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Be Prepared When Buying

Any large-ticket transaction can be stressful.

So is moving.

As are large, real-life commitments.

Combine all of this and you have the process of buying a home!

However, even in today’s volatile market where distressed properties are commonplace, it really is possible to maintain an even keel in the midst of your real estate deal – I promise.

Here are three wisdom-strategies I think you should employ while buying a home; without the complete stress-mess.


Be smart by being prepared.  Scrambling for documents and money that your lender requires to close stands right up there in the top couple of stressors that buyers experience; it may be THE top stressor.

Once you get into contract and, especially, once you’ve removed contingencies and put your deposit money on the line, every request that your lender makes may seem like a ransom demand for your home – and your life, as you’d planned it.  Most good lenders will do their best to minimize this, but even the good ones still might seem like they are asking for a lot, often.

It’s easy to avoid this scrambling simply by being prepared. If you are planning to buy a home down the road, consult an experienced mortgage lender and real estate professional early-on in your planning process; I happen to know a good mortgage guy here in Wisconsin 😉 and I know a lot of great realtors that I can refer you to as well.

This will help you know what kind of cash you’ll realistically need to close the deal; before you start the buying process. You probably keep hearing about 3.5% down FHA loans or zero-down USDA/VA loans, but your local Wisconsin professionals can reality-check you by showing that it might cost an addition few percent of the purchase price just to close such a loan once you consider the closing costs for the lender, title company, appraiser and, of course, the escrow deposits!

If you are given a range, it’s wise to lean toward the high side. I have seen time and again that penny-scraping buyers are generally the most stressed of them all, as they are the ones whose deals are most likely to be entirely derailed if there’s an uptick in interest rates during the time they are house hunting or in the process of closing their transaction.  Take that one step further to consider the same would apply if the homeowners’ insurance costs are a bit more than initially planned for.

As part of your planning, you will see that it’s important to have all your documents ready, too – things like divorce decrees, tax returns, updated check stubs, documentation of bills that you’ve recently paid down or off, even your driver’s licenses (you wouldn’t believe the number of people who can’t produce ID when the notary needs it at the closing table!). Keep all these items available in case your lender requires them; and we will! Here’s a great resource you can download to help you get started on the right track.

Update 6/9/2011: OOPS! That is the wrong document – while helpful, it’s not what I had in mind. Here’s the correct document: Eight Steps to Home Ownership

Last, but certainly not least, there is an educational element of preparedness.  Educate yourself about the standard practices and timelines for a real estate transaction in your local market (both I and your agent will surely be able to brief you on this).  If you’re buying a bank-owned property or a short-sale, educate yourself about what this will entail – as it’s certainly a wildly-changing process – from the buyer’s point of view.

As is the case in life, when it comes to buying a home, realistic expectations – brought on by proper planning – will set you free.  Stress-free, that is.


Flexible Timelines. Sadly, it’s rare that the sun sets in Wisconsin without some homebuyer near you lying awake in bed wondering how long they’ll have to continue:

  1. Sleeping in their in-laws’ basement,
  2. Paying the nightly rate for the all-suite hotel down the street from the place they’re buying,
  3. Forking over the daily fee for the moving truck which is parked outside (the hotel they are also paying for), containing everything they own,
  4. Begging their landlord to please, please, please give them another 24 hours; repeatedly swearing they’ll be out after that,
  5. Pushing back the vacation days they took off work for the move that seems like it will never happen, or
  6. Any combination or all of the above.

All of this because their contract is not closing on the timeline they expected it to. Is a good thing? No. Does it happen? Yes.  There are so many parties involved in these transactions and, as you have heard before, a chain is only as strong as it’s weakest link.  One thing we do here at Envoy Mortgage in Wisconsin is strive to surround ourselves with only the best in class for our third parties.  This means that we mitigate risks for delay, but we cannot fully control it as there are some parties that will always be outside of our circle of influence.

There are as many reasons for late closings as there are overtired homebuyers facing this issue: the buyer’s loan underwriting is taking too long, seller’s short sale application is still being processed, appraisal is sloppy, bank-owned property asset manager is slow to produce the necessary signatures, the buyer of the seller’s house (contingent transactions) hasn’t gotten their loan done, and the list goes on.

More important than knowing the causes, though, is having the awareness that closing dates are not set in stone until the end is very near – and that the problem of delayed closing comes up with ever-increasing frequency these days. Buyers who are trying to time their closing so that they move out of their apartment on the exact day they plan to close are likely to be disappointed – and temporarily homeless – in the current market climate.

It’s best to plan on some overlapping days or weeks between the time you want to move into your next home, and the time you must be out of your current home, if you can afford it. Keep your moving plans flexible as long as possible.

Also, it’s wise to try to keep some flexibility about your daily calendar while you are in the process of closing, should you need to show up at the property and get some additional, specialized inspections, unexpectedly, which were recommended by your first general inspector.  If you only have a couple of days before you must remove your inspection contingency, you might have to drop everything and stop in at the home for an hour here or there to make that work.  You might also need to stop in at the bank – in person – to wire cash when it’s time to increase your deposit or pay your down payment or closing costs into escrow. For most Wisconsin banks, this cannot usually be done over the phone or outside of banker’s hours, so if you can be a bit flexible for these outings, calendar-wise, you’ll be in good shape.


Pre-approve the un-pre-approved; the sellers.  There’s nothing worse than doing everything you’re supposed to do, then having the deal fall apart at the last minute, through no fault of your own. I’ve known many buyers whose short sales failed to get approved by the seller’s bank and, in turn, fell out of contract because of it.  Here at Envoy, we have also knowing buyers whose transactions died when their intended subject properties failed to meet the mortgage guidelines because of condition problems like incomplete remodel jobs, electrical problems, and/or mold; some of which are high-cost items that neither the buyer nor the seller can afford to repair.

These issues can often be prevented by an early, detailed questioning of the seller and/or the seller’s agent. Make sure of the others’ qualifications and ability to close the deal, before you get into contract because, it takes at least two parties to complete a contract – a qualified buyer and a qualified seller! For buyers, this can mean having your agent collect as much information as possible about the seller and the home they are selling.  Similarly, if you’re getting an FHA loan, before you make an offer, walk through the property with your agent and troubleshoot it for condition problems that might come up during the appraisal.

With this information you can make an informed decision whether to move forward and try to buy the place you have your eye on!  If you get into contract knowing it’s a shot in the dark, at least you’ll have realistic expectations for said transaction.

Be sure to contact me if you have further questions or would like to dialogue about this further.

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