The process of buying a home is very exciting, but also emotionally stressful time for potential homeowners. Even if this isn’t your first time purchasing a home it is still the same exciting, but emotionally stressful process as it was when you were a first time homebuyer. Since purchasing a home isn’t something most people do on a regular basis the home buying process is something that they should review each time. The home buying process consists of 8 steps which are explained below.
Step 1: Meet with a Real Estate Professional
Step 1 is to schedule an appointment to meet with a real estate professional (Realtor) for a buyer consultation. This buyer consultation is when the Realtor will explain this process to you as well as answer any questions you have. If you need a good realtor, I can refer several.
This is also the time in which you will be able to discuss the type of home you are looking for. Before meeting with your Realtor you should write down all your must-have’s as well as your wants. Your must-haves are things that are non-negotiable. If you work from home one must-have on your list may be an office space. For many people, a must-have might be an updated kitchen. Your wants are things that you want or prefer your house to have, but these wants are secondary to your must-haves. Discussing these with your Realtor will give them search parameters to use when looking for a home for you.
One thing that many people do not talk about in the home buying process is the buyer’s advantage. As a home buyer, you have a financial advantage. This is because in most situations your agent’s commission is paid by the seller of the home your purchase. This means that having an agent represent you as a buyer usually cost you nothing. This is not always the case though. If you decide to purchase a home from a For Sale By Owner (FSBO) then you will sometimes be responsible for paying your agents commission. Many FSBO’s are now agreeing to pay the commission for a buyer’s agent now though because they know they get more potential buyers by being willing to do this.
Step 2: Get Pre-Approved
The next step is to talk to me! Your Realtor can usually recommend one or more for you to talk to in order to be pre-approved. The pre-approval process in one in which the mortgage lender will look through your financial situation and will determine how much money you will qualify to borrow for purchasing a house. In order to give you a pre-approval, you will need to apply with your mortgage lender for this credit verification, asset & income calculation to determine your pre-approval.
One thing to keep in mind about the pre-approval is that you should only purchase a home within a dollar range that you are comfortable with when looking at your entire financial situation.
Once you have this pre-approval you should communicate that with your Realtor so they know what price range they should be looking for homes in.
Step 3: Search for Homes
This is the fun part of the home buying process. This is when you get to go shopping for a new home. Your agent will be responsible for scheduling showings as well as helping you find the perfect home for you.
One thing to keep in mind when searching for a home yourself is that not all real estate websites are the same. Some contain more information than others and some contain outdated information. Your agent will have tools and systems to make sure that every home they show you meet your criteria.
Step 4: Make an Offer
Once you have selected a home to purchase your agent will write an offer based on the price and terms you choose. Your agent will also be able to walk you through the process of selecting the price and terms.
When making an offer one thing that home buyers forget about is that they must submit earnest money with their offer. Earnest money is a certain amount of money they give to their agent to be used to show a seller they are serious about purchasing the home. This check is cashed and the money is held by the real estate brokerage until closing. This earnest money will go towards your down payment.
One reason that the earnest money shows a seller that you are serious about purchasing the home is that you are showing them that you have something invested in the home buying process. If you fail to follow through on your end of the deal then you may lose your earnest money and it may be given to the seller.
Step 5: Negotiating the Contract
Once you submit your offer to the seller it is us to the seller to decide what happens next. They can accept your offer and the house will be under contract or in escrow. They can also counter your offer which means they will try to negotiate the deal to be a little more favorable for them. This negotiating may take some time, but it is a necessary part of the home buying process so that both the buyer and the seller get a deal that they both consider to be a win-win.
One thing to keep in mind about the offer you submit is that it will in most cases provide you with a timeline to complete certain tasks, such as obtaining financing and performing inspections. Your agent and you should make sure all these tasks are completed within the timeframe.
Step 6: In Escrow
In escrow means that you and the homeowner have agreed to a purchase price as well as the other terms of the deal. The home is basically being held for you until closing and no other buyer can purchase the home.
Step 7: Final Details
During this step, you are performing all the tasks mentioned in Step 5. These include finalizing financing, performing inspections, ordering an appraisal, etc. Also as mentioned in step 5 each one of these tasks has very specific dates that they must be completed by.
Step 8: Closing
This is when the ownership of the home is transferred to you. This is also when you give the seller the money to purchase the home. The paperwork that you must sign is usually prepared by a title company or an attorney.