The Journey to Buying Your Cape Cod House
As you begin your Cape Cod house hunt, you may have many questions about the process of buying a home. Our team has the real estate knowledge and local understanding to help you make informed decisions and successfully purchase a home in this ideal location. For more information, please feel free to contact us. We are happy to answer any of your questions.
Step 1: Determine Your Price Range
The first step is a bit of the old chicken and the egg conundrum: do you look at your finances or your housing needs first? The answer is that your finances should come first because it'll drive everything else in your search.
Make sure your financial house is in order by pulling your credit report. Lenders look at factors called the four Cs of credit: credit history (timely bill paying), capital (money available for a down payment), capacity (income versus debt), and collateral (the value and condition of the house). Your credit score = your credit history. Read through the report thoroughly and make sure the information is correct and updated. When you're ready, select a lender and get pre-approved or at least pre-qualified for financing. Pre-qualification refers to when a lender calculates how much mortgage you likely can afford based on unverified information and no identified property. Pre-approval is a guarantee based on verified information that the lender will loan you a fixed amount of money, as long as the property appraises over the amount for which you are qualified and you buy within a certain time period. Getting either a pre-qualification or a pre-approval from a lender will clear up any mystery about what you can afford. You may qualify for more – or less – than you think! You will feel more empowered to buy if you have the certainty and security of a lender behind you.
Once you have identified a property, go back to the lender and have them run the numbers on that house. Having a pre-approval submitted with the offer strengthens your negotiating position because the seller doesn’t have to worry that the deal will fall through if you can’t get financing.
Sep 2: Decide What Kind Of Home You Need and Want
Determine your housing needs and wants according to what you can afford. Needs are your requirements that a house must have for you to consider it. Start by making a list of your needs in terms of location, style, size, and other amenities or design features. Here are a few questions to consider:
- Where do you want to live? On Cape Cod, location often comes down to distance to the beach…and whether that beach is on Cape Cod Bay, Nantucket or Vineyard Sound, or the Atlantic Ocean. If you're going to do summer rentals, proximity to the beach is an important factor. If you're looking for a year round home, which towns appeal to you?
- Do you want a new home or an older home? A new home is often better insulated, needs fewer repairs, and easier to maintain than older homes. On the other hand, you may get more space for the money buying an older home
- What size house do you need? How many bedrooms? How many bathrooms? Do you need a family room, basement or work room? Do you want a house that has only one level, or would you like a two-story house? Will it be big enough for your family in five years?
- What design features are important to you? Do you need a garage, central air conditioning, a fireplace, large back yard, large kitchen, first floor bedroom, etc.?
Next, consider other features you want in a home. These are attributes that you'd like to have, but aren't essential. Finally, go over your list of needs and determine whether any items are more wants than needs. The key question to ask yourself in distinguishing between needs and wants is whether you would be willing to trade off something if you can't find a home within your price range with all the features you want.
Step 3: Find a Buyer’s Agent
Buying a home is a decision that carries one of the highest price tags and biggest emotional roller coaster rides of anything you'll probably ever buy. Fortunately, we are here to help you. Ask family and friends if they can recommend someone. Talk to several buyer's agents before choosing one. Look for an agent who listens, understands your needs and makes you feel comfortable. Once you find someone you have confidence in and rapport with, promise to work exclusively with that one agent. The agents are all working off the same inventory of listings, so any agent can show you virtually any listing. That's their job! But looking at houses is just the beginning of the home-buying process. The services we brings to the job are considerable. At Cape House Real Estate, Marietta or Margaret will:
- Talk to you about what you want in a house.
- Give you information about the areas in which you want to buy a house and suggest other parts of Cape Cod that might also suit your needs
- Help you find a good lender to finance your home by recommending lenders we trust and have worked with
- Monitor MLS daily and send you properties in your price range with the features you need and want
- Take you to see the properties that interest you
Help you write the offer and negotiate with the seller to get the best value
- Refer you to other professionals to get you to closing, including home inspectors, attorneys, tradesmen, etc.
