BUYING PROCESS

Buying Process

Once you've found the home of your dreams and you're ready to make it yours, the real excitement begins. If you don't already have a real estate agent, now is the time to find one. Although the seller's agent can help you, their job will be to look out for the best interests of the homeowner, so it's wise to have an expert to make sure you're getting a fair deal too. Your agent may recommend that you retain a real estate lawyer as well, and in some cases, it's mandated by law. Each region can have additional stipulations and regulations, but this quick guide will help you understand how the overall process of buying a home works.

  • Getting Started

    You have decided to start the process of buying a home and achieving the American dream. Deciding what kind of home you wish to buy is the first step when trying to buy a home. 


    Consider:

    • What area you wish to live in?
    • How close is it to parks, shopping, work, transportation, etc?
    • How many bedrooms, bathrooms, and garage stalls you need?
    • What style of home you wish to buy?

  • Choosing Your REALTOR®

    Hiring a professional REALTOR® is the most important step when buying a home. Your agent represents you, working in your best interest, educating you about the real estate home-buying process, and providing their negotiating experience to get you the best home. There are many relationships you can have with a real estate agent.


    Contact us to learn more about how we can help you achieve your home-buying dream!

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  • What Can You Afford?

    Rule of thumb: you can afford a home that costs about 2½ times your yearly income. Some other factors that will help you determine how much you can afford are:

    • How much money do you need for bills? (Be sure to include utilities, doctors, groceries, car payments, insurance, etc.)
    • How much do you have for down payment? (The typical minimum down payment is 3-5% of the total loan amount.)
    • How much will you need for closing costs and other payments? (Be prepared to get out your checkbook. There are several costs — along with down payment — that will arise, such as earnest money, inspection, appraisal fees, and insurance binders.)

    Qualifying for a loan: do not confuse loan qualification with loan approval. Even before you begin looking for a home, meet with a lender to determine how much you qualify for. Keep in mind that prequalifying with a lender does not bind you to that lender. Do not sign any paperwork that would obligate you to a lender at this point.

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  • Viewing Homes

    One of the most exciting aspects of buying a home is looking at different properties in your price range and seeing houses in all sizes, conditions, and styles. It's the best real estate education of all. Finding homes to see has never been easier; you can:

    • Work with your REALTOR® and have them send you properties directly
    • Take the reins and search for homes online on my website. Click here to view properties. Ask me questions about any properties that you are interested in

    It is recommended to always try to schedule showings 24 hours in advance. Last-minute showings are possible but should not be the norm.

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  • Preparing An Offer

    You will work with your agent to create a formal offer to be submitted to the homeowner or their agent. If you're happy with the home as-is and are willing to pay the full price, creating an offer is fairly straightforward. However, you may request a lower price, ask for changes to be made, and add specific stipulations to the deal. A typical offer contains many of the things detailed below:

    • The price you're willing to pay for the home
    • The date you want to close on the home
    • The date you want to take possession of the home
    • A list of items you want left in the home (such as specific appliances and home equipment)
    • Things you want to have happen before you sign (like a home inspection, pest inspection, or any repairs)
    • Contingencies (specific things that must happen in order for the deal to take effect, like your loan approval)
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  • Approval & Negotiation

    Once you've submitted an offer, the homeowner usually responds in one of three ways. They may accept it, in which case you can move on to the next step. On the other hand, they may also deny your offer or provide you with a counteroffer. In either of the last two situations, there is often room to negotiate. Your agent will help you sort out what's fair, and will have a good idea as to what the homeowner may negotiate further on, though you ultimately have total control over what alterations you're willing to accept.

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  • Once You're Approved

    Getting your home ready for closing is very important. There are many steps that still occur behind the scenes, and many agents will play a role in closing the sale of the home. Again, your real estate agent will likely introduce you to each of these individuals and monitor progress for:

    • Hiring a reputable home inspector who will spend several hours scouring through your new home to ensure that there are no surprises (consider hiring an inspector who is a member of one of the major home inspection associations)
    • Removing contingencies (sometimes it's required that any stipulations are officially removed from the contract)
    • Renegotiating the offer (if there are any issues observed by the various agencies involved, you may be able to request a reduced price for the home and/or have repairs made)
    • Securing your home loan. Your loan officer will work diligently to get the loan approved with the mortgage lender
    • Locking in your interest rate if you haven't already done so (your loan officer will likely guide you as to when the best time is to lock in your rate to ensure you're getting the best possible terms)
    • Obtaining an appraisal of the home if required or requested
    • Considering obtaining insurance (such as title, home warranty, flood, and homeowners insurance)
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  • Steps Before Closing

    Each of the aforementioned agents will play a role in closing the sale of the home. Again, your real estate agent will likely introduce you to each of these individuals and monitor progress for:


    • Opening escrow (usually done through a third-party title company)
    • Verifying title and obtaining insurance (may be done through the title company)
    • Performing a walk-through so that you can confirm any necessary changes have been made and that the residence is as you expect
    • Having an attorney verify documents are in order if required or preferred
    • Funding your escrow account
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  • Sign & Make It Yours

    Although it takes a lot of work to get to the final signing, it's worth it. The documents needed to buy a home may be 100 pages or more, so plan to spend some serious time at the office reviewing them before you sign. All payments usually come out of the payment made to the seller, so after signing, you can accept the keys.


