You’ve decided to purchase a home. Now what happens? Many think you look online, find a home, go look at it, get a loan, and you just buy it. Home buying is a lot different than buying any other consumer goods. You don’t just pick out a size 10, pay with your VISA, and have it shipped to you in 2 days via Amazon Prime… nope, it just doesn’t work that way.
I am going to break down the process for you. Know that this can get a little out of order at times, and at any one step things can tend to get a little “upside down,” but that is where your REALTOR® will be a tremendous asset. Here is what the “typical” process will resemble. *For the record, I have been selling real estate for over 13 years, and I don’t know that I have ever encountered a “typical” transaction… they ALL have their quirks!!
- Thought: “I think I would like to buy a home.”
- Search online… just to see what’s out there.
- Begin talking to friends and family. Actually saying it out loud will solidify the idea for most!
- Contact a REALTOR®. Your REALTOR® will help you figure out that the next step is to contact a bank or lender. They will also make recommendations for reputable ones to contact locally.
- Contact a loan officer to prequalify or get preapproved for a loan.
- Discuss not only the amount you qualify for, but also the amount that keeps the monthly payments at a point that you are comfortable with. (These amounts may not be the same, so be sure to cover BOTH avenues with your lender.)
- Meet with your REALTOR®. Your agent will discuss with you the importance of having them “on your team” as your representation. They will also help you to learn about the process, and help you navigate the steps from here on out! They may ask you to sign an agreement at this time that states that they will represent you/work in your best interest, and you will work solely with them. (Don’t be alarmed by this – it just means that they respect your professional relationship with them, and want to put it in writing.)
- Define your home searching criteria & decide what is most important to you. This list may be fluid and change as you look at homes and see what is within your budget, area, etc.
- Look at homes with your REALTOR®. This may be one home. This may be 20 homes. There is no right or wrong number of homes to look at. Note: If you have looked at 50+ homes and are not finding “the one”… you may want to take a moment to look at your criteria to see if there is something that you can “tweak.”
- During each home visit you will be looking at numerous things with your REALTOR®, and deciding if further research is needed to make a buying decision on that particular home.
- Find “The One.” It’s the holy grail! Depending on the market you are in, you may need to act quickly to move on to the next steps. Your REALTOR® will help you in knowing when you need to pull the trigger quickly, and when you have a little time to spare.
- Research the property depending on what is most important to you. You may want to check on the average utility costs, see if there is a HOA fee, read the covenants & restrictions, verify taxes, check insurance costs, among any number of other things.
- Your REALTOR® will help you to determine the best offer terms. This will include the price you offer as well as a closing time frame, whether to ask for closing cost assistance, inspections, and any other needed contingencies.
- Formally make an offer to the seller. It is always best to have your REALTOR® to present your offer in writing. This will require that you sign the offer documents. It is recommended that if you do not understand the documents that you consult an attorney before signing. If this is your first offer/contract to purchase you will want to ask your agent to meet you in person to go over the paperwork. It will ensure that you know what you are agreeing to. If your offer is accepted by the seller it is a legally-binding contract!
- With the guidance of your REALTOR®, you may have to negotiate the terms with the seller with counter-offers. There may be some back & forth on the terms of the contract. Be patient, and know what your personal limits are. There is no contingency for getting cold-feet!
- Once everyone has agreed to the terms in writing you are formally UNDER CONTRACT, and moving on the the next phase of the process!!
- Make formal loan application with your lender. You will need to contact your lender to apply for your loan, and provide them with a copy of your contract (your agent will likely email it directly to them.) The lender will ask for a boat load of financial information. I’ll outline what is needed for loan application in a different blog post in the future… so be on the lookout!
- Pay lender for the appraisal. The lender will order the appraisal, and the appraiser will contact one of the real estate agents to get into the home.
- Confirm who you will be using for the title work & closing. Your lender and/or REALTOR® will send the contract and transaction information to the closing agent for them to begin the title exam work.
- Schedule your inspections (ie: home inspection).
- Attend the home inspection, if you can. It’s not required that you be there, but it is a good idea so that when you are looking over the inspection report, you know what is being referenced. The inspector will also show you different aspects of the house that are good to know (where filters need to be changed, where shut-offs are located, etc.)
- Review the Inspection Reports.
- Determine if there are items that you would like to request the seller to repair. Your REALTOR® can help to make recommendations on how to approach the repairs request.
- It is likely that you will negotiate the repairs request with the seller, so expect for their to be some more back-and-forth at this stage.
- Your lender will be reaching out to you throughout the approval process for information and to verify info that you have given them.
- When the lender has a “clear to close,” which means the loan is approved, they will send you a closing disclosure that you need to review and sign.
- The title agent will contact you to schedule the closing date & time.
- Your REALTOR® will contact you to schedule a time to do a final walk through of the property.
- You will meet your REALTOR® at the home you are purchasing to do a final walk through. At this time you will want to ensure that the home is in the condition that you agreed to purchase it, and that there are no surprises after the seller removed their furnishings. You’ll also take this time to look over the repairs that were completed.
- Arrive at the closing agent’s office, ready to sign lots of paperwork!
- Sign closing documents. This will include (but certainly not limited to): Settlement Disclosure with all fees & monies that change hands for this sale, Deed of Trust which encumbers the title with a lien (mortgage), Note, acceptance or waiver of Title Insurance, Loan Application Form, and a few other items. (You may see a future blog post about what to expect at closing, which will include a detailed list of the typical paperwork!)
- Exchange any info with the seller that you may need. If the seller is present at the closing, you will have an opportunity to ask them questions about anything that came up during the walk through. They may also offer some advice or information about the home and neighborhood.
- Get the KEYS!!!
- Move In!!!
Shew… are you tired just thinking about all of that? Don’t be overwhelmed by all that needs to get done during the transaction. You have plenty of time to get it all done, and your REALTOR®, lender, and title agent are all there to guide you through the process (and remind you of what is next on the agenda!!) Never feel hesitant to ask where you are in the process or what is next. Most, if not all, service providers want to make sure that your home-buying experience is the best it can be. Purchasing a home is stressful enough, you should have a team of professionals that are excited about helping you achieve your dreams!
Do you have a question about the process or are ready to get started? Let me know how I can help!