Buying your new home in Alaska can be an exciting adventure! It can also be daunting if you are not prepared. For many, the thought of moving to Alaska means starting an all new chapter of life for their family in a place that that they have always dreamt of living.
For families already in Alaska, maybe your seeking to get out of a home that someone else owns and into a home of your own. Or, perhaps, your looking to upgrade from your existing home to a larger one or one in a different part of Alaska… Regardless of your motivation, understanding the steps involved in the process are critical to a smooth transaction.
We find that many homebuyers think that the first place to start the process is by surfing the internet on home buying sites like Zillow or Trulia. WRONG! Our attached 16 Step Alaska Home Buying Guide at a glance will help you understand all of the processes, in order, from start to finish.
While there are a lot of details in the information below, this information and the attached diagram will help you to take the right steps in order, and help you making well informed decisions to ensure your purchase goes as smoothly as possible. We are here to help you through the process and look forward to working with you as your Buyers Representative.
Where to Start?
1. Determine if Home Buying is Right for You
Before beginning your home search have a conversation with your family is right for you. Make sure to discuss things like family finances, timing, school locations, commute areas, etc. Make sure to have clearly set goals: desired neighborhoods, type of home, must-have amenities, etc. As you get into the market, you may need to be flexible on some of these requirements, but starting with a best-case list will be helpful.
2. Gather your Financial Documents
In order to examine your finances to determine if purchasing a home you need to gather your financial documents. Doing so will give you a complete picture of whether you can afford to make the changes that a mortgage will require you to make. Sometimes you can actually purchase a home for less than it costs you to rent, but there are annual costs to owning a home that may not be there if you rent.
It’s important to make sure you have your finances under control – make a detailed budget and ensure that you have savings and reserves in place to support your home purchasing goals.
3. Shop for a Lender
Call several mortgage lenders – you’ll find differences in rates, fees, and customer service. Finding the right mortgage lender is important. Check reviews as well to make sure you’re choosing someone with a track record of satisfied borrowers. We know many local and National Lenders that are honest, trustworthy, efficient and reliable. Not all lenders are the same, and we have a list of trusted lenders that we are happy to share with you as your Buyers Representative
4. Get Pre-Qualified
Pre-qualification is a good idea at this stage. Pre-qualification is a fairly quick process where your lender can make estimates of how much loan you can qualify for and can generate a letter (known as a 90% letter), that helps you if submitted with your offer, once you find a home to write an offer on
The 90% letter, along with a deposit of about 1% of the offer price, shows the seller that you are in a strong and serious position to purchase a home. Without the 90% pre-qualification letter, sellers are less likely to take your offer seriously. Without the 1% “Earnest Money” deposit, you will lack “consideration”, which is one of the required elements of a legal contract.
Unlike prequalification, preapproval is a more specific estimate of what you could borrow from your lender and requires documents such as your W2, recent pay stubs, bank statements and tax returns. The lender will ask you for these documents along the way in order to determine exactly how much you can be pre-approved to borrow. If you start with a pre-approval from the start, you’ll have more power as you submit offers and negotiate with sellers if you are already approved for a mortgage. However, your lender will likely start with the “pre-qualification” process, until you actually find the home you are making an offer on and price can bet established in the contract. The pre-qualification process can use “estimated sales and closing costs to spitball whether you have enough money set aside and buying power to proceed with an offer on a home.
5. Find a Realtor
Take some time to do some research here! Not all Real Estate sales people are the same. The Realtor designation behind their name means that they, as Realtors, have additional educational requirements to meet and ethical guidelines to follow.
By the time you pick a Realtor, you probably already have a good grasp of the type of property you’re looking for and the purchase price you can afford. Interview several Realtors to find someone who regularly sells similar homes and is familiar with your area. Interview them, look for social proof and check out pervious client reviews. Zillow is a good place for this. If you’re shopping with a spouse, make sure both of you agree on the selection of your Realtor. Home-buying can be a storm and you want a good captain at the helm that you’ll both trust!
