Buyer Information

The Home Buying Process – a brief step-by-step overview

If you’re like most people, buying a home represents your single biggest investment – and debt. As such, the home-buying process can be one of your most exciting, but also stressful, experiences. This may be true whether you’ve bought many homes or you’re looking to buy your first; whether you’re in the market for a new primary residence, an investment property, or that perfect vacation getaway!

The real estate market has never offered more great opportunities or had as many risks as now. There are many factors to consider and many decisions to make. That’s why, when buying, it’s crucial for you to have access to all of the resources necessary to make a well-informed decision, as well as the time required to use of these resources. That’s also why you should enlist the help of a trusted REALTOR who will be able to provide you with expert consultation during each step of the buying process.

Generally, finding and purchasing a home includes the following steps, some of which are examined in more detail throughout this packet:

  1. Define Your Goals, Research Your Options, Make Your Plans

    Given that buying a home is such a big step, it’s all the more important for you to educate and prepare yourself as much as possible in advance. This means clearly determining why you’re buying and what kind of home you’re looking for. And because buying and financing a home are so closely related, it also means examining your current financial situation and projecting how much you can afford.

    Once you’ve answered these questions, even tentatively, you’ll be in a better position to research your housing and mortgaging options, as well as create an action plan and timelines moving forward. You may want to do this yourself, but you may also benefit by consulting an experienced REALTOR right from the start.

  2. Contact A Realtor

    Buying real estate is a complex matter at the best of times because there are so many factors to consider, and no two homes or transactions are alike. Considering the unique opportunities and potential pitfalls of the current market, it’s even more important for you to contact a REALTOR once you’ve decided to buy.

    In choosing a REALTOR to guide you through the property search, financing, negotiation, and transaction processes, you should consider their local market knowledge, experience and track record.

  3. Get Pre-Approved For A Loan

    Generally, it is recommended that you get pre-qualified for a loan before you start viewing homes with the serious intention of buying. The pre-approval process involves meeting with a lender and authorizing them to examine your current financial situation and credit history. On the basis of this examination the lender will provide you with a document that details how much you can borrow to buy a home.

    Using a local lender usually alleviates the most typical problems that arise during the process.

    The benefits of pre-qualification include:

    • You’ll understand better what you can afford and be able to plan accordingly
    • As a qualified, motivated buyer you’ll be taken more seriously when you make an offer on a home. Most sellers require loan approval with your offer.
    • Lenders can tell you whether you qualify for any special programs that will enable you to afford a better home (particularly if you’re a first-time buyer). Certain loan types also require you to purchase in certain areas (USDA, etc.)

    Real estate financing is available from many sources, and an experienced REALTOR will be able to suggest lenders with a history of offering excellent mortgage products and services. Contact us for a list of reputable local lenders.

  4. View Homes and Select THE ONE

    Simply put, the key to the house search process is knowing what you’re looking for. Among other things, that means distinguishing between “must-haves” and “like-to-haves”.

    That said, here are a few recent facts that might put your experience in perspective:

    • Almost 90% of buyers use the Internet to search for homes
    • The typical buyer searches for 12 weeks and views 12 homes
    • 81% of buyers view real estate agents as very useful in the search process

    There are many benefits to starting the search process at a real estate website like REALTOR.com, the world’s most extensive source for property information. You can view many homes and detailed information about them, take video tours, and access neighborhood info. Your realtor can also set up a more detailed search and send you automatic updates.

    However, it’s also important to view homes in person. While their property details may seem similar online, homes can actually be very different in terms of layout, design, workmanship and other aspects. Ideally, you should view homes with the help of an experienced and eagle-eyed REALTOR who’ll notice things you might miss, provide expert analysis, and act as an impartial sounding board.

  5. Make an Offer and Negotiate With The Seller

    Now that you’ve found the home you’d like to buy, it’s time to make an offer. Your local real estate association, working with legal counsel, has developed the contracts that are used for transactions in your area. These contracts enable you to specify a sale price and also include many clauses for specifying various terms of purchase, such as the closing and possession dates, your deposit amount, and other conditions. You should carefully review these clauses with your REALTOR to ensure that they express your desired offer. In addition to drawing up the contract, your REALTOR will be happy to address all your questions about the offer process.

    Once you’ve written the offer, your REALTOR will present it to the seller and/or the seller’s representative. At that point, the process – given that a home’s eventual sale price is subject to supply and demand – will depend on the kind of market you’re in. Generally though, the seller can accept your offer, reject it, or counter it to initiate the negotiation process.

    Successive counter-offers, with deadlines for responding and meeting conditions, will be exchanged between you and the seller until a mutually-satisfactory pending agreement is reached or the negotiations breakdown.

    Negotiations can involve many factors relating to different market conditions, homes and sellers.

  6. Securing Your Financing

    Once you have a pending agreement, it’s time to go back to your chosen lender to finalize your mortgage details so you can close the deal. This means finalizing your down payment, interest rate, regular payment schedule and any other financial conditions associated with the closing.

    As noted in the section on loan pre-approval, if you’ve already been qualified with a lender for a certain loan and home purchase, this phase of buying your new home should be a relatively straightforward matter that centers on finalizing the loan details and signing the mortgage papers.

    As the old saying goes, ‘let the buyer beware.’ Particularly in these times, when so many buyers are suffering the consequences of not having fully understood their financing decisions, it’s crucial for you to work with people you trust. In this regard, a good REALTOR can be a true friend for life.

    For more information on the loan process, talk to your lender.

  7. Close The Deal

    If you’ve efficiently taken care of everything connected with purchasing your new home, the experience of taking ownership will be a positive joy with no surprises. Key steps to the closing, also referred to as the “escrow” or “settlement”, include:

    • Getting a Title Search – a historical review of all legal documents relating to ownership of the property – to ensure that there are no claims against the title of the property. It is also necessary to purchase Title insurance in case the records contain errors or there are mistakes in the review process.
    • The Final Walkthrough – you’ll be given the chance to look at the home to make sure it’s in the same condition as when you signed the sale agreement.
    • The Settlement – typically, on the Closing Date you’ll go to a lawyer’s office to verify and sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments and transfer taxes. At that point, you’ll receive the property title and copies of all documentation pertaining to the purchase.

    Oh, and one more thing – you’ll get the keys. In most cases, Possession Date will fall within a couple of days, at which point you’ll be able to move into your new home. Your realtor will guide you through all of these steps as we coordinate the closing with a team there to serve you.

    Michele Johnston
    Realtor, ABR, SRS, GRI, Broker Associate
    Cell: 901-647-6285
    michele@mjohnston.us