At your first meeting with an agent to discuss a specific house, you'll be presented with the Massachusetts Agency Disclosure form to review. This is not a contract; and you may elect to sign or not. The agent must tell you what type of agency relationship can be offered to you: seller’s agent, buyer's agent, or facilitator. A buyer's agent is your best bet because you will get the most value from the transaction by having someone 100% loyal to you. You're paying the same amount of money anyway; why not benefit from the experience and knowledge of your own special agent?
Step 4. Start Looking
Now that you have an idea of what kind of home you might like and have a buyer’s agent, how do you go about finding it? First, we will send you listings from the Cape Cod MLS that meet your needs and wants within your price range. We strongly encourage our clients do some exploring on their own. You can search available properties online by signing up for the MLS on our site. In addition to searching online, you can:
- Talk to friends and family to see if they know of anybody who is planning on listing their Cape Cod property.
- Drive through neighborhoods you are interested in and look for “For Sale” signs. You may find sale signs that say “For Sale By Owner.” We call these listings “FISBOS.” Many FISBOS are overpriced for the market because the owners have a very high opinion of what they are worth. We can help you determine the fair market value and evaluate the condition of the house so that you don’t end up paying too much.
- Read the newspaper real estate section and watch the real estate channel on your local cable network.
- Check real estate shopping guides. These free booklets are often found in supermarkets and malls and in sidewalk boxes. They usually have pictures of the houses and are a good way to compare prices and features.
- Visit open houses. When a house has an open house sign in front, it is an invitation to go in without an appointment and look around. The listing agent or the owner will be there to hand out information about the house and answer questions.
Step 5: Narrowing the Search and Selecting the One
It’s a good idea to take notes as you go -- write down the important things about each house as you go through, or you can use our Cape House Hunting Checklist. We will give you a hard copy of the MLS listings for each house we see. This listing sheet can be a handy place to write your notes.
NOTE: While you will have an official home inspection once you have an accepted offer, you can do the first level of inspection yourself. Pay attention to ceilings, walls, and floors. Cracks may indicate that there are structural problems. Make a list of questions to ask us about the structural soundness of the house. For example: When was the roof last replaced? What material was used? Does the plumbing system include any old lead pipes? (They may be unsafe.) By law, both the seller and their agent must tell you about any problems they know about in the house.Once you have narrowed your choices to a few homes, take a closer look. Don’t be shy about asking us to take you back to certain properties a number of times. If possible, let the whole family see the final choices; children especially have an easier time moving if they have been part of the decision.
Step 6. Make an Offer and Negotiate
Making an offer is easier than you think. The hard part is figuring out how much to offer. There are a number of factors to consider in determining the amount to offer:
- Is the list price in line with recent sales of similar homes in the area?
- Does the house appear to be in good condition? If not, does the list price appear to take the costs of major repairs into consideration?
- Are there any special factors to consider?
- Do the owners need to sell the house quickly (perhaps because they have a contract on another house)?
- Has the house been on the market for a long time?
- How much did the seller pay for the house and when?
- How much can you afford?
Don’t be tempted to offer more than you are sure you can afford!
As your buyer’s agent, we will gather all this information and recommend a reasonable market value for the property. Ultimately, it is your decision – based on our comprehensive market analysis – to determine what you are willing to pay for a property and where to start in terms of an offer.An offer is a legally binding written statement of your interest in buying a property. It includes a complete legal description of the property, the price you are offering, the amount of earnest money you are giving with the offer (often called the binder, the amount is usually $1,000 and it is credited towards the sales price at closing), the amount you will put down with the purchase and sales agreement, and how much of the purchase price you are financing. It will also note any items of personal property (such as a washer and dryer) the owner has said will stay with the house, the date you would like to close the sale and move into the house, and the length of time the offer stands (usually three to five days).
