Real estate is a tree-killing business. I estimate that my average buyer client’s transaction file is three to four inches thick and hundreds of pages long. The lion’s share of these pages is comprised of disclosures and inspection reports. If you’re a goal-oriented type of gal, it is tempting to attack that stack of paper like an unpleasant chore—to initial and sign away to get it out of the way as fast as you can. I’m here to tell you to fight that impulse—just this once!

When the typical Smart Woman prepares to buy a $30,000 car, she goes to the Blue Book to research market values, goes to epinions.com to check out the feedback of others who already own the car, and maybe to the purchase decision-making gurus at Consumer Reports. She may also email a bunch of folks she knows to see if anyone has the type of car she’s considering, and
how their experience has been with the vehicle. If she’s buying used, she’ll go to CarFax.com to get a vehicle history report, and take it to her own mechanic to get a professional opinion on the car before she buys it.

Well, homes aren’t like cars in that there is no standard repository of information about your “model” of home, and no database that keeps track of the history of repairs done to individual homes. That thick set of disclosures, inspections, and other reports are the safety net that keeps you from buying a lemon of a house.

The point of these documents is to equip you to make your final decision whether to buy the property only after you have full and unbiased information. Instead of looking at these papers like a stack of signatures you have to churn out, look at them as the final phase of a study project.

Depending on the length of your contingency or objection period, you’ll have up to about a three-week time period after you get into contract. In that time, your job is to research, study and familiarize yourself with the details of the property by attending your inspections and reading disclosure and reports. That’s the only way you’ll be able to say a fully informed ‘yea’ or ‘nay’ to the purchase, or to renegotiate the price or other terms if you need to.

General Rules for How to Read and Use Disclosures,
Inspections & Reports

• Read them front to back – there is some potential for eye-glazing, but persevere and pay close attention;
• Keep a running, written (or digital) list of questions, and present it to your broker or agent. Then follow up and get answers—from your agent, the inspector(s) or the sellers. Feel free to call inspectors directly with questions, if you’d like;
• There is no such thing as a “bad” inspection report or an absolute “deal breaker,” other than a home that needs repairs that you don’t want (or can’t afford) to complete;
• If the inspection results are surprising, you might be able to renegotiate your deal with the seller (unless your seller is a bank and you’re buying an REO – then, as-is means as-is). For minor items, though, you should plan to use the inspection reports as the start of your long-term home maintenance/upgrade plan;
• Keep everything in perspective—even brand new homes sometimes have items that should be repaired, replaced, or installed differently: no home is perfect, and the older the home is, the more of a “history” it will have.

Don’t assume that once your final underwriting approval is in, you’re totally off the hook. Underwriting continues up until the time the deed has recorded. As I’ve stated before, many lenders, for example, will verify your employment on the day they fund the loan, or the morning the escrow agent plans to go record the deed in your name!

Ironically, after all you’ve gone through to get the house, if all goes well it will close with a whimper, not a bang. I recently sold a home to a woman who hadn’t bought real estate in over 20 years. The sellers signed at home the night before she and I went to the title company for her signing appointment. I explained that the mortgage would fund the next day, and that the day after that the sale would close. The seller would leave all the keys and garage door opener on the counter, and I would access the front door using the lockbox, which the listing agent would later remove.
Well, my client was sorely disappointed at how anti-climatic her closing was. In her imagination, she pictured a momentous event with both parties, both agents, and some other distinguished-looking folk all dressed to the nines, and seated around a mahogany table in a mahogany paneled room. After everything was signed, a trumpet blast would sound and the Handing Over of the Key would take place.
In real life, any celebratory climax around closing escrow is something you’ll have to create by going out to dinner or having a housewarming soiree.
Closing can be around-the-conference-room-table formal or around-your-dining-room-table informal, as the circumstances of your case and the standard practices in your area require. Your escrow agent will drive this phase, keeping your Realtor constantly apprised of any and everything that is required of you. One day during the last week of your escrow, you will be asked to sign the final documents. Ideally the signing will take place at the escrow agent’s office, but you may request to do it at your home or office with a mobile loan signer, who is also a notary public in your state. At this signing, you will sign a huge stack of documents:
° Title documents, which allow the property to be placed in your name on the public records and which secure your mortgage lender’s interest in your property (e.g., the grant deed from the seller and the deed of trust you sign for the benefit of your lender). These make up a small fraction of your closing documents;
° Loan documents, which set forth every last detail of your mortgage loan, and constitute your agreement to repay the lender and the lender’s various legal and corporate disclosures to you (e.g., the note which evidences your agreement to repay the lender); and
° Escrow documents, which constitute your final authorization of the escrow or closing agent’s disbursement of all the money and property in your escrow account (e.g., your settlement statement or HUD-1).
Most of these items vary dramatically state-by-state, county-by-county, lender-by-lender, and even transaction-by-transaction. However, there is one important element of closing that has been standardized nationwide—your closing, or settlement, statement. The federal Department of Housing and Urban Development has created a standard form, called the HUD-1 (check out a sample HUD-1 on www.REThinkRealEstate.com by going on our blog and typing keyword “HUD1” into the Tara’s Tips box), for use by closing agents everywhere in disclosing to buyers and sellers in line item format:
° All the debits to both Buyer and Seller, including every penny of closing costs;
° All the credits to both Buyer and Seller;
° All deposits that have been made to the escrow account; and
° All monies which must still come in to close the transaction.
At closing, you will receive a preliminary or proposed HUD-1 statement, because some items, like property tax prorations or prepaid interest, cannot be determined definitively until the day of closing. This is because if the lender funds the loan a day early or a day late, these amounts will change. Usually, the closing agent will very slightly overestimate the cash you need to bring in to close, so that they don’t have to ask you to come back in with a cashier’s check for $13.25 before your deed can be recorded. Your final HUD-1 will be sent out the day of closing, and often a week or so later you will receive a refund check with the overage left in the escrow account, if any. This final HUD-1 will do double duty as a tax document the following January 1; mortgage discount points and pre-paid interest are fully tax deductible (in addition to your regular monthly mortgage interest) for the year in which you paid them. Don’t forget to give your tax preparer your HUD-1 with your W-2’s or 1099’s the next year!