    Once you've signed, the house isn't yours just yet. You'll have to wait until you reach the occupancy date to move in. However, you can use this precious time to prepare to move into your new home and schedule services to start. 




    Congratulations, you're a homeowner!

Who's Involved?

Your agent will be able to introduce you to key players and will help keep track of where you are in the chain of events. Oversee the various agents and entities, as they handle the tasks that will lead to a successful closing:



  • REALTOR®: as your real estate professional, I am committed to helping you reach all of your real estate goals
  • Mortgage lender: the bank or firm that provides your home loan
  • Mortgage officer/broker: the person who works for the lender and helps you obtain a loan
  • Home inspector: the individual who examines the home for hazards and defects
  • Home appraiser: the person who gives an educated opinion as to what the home is worth
  • Title company: the agency that makes sure the home can lawfully be transferred, issues insurance, and may maintain the escrow account
  • Real estate attorney: optionally, you can choose to hire an attorney to review the closing docs

Why Buy With A Realtor®

We live in a fantastic age where information is only a click away. There are plenty of places to look for the home of your dreams, and you probably have a good idea of what you want or need in your future residence. Nevertheless, there are many good reasons why nearly 90% of all people who purchase homes today opt to have a real estate professional on their side:

Your Agent Will Represent You.

The real estate professional you hire owes you fiduciary responsibilities that protect you, allowing you to be able to shop with confidence, and security. These are their responsibilities:


  • Loyalty: Your REALTOR® must be loyal to you and work in your best interests only, even if that is above their own best interests. You are their #1 highest priority during a real estate transaction.
  • Confidentiality: Your REALTOR® must keep anything you tell them private and confidential. In other words, your price, terms, motivation, and personal information are all kept under a tight lip.
  • Disclosure: Your real estate professional has a vast wealth of knowledge about the real estate transaction process. They will share anything they've learned from their years of experience to help set you up for success. This allows you to know you are always making the most informed decisions.
  • Obedience: Your REALTOR® must obey all of your lawful instructions. You are in the driver seat.
  • Reasonable Care: As a client of your REALTOR®, you are the most important person to the transaction. They will always attempt to be available when needed and will make sure to help you locate the best possible home for your family.
  • Accounting: The real estate transaction is a challenging process. Your REALTOR® is accountable for ensuring that the transaction runs smoothly, all the pieces fall into place as expected, the numbers match the offer, as well as the financing approval and closing docs are taken care of.

The Real Estate Agent Selling The Home Has An Obligation To The Seller.

In other words, if you walk into an open house, the person representing the seller is obligated to be loyal to the seller only. That agent's job is to secure the best possible deal for the seller, which may not be in your best interests. You deserve to have someone on your side who is looking out for you.

Your Agent Has Extensive Knowledge Of The Current Market.

Each neighborhood and each city follows different trends. Your local agent knows which homes are up for sale in the areas you desire, and may also be able to show you neighborhoods that fit your criteria but that you may have otherwise overlooked. Most of all, an expert knows what homes are currently selling for, and can better gauge if there's wiggle room in an asking price.

You Will Probably Want To See Many Homes At Once.

It's nearly impossible to call up a seller and ask for the keys so you can take a look at a home, and it's twice as difficult to make the arrangements with multiple sellers all in one day. Because your agent has the reputation and experience of a professional, they can make the arrangements to view homes much quicker than you'd be able to alone.

Your Agent Can Help You Find Lenders Who Are Best-Suited To Your Needs.

You may have a budget in mind, but getting financing can be difficult. Your agent knows which programs are available, and which lenders are currently offering the best incentives for borrowers.

Your Agent Is A Valuable Asset During The Negotiation Process.

Buying a home is an emotional process, and a neutral third party will look out for your interests so you get the best possible deal.

Your Agent Provides An Extra Layer Of Protection During Home Evaluations And Inspections.

When you have someone representing you who knows how things should be done, they tend to happen as they should. Without representation, it's easy to be taken advantage of during the home inspection process.

When You're Ready To Close, Your Agent Can Help You Navigate The Process To Make It Easier.

There's a lot of paperwork and people involved in the closing of a home. Your agent will keep track of everyone, so it will feel like all you had to do was sign. Your new home will likely be one of the biggest investments you ever make, so it's imperative to have someone looking out for you throughout the process. Your agent will make it easier, safeguard you, and help ensure you're getting a good price. It's not so much a question of whether you need one, but rather, of whether you can afford to accept the risks of not having an agent by your side. This is why you always want to work with a REALTOR®.

Find the Right Neighborhood

There's a lot of excitement when it's time to buy a new home. It's a huge investment, and you'll probably live there for years, if not the rest of your life. This will be the place where you create memories and maybe even raise a family. So it's worthwhile to identify which neighborhoods are ideal before you start looking at individual homes. A real estate agent can help you pinpoint the best areas for your budget, but if you're examining options on your own, consider the following factors:

  • What Kind Of Neighborhood Would You Like To Live In?