In the process of selecting a Realtor, it is important to understand who pays your “Buyers Representative”. As your Buyers Representative, we do NOT ask your for any money to represent you and help guide you through the process of home buying. All of our commissions are paid by the Seller’s Brokerage. When the listing is signed by the Sellers, they agree to pay a specific sum or money or percentage of the sales price to the listing brokerage in order to get their home sold.
The money that is paid by the seller to the listing brokerage at closing is split four ways. The listing brokerage pays himself, his listing licensee, our brokerage and finally us. The amount of money or percentage of total money that we get is based on what the sellers brokerage feel is fair to us. Some Buyers Representatives ask the seller for additional money to be paid to them above the amount agreed upon in advance, in order for them to complete the transaction… NOT us! This is horrible practice and has killed many transactions. As Realtors following a higher set of ethical standards, we feel that asking for more (negotiating commission) is bad for the buyer and we NEVER ask the selling side for more money to do our job. And agin, you never pay us a cent.
6. Find your Home and Get Under Contract
Work with your Realtor to search for homes that meet your goals and criteria. You’ll also want to make sure you view homes in person, even in a post COVID world – pictures are awesome and virtual tours are cool, but can sometimes be misleading! Don’t get frustrated if you don’t find a home immediately – each showing gives you a chance to learn more about what you can get in your area at your price point. You’ll find a place to call home.
There is a lot that goes into making an offer and negotiating. Once you have found the place you want to make an offer on, your Realtor will make recommendations to you on how to structure the offer to best meet your goals. A good Realtor will fight for you and what is important to you.
Once you’ve found the home you’d like to buy, it’s time to make an offer. Here’s where a good agent earns their money – showing you the home is the easy part. Shepherding you through offer and closing is where great agents shine! Sellers can counter your offer, inspections can reveal possible repairs, and you can suddenly find your budget at risk and maybe even question if this is the right home for you. Above all, stay calm and continue to communicate with everyone involved. Check your budget, your emotions, and your buying partner to make the next right steps.
They will never push you to buy a home or steer you away from one. They will point out the best options for structuring your offer to help you save money or meet other goals that you have. Maybe you want a price discount, closing help or need to move in early (early occupancy)? Your Realtor can ask for these concessions in the contract and help you get what is important to your family.
7. Complete Home Inspection & Negotiate Repairs
This is perhaps the single most important process in the transaction. A home inspection in Alaska will cost you between about $350 and $500, depending on the home inspection company you pick and the size of the home. Not all home inspectors are created equal. They have different inspections techniques, attention to detail and report writing styles that can affect the outcome of the transaction. At this point, it is really important that you research the home inspectors available to you to ensure that you pick a few that will represent what is most important to you. Do you want one that is going to identify every single defect and write a report that seems to suggest that everything is urgent? Or, do you want one that check the issues most important to you and writes a report with reasonable recommendations for repairs/replacement. This is where again, you have to do research and look at on-line reviews to make sure that what is important to you is being addressed in the home inspection. It is a good idea to pick 3 home inspectors that you find capable in your research. The seller may actually have objections to one or more of the inspectors that you pick, but should let you use 1 of the 3 that you list in the contract.
Ensure that you talk through the home inspection process with your Realtor and perhaps interview the inspectors you have chosen to ensure that your getting what you pay for and that you are comfortable with the home inspection report provides you withe details that make you feel assured that you’re buying a safe, well-maintained property, and investing your money wisely.
If the home inspection is done within the “due diligence period” stated in the contract, and reveals a problem, you do have the option at this point, to move forward (or back out) if the results are less than ideal.
The options you have to move forward come in the form of repair requests. The option to back out is clearly spelled out in the sales contract. The repair negations added to the contract clearly spell out what repairs needed. Getting the seller to agree to the terms you propose is all a negotiation. The seller’s willingness to negotiate, and several other factors affect whether the contract negotiations continue or whether they back out of the deal altogether. At the end of the day, they don’t have to agree to take on the cost of any repairs, unless it is written into the contract, and you don’t have to agree to buy their home, unless you are happy with that you are getting for the contract prices. Negotiating repairs and other concessions after your home inspection is one of our strong suites. As Real Estate investors for over 20 years now, we have learned a thing or two about motivation and negotiations. As you “Buyers Representative”, we will provide creative and valuable recommendations to you.
