Buying A House

Buying A House


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Congratulations!

Buying a home is one of the best financial decisions that you can make. It can also be a process filled with emotions. David Birka, Accredited Buyer’s Representative, ABR, has successfully guided home buyers along their home buying journey in Rochester & SE Minnesota for over 16 years. David grew up in Rochester, and has worked in the business community for over 30 years! His connections in this region are invaluable to make the real estate process go smoothly before, and after, you move into your perfect place to call home.

Call, Text for your no obligation Home Buyer Orientation today – 507-250-1000.

"We’ve use Dave Birka’s service twice. When we decided to buy a house, we were all over the map with what we wanted. Dave quickly helped us narrow our focus on what was truly important in a house, and soon we found something perfect." J. Manning

Wants and Needs

Questions regarding the home, townhome, or new construction:

  • Is this home priced comparable to similar recent Sold homes?
  • Do I prefer a new or a previously lived in home?
  • What style of home do I prefer?
  • What type of yard do I prefer?
  • Will this home be a good fit for our growing family?
  • What maintenance or improvements have been done?
  • How much will it cost to replace items?
  • How long will it take to build a new home?
  • Can I make changes to the plan?

Today, research can be done online for a particular city or community in SE Minnesota.

  • Where the schools and city parks are located?
  • Where does the city and school bus stop?
  • Where are the shopping areas?
  • Are there busy roads in the neighborhood?

The recent annual survey sponsored by the National Association of Realtors reported that 33 percent of buyers were first time home buyers.

Finding the Perfect Home

David has the tools and networking skills to see what is coming on the market and simplify your search. David will customize an automated "Market Watch" home search based your unique search criteria, and send you daily updates for new listings and price changes.

A detached single family home continues to be the most common home design for 82 percent of home buyers, followed by 8 percent that preferred townhomes. Buyers typically searched for 10 weeks and looked at a median of 10 homes.                                                                                             

"We first met Dave 11 years ago when he helped us buy our first home, so when time came for us to reach for our dreams of moving to the country we knew we want to go with Dave again. Dave is the most open and honest person we have met when it comes to home buying and selling. He is a great guide to answering your questions and if he doesn't know the answer, he finds it out for you in a very quick fashion." The Schweim Family

The Home Search Process

Once a potential home has been found, from David’s "Market Watch" home search, print ad, online listing, yard sign, sale by owner, David can set up a showing.

The buyers of new construction homes made up of 14 percent, and the buyers of existing previously owned homes made up 86 percent. For 44 percent of recent buyers, the first step that they took was to look online at properties for sale, while 17 percent first contacted a real estate agent.

"David Birka was recommended to us by a co-worker and we couldn't have been happier with him as a real estate professional. As first time home buyers we had a lot of questions and needed some direction. We went into the process thinking we would be purchasing an existing home and ended up building our dream home. Dave has extensive knowledge about the market in Rochester and neighborhoods. He is helpful in every way and VERY patient. He guided us through the building process and answered any questions we had along the way" John & Alishia

What Costly Repairs to Look For?

Roof repairs, plumbing and heating issues top the list, followed foundation issues for home buyers to watch out for when buying a real estate property. David is an Accredited Buyer’s Representative. David advocates the use of a Home Inspection to examine real estate property for current and future problems.

Get Your Credit Pre-Approved

When you apply for a mortgage, a lender will verify your credit history. It's wise to check your credit rating in the beginning of your home search, (pre-approval) even if you have a excellent credit record. There may be blemishes in your credit history that you don't know about. A good credit rating will provide benefits, such as preferred rates from lenders and home insurers. Acquiring a copy of your credit report is simple. The Fair Credit Reporting Act allows consumers to obtain one free credit report from each of the three major reporting bureaus every 12 months. To obtain a report visit: www.annualcreditreport.com - the only authorized source for consumers to access their annual credit report online for free. Or, call 877-322-8228.

Equifax Information Service Center  P.O. Box 740241  Atlanta, GA 30374-0241  800-685-1111  www.equifax.comExperian (formerly TRW)  National Consumer Assistance Center  P.O. Box 949  Allen,TX 75013-0949  (888-397-3742)  www.experian.comTrans Union Corporation  Customer Disclosure Center  P.O. Box 390  Springfield, PA 19064-0390  800-888-4213  www.transunion.com


Pre-qualification vs. Pre-approval

Typically you will first pre-qualify for a mortgage, then get pre-approved before you have found the specific home you wish to purchase. What is the difference?

  • Pre-qualification - An informal determination by a lender or mortgage broker stating the amount of the mortgage you can afford.
  • Pre-approval - A guarantee in writing by a lender to grant you a loan up to a specified amount.                                                                             

Why is Writing the Offer Such a Big Deal?

There are many important considerations that can impact your finances, tax situation, and legal obligations. The decisions you make about these issues show just how big a deal your home purchase is. David will help you navigate the way through the transaction process, but may also advise you to consult with legal and tax experts.