You will also make your offer contingent upon specified events such as satisfactory inspections of the structural and mechanical systems (which should occur within two weeks of making the offer). The offer may also have a financing contingency covering the need for the lender to okay several things about the house.Contingent means that if the inspection shows major problems or the appraisal of the property is not in line with the purchase price, you can get your earnest money back and cancel the sale. In terms of the inspection, if you don’t want to cancel, you can ask the seller to make the needed repairs or give you a credit at settlement for the amount it would cost you to make them. The seller, however, is under no obligation to do so. In terms of the financing, it is sometimes possible to work with the lender to increase the amount of your down payment.It may be a matter of hours or days for the negotiations to come to a conclusion. This is one of the most emotional phases of the process; and negotiations can continue into the next phase if, for example, there are issues found with the house during the home inspection.
Step 7. Inspections and Other Contingencies
Once your offer has been accepted, you have a legal interest in the property – and a strict schedule for satisfying any contingencies. As so much is dependent on the financing, you should immediately notify your lender that you have an accepted offer. The lender will assign, usually with your consultation, an attorney to handle the title search and mortgage paperwork. It is a conflict for the buyer and seller to have the same legal representative, so everyone will first want to know the identity of the seller's legal representative. Your lender will order the appraisal. (The appraiser typically schedules an appointment with the listing agent to inspect the property.)
If the septic report, soil percolation test, and water quality tests (which are all the seller’s responsibility) weren't completed prior to listing the property, the seller’s agent must get them done according to the schedule specified in the offer.
We will work with you to schedule the home and other inspections. Since May, 2001, the Commonwealth of Massachusetts has required home inspectors to be licensed and Realtors to give out information about how to find one. The law also states that only buyer's agents may recommend a home inspector to a buyer. In contrast, seller's agents, by law, may only give out a general list of inspectors. This is another example of how you are better off using a buyer's agent!
Note on Inspections: a home inspector checks the structural and the mechanical parts of a property. The inspector then writes a report noting the condition and describing any problems. The inspection report is not meant to tell whether you should buy the house or how much you should pay for it. If problems are found, the inspector will recommend calling in a professional in the particular area (like a plumber or electrician) who can give you an estimate of the repair costs. If serious problems are found, you have the right to cancel the purchase agreement and get a refund on your deposit. You can also ask the seller to reduce the purchase price to cover the cost of repairs. Or you may be able to negotiate with the seller to make the needed repairs.
Generally, the home inspector will do a basic inspection for the presence of termites and other wood boring inspects (like carpenter ants). If there is evidence of past or present issues, the inspector will recommend a professional pest company perform an inspection. (This way, you can save the fee for the pest inspection if there are no apparent issues.)In addition to a professional home inspection and (if necessary) a termite inspection, there may be other environmental hazards you should also investigate. Although chances are that none of these environmental hazards will apply to your home, it is better to be on the safe side and make sure you have investigated any potential problems. This is especially true if you are pregnant or have infants and small children in the home, if you are purchasing an older home, or if you plan to make renovations to an older home.Here are important hazards you should know about.
Radon - Radon is a natural, odorless gas that can seep into houses and cause major health problems. For this reason, many home buyers insist that the house be tested for radon. For more information about radon in your area, call your state or county public health department.
Lead-based paint - If the house you want to buy was built before 1950, you can be almost sure that lead-based paint was used. There's a good chance it was used in any house built before 1978. Exposure to lead paint can have serious consequences, especially for infants, young children, and pregnant women. Even lead-contaminated dust from children’s hands and toys can pass to their mouths. Renovation projects in older homes that disturb the lead-based paint can be especially dangerous.Before you finalize a sale on a house built before 1978, the seller or real estate agent must, by law, give you written information about lead hazards and tell you about any lead paint hazards in the house that he or she knows about. The seller must also give you 10 days to have an inspection completed. You should make sure any inspector you hire has taken an EPA course, or is certified in your state. You should never attempt lead-based paint removal yourself. For more information in English and Spanish, call the federal information hot line at 1-800-LEADFYI.AsbestosAsbestos is a material that, until about 20 years ago, was often used in housing insulation. Today, it is considered a health hazard and is no longer in use. If you are purchasing a home over 20 years old, you should ask about asbestos and get a professional inspection if you suspect it might be present.