At REThink Real Estate, we believe that buying a home is not just a business transaction, it’s also the purest opportunity at designing your whole life that you might ever have!

So often, though, the lifestyle design opportunity gets lost in the drama and stress that seems to go hand-in-hand with homebuying.

It’s time to REThink Real Estate, ladies – it doesn’t have to be stressful. In fact, buying a home can be chock full of yummy, juicy opportunities to evolve as a person and obliterate things that have been getting in your way.

Smart real estate decisions are those that:

(a) enhance and protect the people and experiences you care about, while

(b) being sustainable and non-damaging to your lifestyle and finances over the long haul.

Confusion, fear and mystery about the homebuying process get in the way of smart real estate decision-making by causing panic and impulsivity or paralysis and procrastination. So let’s get rid of the mystery – here are our

Simple Steps to Smart Homebuying

STEP 1:  Cultivate a clear ‘Estate of Mind’.

The Mindset Matrix
Fear:  How to Overcome This Homewrecker
The Power of Alignment

STEP 2:  Handle your homebuyer money matters.

Know Your Numbers
Lifestyle Inputs to Your Mortgage Equation
Risky Business:  What Lenders Want to Know About You
Surprise Prevention:  Owner-Only Utilities and Costs

STEP 3:  Master the art of the house hunt.

Anatomy of a Listing
House Hunting: A Three-Hour Tour – What to Expect and What to Demand

STEP 4:  Cover yourself with your contract and negotiations.

Always Have a Backup Plan
Contingencies You Must Have

STEP 5:  Experience the escrow process.

What is Escrow?

Disclosures, Inspections and Reports: Your Paper Safety Net

STEP 6:  Close the deal and collect your keys!

Closing Without a Bang

There are no hard and fast “rules” to which agents adhere when they are writing listings for inclusion in the MLS or for a property’s flyer. Nevertheless, there is a sort of recipe of informational ingredients you should expect to see when you pick up a flyer or see a listing. Generally, the listing agent’s description of the property will include the following basic information:

* A photo and/or a map. (Some agents don’t manage to get a photo onto the listing. This may dissuade you from seeing it, but if it otherwise meets your criteria, ask your agent to check it out for you. Some of the best deals I’ve gotten for clients were in cases where the lack of a picture kept the competition down.);

* The property address;

* The list price (the price the seller is asking);

* The property type (see below);

* The number of bedrooms and bathrooms;

* The building’s size and the lot size, both expressed in square feet;

* Major, unusual terms – good and bad (e.g., Seller needs to stay in the property for two months after close of escrow, Seller will include all appliances);

* Major, unusual disclosures (e.g., a $50,000 termite repair estimate, a recent death on the property);

* A general description of the property’s amenities and features – in most areas, the MLS will require that agents complete fields relating to certain features in an effort to guarantee some minimum level of information across the board. These will differ by area, though, and some agents still manage to check “Other” or “None” for every field! When they do, the listing will look like a whole bunch of nothing, and if you want to learn about it, your agent will have to call and get the details from the listing agent by telephone;

* Selling points, or anything that the listing agent knows will make the property more attractive to buyers, including:

- Upgrades and updating that have been done to the property’s roof, flooring, paint, climate control, plumbing or electrical systems, kitchen or bathrooms (these are so reliably included in the description that you can generally assume that they don’t exist if they are not listed);

- Neighborhood or community amenities (e.g., near public transportation, near popular shopping district, school district is top-rated, etc.);

- Favorable lot characteristics (e.g., views, yard size, etc.);

- Whether property is in a homeowners’ association (HOA)or other planned unit development, and applicable dues, if any.