8. Shop for Homeowners Insurance
Most major insurance carriers and many financial institutions offer Homeowners Insurance policies. Check with your bank, credit union and auto insurer to compare rates and get the home owners insurance policy that is right for you.
Homeowners insurance provides financial relief if a covered event damages your home, property or personal belongings. Depending on the coverage included in your policy, it can also pay out when you’re held responsible for an accident or injury. It has three main functions:
- Repair your house, yard and other structures.
- Repair or replace your personal belongings.
- Cover personal liability if you’re held legally responsible for damage or injury to someone else.
Homeowners insurance coverage isn’t required by law, but if you have a mortgage, your lender will likely require you to insure the home to protect its investment. Even if you don’t have a mortgage, home insurance is almost always a wise purchase, giving you both property and liability coverage.
9. Order 3rd Party Services
This process is done by the lender and involves ordering the property appraisal, a credit report on you, setting up title, ordering a survey, making flood zone determinations, and certifying that that title to the home you chose is insurable (title search).
Since all of these things are going on behind the scenes and don’t really involve you, this is a fairly quiet time along the process timeline. You may not hear anything from your lender and the processes take a few weeks to complete. Don’t worry… A good Realtor will let you know what is going on through the process and will give you a heads up when this “quiet time” in the buying process has started.
10. Finalize Loan Documents for Approval
You’re almost there – remember, your lender wants to ensure that this is a good move for everyone, so they may ask for more information about income, the condition of the house, or your credit history. Providing accurate and timely responses keeps the process moving and gets you to your desired outcome the fastest.
11. Submit Loan to Underwriting
Many things are going on behind the scenes at this point within the lenders processes to ensure that the bank is willing to lend you the money to purchase your dream home. The process of a loan review in “Underwriting” occurs with all lenders. For the most part, your lender will let you know if any additional information is needed from you as the buyer, at this point. Sometimes, they will ask for a new pay stub or other proof of income, or clarification about debts, etc. You will be notified by the lender when you home is done in underwriting
12. Review the Closing Disclosure
At least 3 days prior to the scheduled closing, your lender issues a document that is known as the “Closing Disclosure” of “CD”
This document provides you with an opportunity to review the costs associated with purchasing you home, to include the contractually agreed upon price of the home, sellers closing costs, prepaid’s, , points, principle payment amounts, interest, taxes and insurance costs.
There is a a lot going on in this document, but your Realtor and Lender can help explain the parts and pieces to ensure you understand what you are looking at.
13. Perform your Final Walkthrough
This is your last opportunity to walk through the home to make sure all agreed upon repairs and conditions have been met. This is typically scheduled for a day or 2 before closing and the timing of the event can be adjusted by your Realtor, depending on progress of repairs, etc.
Rarely, the final walkthrough occurs after the Seller has signed their closing document; and you definitely want the process to occur secure you sign your closing documents…
The timing for closing can vary, but the average is 45 days from the time that you have a double signed contract. Closing is the process if you completing loan documents at a title company that starts the transfer of possession of a property. The process takes about an hour but can be a bit longer if you have special loans paperwork to sign.
Again, typically, within 48 hours prior to closing, you’ll do a final walk-through to check that all agreed-to repairs are completed and that the home is in the expected condition.
You can expect to meet with your lender and potentially your Realtor to finalize the paperwork at closing. There may also be attorneys present, and a representative from the title company. During the closing all paperwork will be finalized, including: the deed, title, financial/funding, closing statements, insurance, contract, etc. At this point, you’re done with everything that you need to do and will be ready to move into your new home. However, attending the closing does not mean that that the transaction is all done… The transaction must record in order for the property to transfer possession to you.
Recording is the process by which the paperwork that you and the seller have signed at your closing are recorded by the City or Municipality you live in to show that a transfer of possession has occured.
You can expect a call from your Realtor to let you know that the transaction has “recorded” and you are the new owner of record.
16. Receive Keys & Take Possession
Congratulations! Since the property transfer has recorded, you are the proud owner of your new home. You will be able to pick up keys from the title company and take possession of the property and move in.