keeping an eye on the market moment-by-moment to locate the right home for you.
We use all of our resources to discover and visit properties that meet your criteria until we find the perfect fit.
The Shopping Phase typically takes just a few short weeks.
Phase 3 - Offer and Inspection
Writing an Offer
Once you've found the right house, we're ready to make an offer.
At this stage, your Realtor will combine his or her knowledge of the market, current statistics, and recent comparable sales to establish a reasonable purchase price to secure the property.
It's worth noting that, in Austin, unlike some other cities, the purchase price is usually not far below asking price. Here, final purchase prices average 96-97% of asking price.
Once settled on a price, you work together with your Realtor to write an offer. Davis Company agents are well-versed on the required Texas Real Estate Commission contracts and will guide you through every step of this process.
This is also the moment when we will use the Prequalification Letter obtained through your lender in the beginning, so that the seller will regard your offer as “just as good as cash.”
Obtaining a Signed Contract
When the offer is complete, your Davis Company representative will submit it—typically via fax or email—to the agent representing the seller.
Within a short period (usually 24 to 48 hours), your agent will receive either an acceptance of the offer, a rejection of the offer, or a counteroffer. This can arrive verbally or by written notice.
Once an agreement has been reached and an accepted contract has been signed by all parties, it's time for your home inspection.
Inspection (the option period)
Almost all home purchase contracts written in Austin will include a negotiated “Option Period,” a time during which the potential buyer can have the house inspected, negotiate for repairs if necessary, and drop the contract without penalty. The average Option Period is between 5 and 10 days in length, and costs a non-refundable fee of $100 to $250, depending on what has been agreed upon in the contract.
Because of the time limit implicit in the Option Period, this is a time for quick action. Your Davis Company representative will recommend a licensed home inspector to give the house a thorough examination as soon as possible.
The inspector will write a detailed report containing his or her findings, including any problems or suspected problems at the property.
In some cases, the inspector might recommend that additional professionals be brought in to complete more thorough inspections of items or systems in need of repair: foundations, roofs, electrical systems, plumbing, etc.
These inspection reports can be incredibly detailed, so it's important to keep in mind that most sellers won't fix every single item set forth on them. Even new and recently-renovated homes frequently have multiple items of concern listed in their reports; a number of which are conditions which will go unaltered prior to the sale.
Last Minute Negotiations
Using the information gleaned from inspections, your agent will help you decide whether to proceed with the contract as-is, drop the contract and begin shopping again, or (most commonly) request—in the form of an amendment to the contract—minor repairs or a repair allowance from the seller.
Remember, time is of the essence!
All of this must be done within the prescribed period of the Option Period. If the Option Period expires, and the Buyer has not dropped the contract or obtained an amendment to the contract signed by all parties, he or she is obligated to meet the terms set forth in the original contract.
Phase 4 - Heading to the Closing Table
Wrapping Up Your Loan
Once the Option Period is over, all energies go towards getting to the closing table so you can take possession of your new home.
This step rests largely on your Lender, which is why it's important to choose a good one from the start.
During this period, your Lender will have the house appraised to verify its value. Then, using the subject property's home price and property taxes, your Lender (and his/her company) will work to package and process your loan.
Because of the amount of money, paperwork, and red tape involved in this step, it can take a while. In Austin, most homes close about 30 days after the signing of the initial contract and they go to the closing table as soon as the lender can provide the necessary documents to the Title Company.
Closings in Texas almost always take place at Title Companies, which specialize in preparing documents for these kinds of loans. They also provide Title Insurance, which protects buyers and sellers from any loans or financial encumbrances on the property which went undiscovered prior to Closing.
Once all the terms of the contract have been met and the loan is prepared, it's time to go to the Title Company for the Closing.
“Closing” refers to the moment you sit down and sign the final paperwork which signals the start of your home mortgage and insurance.
The signed documents are sent to your lender, who examines them, and—assuming all is well—will wire funds to the title company which the title company will promptly disperse to the seller.
This is the moment when the Seller receives payment from your mortgage company. It is also the moment when you, the Buyer, will receive the keys to you new home.
That's it! With your Davis Company Realtor by your side, you'll never be overwhelmed. We'll just take it one step at a time.
For more information about buying Austin real estate contact Davis Company, Investment Real Estate at 512-473-2444 (office) or 512-585-0045 (cell).