When you’re buying a home, Plan A is always to buy the home on the terms in the original contract. Plan B is to buy the home after renegotiating some of the terms. Plan C is the contingency plan: If there is an irresolvable flaw in the condition of the home, the home doesn’t appraise for the purchase price, or your lender refuses to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than the money you’ve spent on inspections) so long as you have the appropriate contingencies in place. Remember, contingency = the right to bail.

When you’re in a hot seller’s market, or there are multiple offers on a property, you might be pressured to make an offer with no contingencies, or one with no appraisal or loan contingency. DON’T DO IT! Personally, I wouldn’t spend more than about $50 at a store that didn’t have a 30-day return policy. It is insane to even consider having no back-out plan on a purchase in the hundreds of thousands of dollars! This is way too big a purchase to be without an escape route, at least until your due diligence into the condition of the property is completed.

The results of your home inspections will help you decide whether you need to bail out of a home purchase. For the most part, properties that look very well maintained have been very well maintained. People who tend to every nook and cranny of their homes and keep things well dusted and manicured, also often maintain their rain gutters and roofs well. Over the last decade, though, a wave of buying and rehabbing properties strictly for profit (not to live in) has swept our nation. In an effort to maximize profit, some flippers pay all their attention to cosmetic detail, and very little to the structural integrity of the home. Others literally tend to everything from the ground up, so don’t dismiss these sorts of properties out of hand either. My point is that with any property, looks can be deceiving – this is why you need contingencies!

If you are competing with other buyers for the property, you can shorten your contingency or objection period so that the seller can gain certainty that you will close the transaction sooner, rather than later, if you get the go-ahead from your team.

In the course of my day-to-day work as a Realtor for many Savvy Women, I have grown to realize that many Savvy Women have:

1. been technically able to buy a home for some time (or at least have been in the position to get themselves able), and
2. wanted a house for some time, but
3. for a number of “reasons,” just haven’t done it yet.

Surely you’ve heard of FAQs, those Frequently Asked Questions that are listed on every other website you come across. I have developed what I call the Mindset Matrix of FEQs-Frequently Expressed Qualms -the four categories of stories I hear from Savvy Women everywhere when I ask them why they haven’t bought a home yet.

Some of us repeat our personal FEQs so often that they literally take on the quality of a story, a fable that we tell ourselves or others to excuse our inaction. These stories we tell ourselves only soothe the mental upset we feel when there is a loose end. They logically close the mental gap, a.k.a. cognitive dissonance, which widens when we contemplate why we are not where we say we want to be. Though this works temporarily, the cognitive dissonance will recur indefinitely until we actually are where we say we want to be, or until we stop saying that where we aren’t is where we want to be.

After you’ve gained this awareness, the choice is three-fold. You can either:

• Continue renting, stay unhappy and keep telling yourself stories about
• why you don’t have a home;
• Stop saying you want a home; or
• Buy a home.

That you have picked up this book and read this far indicates that-ding ding ding!-you’ve selected the “buy-a-home” option, the right answer in my humble opinion, especially given how do-able it is. As I’ve said to scads of Savvy Women, if your personal “story” falls within the Mindset Matrix, I KNOW this is a do-able process for you. It may take time, but you can make it happen.

If you are a procrastinator, your FEQs can point you toward the specific areas you’ll need to emphasize in the education and preparation phases, and the specific supports you’ll need from your professional advisors. So let’s re-conceptualize these FEQs, deactivate them as useless excuses, and convert them into rudders which guide us to the areas in which we need the most education or the most work.

The lessons I’ve learned along the odyssey of my life have taught me two things about fear which apply to women homebuyers:

* What We Fear, We Create – This explains why we must overcome fear. If we allow the fear of becoming destitute and losing our home to prevent us from buying a home in the first place, then we have allowed fear to pigeonhole us in a lower, non-homeowner, socioeconomic bracket, keeping us from developing the true wealth that is available almost exclusively to property owners. The average American property owner has a net worth over 30 times greater than that of the average renter; which side of this equation do you want to be on?

