The home buying process can seem overwhelming. Between qualifying for a home loan, choosing the right neighborhood, finding the right house, and navigating the contract period, buyers have a steep learning curve. Even if you’ve purchased a home before, you may find that the details
Luckily, helping buyers understand this process is our passion!
We can show you how the process works, explain what a real estate agent can do for you, and outline the specific services we offer our buyers.
Overview of the Home Buying Process
You’re just 8 manageable steps away from buying a new home. Here’s what the home buying process looks like.
Step 1: Get Pre-Approved for a Home Loan
Mortgage pre-approval should be completed even before you start looking at homes. Getting pre-approved will confirm that you qualify for the financing you need to purchase a home. It will also tell you how much money you can borrow, which will help you keep your home search in the correct budget range.
Getting pre-approved also shows sellers that you’re a qualified buyer. When you’re ready to make an offer on a home, your pre-qualification will assure the sellers that you can get the funding needed to close the deal. So the sellers will be much more likely to consider your offer.
How to Get Pre-Approved
Most lenders offer online pre-approval. You’ll simply go to the website for your chosen lender and complete an online pre-approval application. This usually takes 15-30 minutes. You’ll answer questions about your income, debt, employment, and savings. Then you’ll need to provide documents like:
- Proof of ID
- Proof of your income (typically with two months of paystubs, two years of tax returns, or both)
- Proof of savings (with two months of bank account statements)
You’ll also need to authorize a credit check so the lender can see your credit score.
In most cases, you’ll get your pre-approval letter within 24-48 hours. If you need any help finding a reputable lender, simply contact us.
Step 2: Start Your Home Search
Now comes the fun part: looking at homes!
Here are a few house-hunting tips to make the process enjoyable and effective:
- Make a list of things you need in your new home and a separate list of wants. This will help you focus on homes that could work best for you.
- Set a budget you’re comfortable with. You don’t need to borrow every dollar the lender is willing to loan you.
- Get yourself a real estate agent right away. In most cases, the seller pays all the real estate agent fees, meaning that you typically don’t have to pay for a buyer’s agent! Real estate agents often learn of new listings before they even hit the market, so having an agent in your corner can give you a head start over other buyers.
- Take advantage of online resources. In addition to listing photos and property descriptions, many listings also offer floorplans and virtual tours.
As licensed real estate professionals, we can show you any home in our local market. So please reach out when you’re ready to start touring properties!
Step 3: Make an Offer
When you find a home that meets all your needs and most of your wants, it’s time to make an offer.
This is where your real estate agent’s market knowledge and negotiation skills become a major factor. We know what it takes to get an offer accepted. And We know when you can ask for extras from the seller (like asking the seller to include certain fixtures or even pay some of your closing costs).
If you would like to make an offer on a property, and you’re not currently working with an agent, contact us asap! We will run comparable sales to advise you on an appropriate offer price, we’ll draft the paperwork for you, and we’ll present your offer to the seller’s agent for the seller’s consideration.
The seller might accept your offer as-is. Or they might counter-offer with a different price or different terms. In a hot seller’s market, it’s also possible that there could be multiple offers on the property, and the seller will choose another buyer’s offer over yours. If you’re serious about a home, make a strong offer so that you don’t risk losing it to another buyer.
Step 4: Get the Property Under Contract
Once the seller accepts your offer, we are officially under contract. At this point, you will pay an earnest money deposit to reserve your interest in the house. This money is needed because there is typically a 30-60 day window between going under contract and officially closing the transaction, and the sellers need some assurance that the buyers won’t back out of the deal without legal cause.
There are legitimate reasons you can back out of the sale during the contract period, including:
- The home inspection comes back with severe unexpected issues.
- The house does not appraise at a high enough value.
- Your financing falls through.
Your contract will most likely include contingencies for these situations, which allow you to terminate the contract and get your earnest money back.
But, the goal is to clear all contingencies and have your earnest money put toward your down payment.
Step 5: Complete the Home Inspection and Appraisal
It is in your best interest to order a home inspection and an appraisal as soon as the property is under contract. If you’re getting a home loan, your lender will likely require the appraisal (and possibly the inspection as well). Buyers generally pay for both. The cost varies greatly (depending on the size of the home and the neighborhood), but you should expect to pay between $300 and $500 for each.
The Home Inspection
A home inspection is when a certified home inspector physically visits the property and evaluations the condition of the home. The inspector will write up a detailed report outlining every visible defect or potential issue.
Most buyers are overwhelmed at the number of recommended repairs in a home inspection. Keep two things in mind:
- The inspector’s job is to call attention to all visible issues, no matter how minor. In the interest of limiting their own liability, they need to note every little thing.
- Most of the “issues” on your inspection report probably won’t need to be addressed at all. They’re just noted for your information so you have a complete picture of the condition of the property. Some of the recommendations will need to be addressed at a future date, potentially years down the road. Generally, there are only a few items that need to be addressed immediately.