Formaldehyde - Formaldehyde is a colorless, gaseous chemical compound that was an ingredient in foam used for home insulating until the 1980s. It can cause irritation of the eyes, nose, and throat, and is suspected of causing cancer. A qualified building inspector can examine your home for formaldehyde-emitting materials.
Hazardous waste sites - The EPA has identified more than 30,000 potentially contaminated waste sites in the United States. If you think you may be living near one of these, you should contact your regional EPA office for more information. Your neighbors may also be able to tell you about community organizations that have information about the problem.
Note on Appraisals: The appraiser’s job is to determine the fair market value of your house. You do not work directly with the appraiser, although you will pay for the appraiser’s services at the time you apply for the loan. Appraisals for single-family houses cost about $275 to $350.
To determine the fair market value, the appraiser compares the house you want with houses like it that have sold recently in the same area. The physical condition of the house affects its market value, as do special features that other houses may not have, such as a corner lot or an extra bedroom.
Note on Insurance: Your insurance agent will usually be happy to visit your new home and recommend how much insurance you should have. Insurance agents can often give you a safety inspection and recommend the proper types of door locks, fire alarms and other safety features. Some insurance companies even offer discounts for installing safety and security features. Choose a reputable company and an agent you are comfortable with and who can explain insurance products and services in a way you understand. In addition to hazard or homeowners insurance, there are many neighborhoods where special hazard insurance is required by your lender, such as flood insurance when you buy a home in a designated flood plain.
Step 9. Purchase and Sale Agreement
A few states require that a lawyer write the real estate contract, search the title and conduct closings.Generally at this point the inspections have been completed, and it is only the bank's full commitment that is outstanding. This is the step where you put down your ten per cent deposit, which goes into an escrow account at the real estate agency that listed the property. A personal check is okay. You sign the agreement first and then the Seller signs. It isn't the custom on the Cape for this to happen at a formal meeting, but rather it happens in two stages and sometimes by mail since one or both parties to the agreement may live off-Cape.
Step 10. Closing
Contact the Utility Companies.
Contact the utility companies to arrange for their services to be put into your name the day of the closing. The seller will contact them to request final readings and to okay the transfer to you on that date. These arrangements can be made 10 days or so prior to the closing. If the house has oil heat, the oil tank needs to be topped off just prior to the closing. The buyer pays the seller for a full tank of oil, and the oil company will certify the exact amount and price of oil in the tank.
Walk-Through - On the day of the closing, you and your Realtor will check out the house to make sure there are no surprises. Generally, the house is to be empty and "broom clean." Any work that was to be done must be completed.
Closing - This is a meeting at the Barnstable County Registry of Deeds or at the office of the buyer's lawyer. The buyer puts down the rest of the purchase money and signs the mortgage documents. The closing attorney provides you with a detailed list of instructions. Sometimes the seller doesn't come, but sends a representative. The listing agent will have a certificate from the fire department confirming that the house has working smoke detectors in the appropriate places and that the house numbers on the house are correct and visible from the street for emergency vehicles. In some towns there is also a special letter from the Board of Health certifying that the septic system is in compliance with the town's regulations for real estate transfer purposes. In other towns, the engineer's report is sufficient. The lender will want to have proof of homeowner's insurance from your agent. The Seller presents a new deed conveying the house to you. Your attorney or the lender attorney will put this new deed on record with the Registrar, confirming that you are now the new owner! You'll get all the keys (you may want to change or re-key the locks). You may now bring in your furniture — the place is yours!