* We fear what we don’t understand. This sheds light on how we will conquer our homebuying fears – with information. The information on this site and in the book, in conjunction with web resources and the resources provided by your team of professionals, will conquer the ignorance-based fears and calm the anxiety caused by the unknown. It will expose the scary process of buying a house for what it truly is: a project, like learning a foreign language or obtaining a degree – but much shorter, in most cases. A project just requires time, a plan, the appropriate personnel and the appropriate materials.

The thing about fear in the context of buying a home on your own is that it masquerades as a legitimate “reason” for not buying; again, this is why attacking the FEQs (and the unstated fears which often lie just beneath their surfaces) with information is the only effective way to deactivate these fears. It’s a two-part equation: disprove or strategize to resolve the FEQs + demystify the process = obliterate your fears, the necessary first step of shifting into the mind of the homeowner.

Most of us have heard the highly technical home improvement mnemonic for remembering how to turn faucets, jar tops and screws: righty tighty, lefty loosey. Imagine if you tried to tighten a screw by turning right twice then left once, right a couple more times, then a few lefts. The opposing forces would cancel each other out, so it would take you a lot longer to get the screw all the way in, and might cause so much frustration that you stop trying and use a nail instead.

This is called the principle of alignment. The principle of alignment says that in order to obtain maximal results from any effort, all forces must be working in the same direction toward the overall aim. The opposite is also true – when the individual forces being applied to a task work in opposite directions, struggle and failure often result.

It is the dizzying array of big things and little things, major issues and minute details that must all line up to make this happen that can overwhelm and intimidate even the savviest woman, causing discouragement, procrastination and plain old giving up.

In coaching people through all these details on a daily basis, I have realized that there really are just a few factors within your control that need to work in unison to attain success at the enterprise of buying a home. The whole process can seem a lot less intimidating if you understand the task before you from a macro perspective, instead of starting out worrying about every ‘i’ which must be dotted and every ‘t’ that needs crossing. We’ve laid this out in the Savvy Woman’s Resource Alignment Quadrant.

Alignment is that ideal state in which all these people, strategies, resources and processes work in concert to convert your intention to won a home into reality.

The #1 enemy of your homebuying goal is any and every thought, person, place, or thing which is not in alignment with your homebuying intention, vision, action plan, strategies, etc. You must be so consistently extreme in your commitment to your intention that it flows through and infect every area of your life. And you must ruthlessly excise from your existence any and everything that runs in any direction other than the course set by your intention.

When it comes to getting ready to choose the mortgage that makes the most sense for you, there is a key set of numbers that is important for you to know – your personal statistics if you will. You can use my kids’ friend, Hamilton, who is about 13 years old, for inspiration. Hamilton is a rabid basketball fan. We don’t see him that often, so the last time I picked him up to hang out with my kids, I asked him how his parents are – he said, “Okay.” I asked about his brother – he said, “Okay.” I asked how school was going – he said (you guessed it), “Okay.” Then, we got home, and he ran into my husband, John. John asked Hamilton who his favorite NBA player is this year. This child’s eyes lit up and he literally morphed into his alter-ego, Sir Talks-a-Lot:

“SHAQ! He is off tha hook! I mean, he’s 7-foot-1, weighs 325 pounds,
- and he’s #1 in the league in field goal percentage with a 58.9 percent average;
- and he led last year, too with 60.1 percent! Did you see that game where he scored 35 points against Charlotte? Did you know he wears a size 22 shoe?”

Now, I won’t ask you your shoe size, but I do want you to know all of the numbers on your Personal Statistics Worksheet before you even think about going in to meet with your mortgage broker or consultant.

When you’ve received your revised credit reports (after errors have been disputed and balances paid as much as makes sense), recalculate your personal statistics, including your new FICO scores. Other than the numbers, there is a short list of qualitative questions to ask yourself to round out your personal profile before the real matchmaking can begin:

• Fluctuations in income – Is your income is steady, or does it fluctuate monthly or seasonally?
• Priorities – What are your priorities for the financial side of this purchase? Are you trying to get maximum appreciation, get as low a payment as possible, or fit your five kids in as big a house as possible?
• Your Tax Situation – Do you usually have to write a big check at tax time?
• Your Exit Strategy – Why will you relocate when you move from this home? (Answers I’ve gotten to this question range from getting into a better school district to “they’ll carry me out in a pine box.”)

Check out our Types of Loans & Types of Lives Tool to explore how your answers to the above questions impact the fit between your lifestyle and various mortgage types.