As your real estate agents, we can review the inspection with you. If there are serious issues that need to be addressed, we might consider re-opening the negotiations to ask the seller to make some repairs or to reduce the price to account for the repairs that are needed.
The Home Appraisal
The appraisal is when a licensed real estate appraiser visits the house and conducts market research to determine the value of the property. In most cases, the value will be in line with the agreed-upon purchase price.
The appraisal is rarely higher than the purchase price. But, if that happens, great! You might be getting an even better deal than expected!
Sometimes the appraisal will come in lower than the purchase price. And this can create an issue because your lender won’t want to loan more than the property is worth. Again, this is where a skillful agent can save the day! It takes a little creative problem-solving, but there are ways to get around a low appraisal and still proceed with the purchase.
Step 6: Secure Your Financing
All through the contract period, your lender will be working on underwriting your home loan. Your job is to provide your lender with the financial documents they need to do their job (typically updated versions of the same documents you used for your pre-approval).
Underwriters triple-check every detail, so you might need to answer questions about large deposits or large withdrawals from your accounts. And your employer will likely receive multiple phone calls through the contract period to make sure you’re still in your current position.
During the contract period, it’s imperative that you keep your finances as stable as possible. Any disruption could cause the underwriting process to start over and could delay your closing.
So, while you’re under contract, do not:
- Change jobs or reduce the number of hours you work.
- Apply for any new loans (even credit cards).
- Make any large purchases.
- Make any large debt payments. It might seem like a good idea to pay off that last chunk of your student loans before taking on a mortgage, but that will reduce your available cash reserves, which negatively impacts your ability to secure your home loan.
Step 7: Sign Lots of Paperwork
Throughout the contract period, you’ll receive many documents to be signed including various disclosures, contingency removal forms, and your loan docs.
Many of these docs just need a quick electronic signature. But some of these documents will need to be notarized. We’ll help you arrange the notary, and he or she will witness your signatures for those documents.
Step 8: Wire Your Down Payment Plus Closing Costs, and Get Your Keys
All the hard work has paid off! All contingencies have been met and your loan is funded. Now you just need to wire your down payment and closing costs to the authorized party, who will distribute the proceeds as outlined in the Settlement Statement. We’ll make sure you have all the information needed to make the wire transfer.
Then, on closing day, you get to collect your keys. Congratulations; the home is officially yours!
Why You Need a Real Estate Agent on Your Side
Did you know that buyers typically don’t have to pay for a real estate agent?
In most cases, the seller pays all real estate agent fees, including the fee for the buyer’s agent. So, in all likelihood, it won’t cost you anything to hire us as your professional representatives in the purchase of your new home!
And the service of an agent is invaluable for buyers. Here are just a few of the reasons to hire a real estate agent:
- You’ll have someone to walk you through the pre-approval process.
- Most agents are a wealth of market knowledge and can help you narrow your search to areas that would best meet your needs and preferences.
- Many agents have a solid professional network and learn of new listings even before they come on the market.
- Your agent should be an expert negotiator who will negotiate aggressively on your behalf.
- Your agent will keep track of all the moving parts of your transaction. This is particularly important during the contract period when there is a lot happening behind the scenes.
- Having your agent review your home inspection will give you insight into which items need to be addressed and which items are noted just for your information.
And again, in most cases, you don’t have to pay for these services since the seller will cover the real estate agent fees. You have nothing to lose and everything to gain!
Services We Provide to Our Buyers
We pride ourselves on offering exemplary service to our clients.
Here’s what we can offer you as a home buyer:
- Clear and consistent communication. You’ll be in the loop each step of the way, and we will always return your calls or messages as soon as possible.
- Insider recommendations. Whether you need an electrician, plumber, lender, home inspector, or babysitter, we have an extensive professional network of reputable service providers.
- Prompt market updates. We will notify you whenever we learn of a new listing that meets your criteria.
- Private home tours. We’ll arrange the showings and personally escort you through the homes.
- A Comparative Market Analysis (CMA) for any property you’re seriously considering. This will guide us to an appropriate offer price.
- Representation in negotiations. We aim to get you the best price and the best terms possible under the current market conditions.
- A review of your home inspection. With our experience, we can help you prioritize items noted in the inspection report and advise you on reopening negotiations as needed.
- Transaction coordination. We’ll follow up with escrow officers, title reps, the seller’s agent, inspectors, appraisers, and other professionals to make sure your contract period goes as smoothly as possible.
- Explanations of the documents you need to sign. We’ll go over docs together so you’re clear on what you’re signing and why.
Do You Have Questions About the Buying Process?
We love helping buyers find new homes to fill with years of happy memories! And We’re always happy to answer your questions. Please contact us any time we can be of service.