Once you've found your dream home you want to place an offer on, the next step is negotiating an agreement with the seller about the price, and terms. First, the buyer must examine their own negotiating position prior to making an offer. Here are some basic rules to help you:

  • You are in a strong bargaining position:
  •  You are an all-cash buyer.
  • You are pre-approved for a mortgage.
  • You do not have a house you need to sell, or other contingency that must be met, before you can purchase the home.

With these factors in your favor, you may be able to negotiate a reduction on the listed price. On the other hand, in a "hot" seller's market, if your "perfect" home comes on the market, you may want to offer the list price (or more) to beat out other multiple offers.

When writing the offer, the buyer can benefit from David’s professional negotiation expertise. David has access to the pricing history and sales data for every neighborhood in the Multiple Listing Service. David has an experienced eye for comparing homes. David can study the condition of the home, and can provide the amount of repairs and renovations required. David knows the market conditions that can affect pricing. David will also advise that the buyer get the home professionally inspected by a qualified home inspector - even if it's new construction - to identify potential expenses that might not be immediately detectable during your viewings of the home. (Imagine finding out that you need a new roof or furnace the day after you move into your home.) Schedule an inspection with a qualified home inspector within the time specified in the inspection contingency of the purchase agreement. David can assist you in identifying a number of inspectors to choose from. Please note: This report will be helpful while negotiating the price of the home.                                                                                                                                                                                      

Selecting a Mortgage

When selecting a lender, your goal is to obtain a mortgage loan with terms that are most favorable to your situation. In order to find the best home loan for you, contact three lenders to discuss the mortgages they offer, their rates, closing costs, and other fees. If you have a mortgage now, contact that institution. Two of the biggest choices you'll make in determining your mortgage are the interest rate and duration. Combined with the amount you borrow, they will largely determine the amount of your monthly payment. The interest rate is the percentage of the loan amount you are charged to borrow the money; the higher the rate the more you pay. Mortgage rates change, subject to various economic factors. To be more certain of what they pay, most buyers "lock" their rate when they apply for their mortgage. A lock means that the rate in the approved application will be valid for a set period of time - during which the deal must be closed regardless of what market interest rates are at the time of closing. With fixed rate mortgages, usually 15- or 30-year, you are charged the same percentage over the life of the mortgage. There are other costs associated with a mortgage. They might include an appraisal and "points", a fee based on the amount of the loan. Depending on the amount of your down payment, you may also be required to carry mortgage insurance, a policy that pays your mortgage if you are unable to. So that you can see all that you're paying for the home over the length of the mortgage, you will be given a Loan Estimate, and a Closing Disclosure, to outline all the costs associated with your mortgage and the purchase of your home.

The financial institution providing your mortgage will demand that the home you are purchasing is insured, so you must obtain homeowners insurance before closing and provide proof of the policy. Allow plenty of lead time before closing to find homeowners insurance. Costs and coverage can vary, so obtain at least three quotes from different companies. When evaluating the policies to find the right one for you, consider questions such as:

  • What is covered?
  • What is not covered?
  • How much will the insurance cost?
  • Are discounts available for such things as smoke detectors and fire alarms, burglar alarms, non-smoking owners, combined auto and home policies, higher deductibles?
  • What is the deductible?
  • Is the home in an area prone to hurricanes where wind insurance may be a separate policy?
  • Is the home in a flood zone where separate flood insurance is required?

Note: Some personal items such as expensive jewelry or valuable collectibles may not be covered in standard homeowner's policies. When getting your quotes, include an inventory of your possessions to see if riders are required to cover these items. To determine eligibility and premiums, insurers are increasingly investigating an applicant's claims history. Past claims made on the property to be insured are also a factor in determining coverage and premiums. Some insurers also examine the applicant's credit report.

Prepare For the Close

The actual and legal transfer of ownership is called the closing, or settlement. Possession is usually transferred at closing too, but not always. For various reasons, the seller may request to close the sale yet retain possession, renting the property from the buyer until the seller vacates the property and possession is transferred.

Who attends the closing?

  • You, the buyer
  • The closing agent, the title insurance representative, and the escrow agent. One person may fill all these roles, coordinating the settlement of the documents, recording, disbursing funds, and handling the details of the closing.
  • Mortgage representative
  • The real estate agent
  • Your attorney if applicable

Steps in the Closing Process

There are a number of steps that must take place between the time you and the seller sign the contract and attend the closing meeting. It can take several weeks, to complete these steps:

  • Setting the Closing Date
    Part of the contract negotiations, when the closing takes place is decided by the buyers and sellers, providing ample time for the preparation of the legal documents for both the transfer of title and for the mortgage. You need to provide time for your mortgage to be approved and to sign the lender's letter of commitment. The closing must take place before the mortgage interest rate lock expires, but remember that you will also need to complete the home inspection and acquire homeowners insurance in addition, perhaps, to other duties.
  • Reviewing the Documents
    Ask for the documents before the actual closing and read them carefully. It might be a good idea to ask your attorney and your buyer's representative to review them with you. This will help you understand the documents before you sign them.
  • Understanding the Closing Costs
    Closing costs can include many different expenses and can add up to a sizeable amount of money. Be prepared. Know exactly what your closing costs are and how much you will be expected to pay at the closing meeting.                                                                                              

