The Wise Home Buyer Process

Part of the process of becoming a Wise Home Buyer includes understanding the benefits:

Off-Market Home Availability

The biggest problem in Orange County right now is the small number of properties on the market; there is unfortunately a very limited supply. Any Realtor can curate for you a list of homes available for sale on the Orange County Multiple Listing Service; one can even create a similar list on Zillow or Trulia. But this is just fishing from the same very small pond. It’s possible, of course, that the right home for you is on the market right now, but it might not be.

There are potential home sellers in every neighborhood whose properties are not currently listed. Some of these homes used to be on the market but were withdrawn for some reason or the owners never officially listed them. Some of them may have not even considered selling, but would be open to an offer from an able and ready buyer. We will give you the opportunity to also see and evaluate these homes, as well.

The Wise Home Buyer doesn’t just search the MLS for potential houses, but also evaluates every other house in their desired neighborhood that could meet their needs.

Substantial reduction of Realtor and mortgage loan fees

Because we will be performing 2 different professional services, representing you in the purchase of the home and arranging your financing, two different fees will be earned: the real estate sales fee and the loan brokerage fee.

In the traditional arrangement, where there are 2 individuals performing this service, the fees are separately paid to each. Currently, the typical fee for the Realtor ranges from 2.5% to 3%  of the purchase price on a listed home and for the loan broker it’s another 1.50% to 2% of the loan amount. That is a LOT of %!!!

On the real estate side, we will accept 20% less than the seller is offering to pay via their agreement with their listing broker. So, if the seller is offering a 3% fee, we will accept 2.4%; if they’re offering 2.5%, we will accept 2.0%. This savings can be credited to you the buyer by lowering the purchase price, a credit towards closing costs, or a direct rebate check after closing (or some combination of all three).

On the loan brokerage side, we will broker your loan to get the best possible program and rate for 1/2%, regardless of the loan amount or type. This is substantially less than the 1 1/2% to 2 1/2% that the typical broker charges (even if it’s a zero point or even a zero-cost loan, the lender will still pay fees of 1 1/2% to 2 1/2% to the broker).

Even if you’re tempted to deal directly with a listing agent in hopes of lowered fees, it still won’t be comparable to overall reduction in fees we will give you.

If we find you a home that is not on the market, our fee for finding that home, contacting the owner, arranging a visit, and then assisting in negotiation the transaction is 3.5%. The fee for the loan brokerage is the same as described above.

Substantial reduction of time and hassle

By only dealing with one professional instead of two, the amount of phone calls, paperwork, and other tasks are dramatically reduced.

Much of the information and communication exchanged between the buyer and their Realtor and loan officer during a home purchase concerns the exact same thing. Not only is duplication of effort eliminated, the potential for miscommunications and mistakes are eliminated as well.

A Wise Home Buyer intentionally avoids wasting time and hassle.


Here are the simple steps to become a Wise Home Buyer.

We will take Stock of Your Financial Situation

Before even considering looking at a home you need to accurately understand the details of these items:

♦ Your debts, including monthly payments and outstanding balances.

♦ Your credit score, by going to FreeCreditReport.com or www.annualcreditreport.com or similar.

♦ Your income and its trend over the last 3 years

♦ Your assets, including cash, savings, and any retirement accounts

A financial prequalification discussion will require an extremely detailed evaluation, so be prepared for it. Start planning to collect all the necessary documents: tax returns, pay stubs, bank statements, etc.

We will discuss How Much Money You Want to Spend

There is a difference between what a mortgage lender will qualify you for and what you actually want to spend. It’s important to know the difference.

This step means taking a long hard look at the reality of your finances. How much of your savings do you want to put into a transaction? How much of your monthly income do you want to spend on a house payment?

Doing this examination right upfront will help save a lot of time. “We want to spend $X in buying a home and no more than $Y on a monthly basis,” should be a sentence you can quickly and easily utter.

You’ll Complete the Loan and Home Buyer Information Worksheet

This document will be the basis for creating your loan application, determining your qualifications, calculating the financial commitment, and prioritizing your needs and wants. All of these items are necessary to buy a home. The more preparation that is done on the front-end of the process, the more successful we will be!

We will obtain a Loan Pre-Approval

Once you know the answers to #1 and #2 above and complete #3, it is time to get your loan approved. We will identify an actual range of value upon which you can focus.

Also understand the difference between prequalification and preapproval. A prequalification is an opinion based upon verbally supplied asset, income, and credit information. A preapproval is obtained after a complete loan application is made, including providing all asset and income documentation, pulling a full credit report, and submitting that package for review. A preapproval turns a buyer into the equivalent of an all-cash buyer, putting you in the best possible position to make a strong offer – and to get it accepted.

Rationally, these first four steps make sense, but they’re backwards from what usually happens. It’s SO much more fun and enjoyable to go look at a house and then try to figure out whether or not the numbers can be made to work.

Don’t do this.

The Wise Home Buyer does the difficult and tedious work before having fun.

You Will Determine Where You Want to Live

A Wise Home Buyer will not say, “I’d like to be somewhere between Malibu and San Clemente” or “Anywhere around Huntington Beach and Rancho Mirage.”

The more narrowly you are able to focus your intended destination and property search, the more able we will be able to save you time and money.

This also includes the type of home you want and its amenities.

Condominium? High rise? Detached home? 2/3/4/5 bedroom? Pool? Backyard? What else?

Of course, some things may be flexible – such as bedroom/bathroom count or construction style or the age of the home. Some things may not be flexible – such as bedroom/bathroom count or construction style or the age of the home.

The important thing is to be able to have a checklist of “Must Haves” and then perhaps “Nice to Haves.” The more detailed you can be about what you want, the easier the process will be.

We Will Mutually Commit and Sign a Representation Agreement

This is the standard employment contract between an agent and home buyer – it lays out the duties and responsibilities for both parties and the compensation if the home search is successful.

We Will Go Out and Find Your House

This is the part where the fun REALLY begins! We will determine the available inventory in the area you’re interested in (whether currently on or off the market) based upon the loan approval we have received, and then we will go identify the one you most want. Then we will negotiate terms and get you the best possible price.

It also makes sense to familiarize yourself with the California Residential Purchase Agreement – this is the required document used to make an offer to purchase a home.

If you have any question about any of this, call or email us.

Thank you!