Planning Your Move

You found your home, the contract has been signed, and the closing date set. Now, it's time to prepare for moving day. You should, however, begin planning for it well in advance. You might find that moving is the biggest job of all. But whether you are moving immediately after closing or have the luxury of extra time after closing, whether you are moving across town or across the country, planning and preparation are essential. Making a Plan Making a moving plan prior to closing will be one of the most beneficial things you do for yourself. By developing an outline of moving costs, making a moving checklist (example on page 27) and investigating moving companies, you can eliminate or at least reduce many of the surprises and hassles that moving often entails. Costs, Insurance, Packing, and Income Tax One of the greatest surprises to first time and even repeat buyers is the variety of expenses associated with moving. They include everything from packing materials and utility hookups to insurance for your valuables and the actual cost of the movers, or truck rental. When selecting a moving company, ask friends and family if they have any recommendations. Call at least two companies for estimates, which should be cost- and obligation-free. You can expect professional movers to come to your home, discuss your move in detail and provide many recent referrals. Check their referrals, especially if you didn't find the mover through a personal recommendation. Before selecting your mover, confirm that the company is insured, thereby providing at least some coverage for your belongings. Three of the most common forms of insurance coverage are basic liability, declared value protection or actual cash value, and replacement value. You may need to buy more coverage or specialized coverage for certain items such as antiques and works of fine art. Contact your homeowners insurance company to see if your policy also covers moving. If your move is job-related, many of your moving expenses may qualify as income tax deductions. Consult a tax professional for details.

Celebrate!

Buyer Representation

As your Buyer Representative, David, Accredited Buyer’s Representative, ABR, owes fiduciary duties of the following:

Loyalty - broker/salesperson will act only in client(s)’ best interest. (not the seller)

Obedience - broker/salesperson will carry out all client(s)’ lawful instructions.

Disclosure -broker/salesperson will disclose to client(s) all material facts of which broker/salesperson has knowledge which might reasonably affect the client(s)’ use and enjoyment of the property.

Confidentiality -broker/salesperson will keep client(s)’ confidences unless required by law to disclose specific information (such as disclosure of material facts to Buyers).

Reasonable Care - broker/salesperson will use reasonable care in performing duties as an agent.

Accounting - broker/salesperson will account to client(s) for all client(s)’ money and property received as agent.

Code of Ethics and Standards of Practice of the National Association of Realtors®

Duties to Client’s and Customers

Article 1. When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors® remain obligated to treat all parties honestly. (Amended 1/01)

Is this the Right Time to Buy a Home in Rochester and SE Minnesota?

In 2013, the State of Minnesota officials determined that there was significant value in SE Minnesota to authorize public investments in Rochester to help support the Mayo Clinic in Rochester. The 20 year mission is to position Minnesota as a global care center, to create a global Destination Medical Center. (DMC)

With more than $5 billion in projected private investments over the next 20 years, DMC will provide the public financing necessary to build the public infrastructure and other projects needed to support the vision.

  • 25,000 - 30,000 new jobs in Minnesota from direct growth of DMC
  • 10,000 - 15,000 new jobs from indirect impacts of visitation
  • 1800 – 2,200 jobs from construction on average annually
  • The State of Minnesota expects $2.5 - $3.0 billion in additional tax revenues over a 20 year period
  • The City of Rochester is estimated to collect $195 - $205 million in additional tax revenues over a 20-year period.

There is also a commercialization element to DMC. With the creation of new businesses in start-up biotech, and other health, and non-medical fields, jobs will flourish.

Southeast Minnesota Association of REALTORS Market Update

November, 2018 - New Listings Southeast Minnesota were up 1.7 percent to 358. Pending Sales increased 3.0 percent to 411. Inventory grew 2.0 percent to 1,308 units. Prices moved higher as the Median Sales Price was up 9.1 percent to $190,000. Days on Market decreased 4.9 percent to 58 days. Months: Supply of Inventory was up 8.0 percent to 2.7 months.

The Bureau of Labor Statistics recently reported that the national unemployment rate was at 3.7 percent. Low unemployment has helped the housing industry during this extensive period of U.S. economic prosperity. Home buying and selling activity relies on gainful employment. It also relies on demand, and builders are showing caution by breaking ground on fewer single family home construction projects in the face of rising mortgage rates and fewer showings.

Rochester, MN Consistently Ranks #1

Money Magazine recently said it best, "One thing to remember about Rochester is that it has the sophistication of a larger metro area, but not the congestion or the complications." Named, "Best Small City" in America by the nationally recognized magazine, "Rochester merges a cosmopolitan atmosphere with Midwestern hospitality giving convention attendees a most memorable experience."