    • Do you feel more comfortable in a busy city or a quieter suburb?
    • Do you like modern homes or historic homes in established neighborhoods?
    • Would you prefer that there are a lot of multi-family dwellings, or mostly single-family homes?

  • How Tight Is Your Budget?

    If you're working with limited funds, a real estate agent can help you identify areas that offer incentives for newcomers or programs that help first-time buyers. If you're not sure how big of a loan you'll qualify for, it's best to figure out the financing before pinning down neighborhoods and homes.



  • What Is The Crime Level Like In The Neighborhoods You're Considering?

    You can use free online tools to scope out potential problems, but you should also visit each neighborhood you're considering. Bear in mind that the feel of a neighborhood will vary based on the day of the week and the time of day you visit, so consider visiting multiple times.



  • How Far Are You Willing To Commute For Work?

    Some cities have fantastic public transit, which may be able to get you to work faster than your car will. It's a good idea to limit your search to areas within a reasonable distance from your place of employment, but research other transportation options, as it may open up other neighborhoods to you.



  • What Are The Schools Like?

    You may not have kids yet, but educational opportunities will be important if you plan to have a family in the future. There are many websites that rate schools, so you can read reviews or check the latest test scores.



  • Are The Neighborhoods Close Enough To Your Family?

    People with close family ties will certainly want to keep this in mind, as it can be difficult to continually shuffle from one relative to the next, especially if you have children.



  • What Facilities Do You Need To Have Access To?

    It's a good idea to create a must-have and a want list, which include things like:

    • Grocery stores
    • Hospitals
    • Places of worship
    • Fitness centers
    • Parks
    • Restaurants
    • Entertainment
    • Cultural attractions
    • Freeways
    • Alternative transportation

    When you've got it nailed down to a few neighborhoods, consult with a real estate agent. Keep an open mind, though, because your agent might be able to come up with other neighborhoods that you've overlooked. You may also find that you're willing to change your goals a little once you have a better idea of what's happening in your market.

Closing On Your Home

Congratulations on beginning the process to home ownership! The closing process may seem baffling if you don't deal with it on a regular basis, but your real estate agent will be by your side to monitor progress and ensure each entity is completing the necessary steps. Your agent will likely be the one to help connect you to all the various entities involved in the process as well.

  • Hire A Title Company

    Your real estate agent can recommend several different title companies to assist you with the closing on your new home. Each title company's fees can vary from company to company, so it is important that you review these fees prior to hiring your title company.



  • Pull A Title Report

    The title company will pull a Preliminary Title Report that contains vital information, which may affect the willingness and the ability of the parties to close an escrow. The information includes ownership of the subject property, the manner in which the current owners hold title, matters of record which specifically affect the subject property or the owners of the property, as well as a legal description of the property and an informational plat map.


    The Preliminary Title Report indicates the type of title insurance to be offered by the title company, and the exclusions, exceptions from coverage based on the type of title insurance policy the company intends to issue. Exclusions and exceptions can include items such as: recorded deeds of trust, easements, agreements, covenants, conditions, and restrictions. The Preliminary Title Report provides you with an opportunity to review any impediments that would prevent a clear title from passing to you.


    When reviewing a Preliminary Title Report, it is important to check the extent of the ownership rights or interest you will be acquiring. The most common form of ownership interest is 'fee simple' or 'fee', which is also the highest form of interest an owner can have in real estate. Liens, restrictions, and interests of others will be listed numerically as exceptions in the report.


    You may also have to consider interests of third parties, such as easements granted by prior owners, which limit use of the property. Some buyers attempt to clear these unwanted items prior to purchase. A list of standard exceptions and exclusions not covered by the title insurance policy is also attached. This section includes items the buyer may want to investigate further, such as laws governing building and zoning.


  • Open Escrow

    Your title company will open escrow on your behalf, or the two of you may do it together. This is when you enter into an agreement with a third party, usually the title company, which then holds funds, titles, and deeds until the sales transaction is complete. The title agency also performs other tasks, like verifying the property can be sold.




  • Complete Any Necessary Inspections

    Between the time you finalized your offer and closing, the home inspector will visit the property to relay their findings. The loan agency will likely send out an appraiser as well, and sometimes an FHA inspection is warranted or necessary. Other inspections that can occur on a property are city inspections, often known as time-of-sale or truth-in-housing inspections. It is important to note that these inspections are for building code and hazards only. They are not as in-depth as a private buyer's inspection.




  • Obtain Any Prudent Or Necessary Insurance

    Although the title agency will likely handle title insurance, your lender may also require you to obtain homeowner's or other policies before providing you with a loan. Some jurisdictions mandate specific types of insurance are held as well, and your real estate agent can identify which ones you'll need.


    Issuing a title insurance policy is an extensive and exacting process. The title insurance company will work to eliminate risks by performing a painstaking search of the public records. They search for where public records, laws, and court decisions pertaining to the property and the parties to the escrow are maintained. This is done to determine the current recorded ownership, recorded liens or encumbrances, and other matters of record, which could affect the title to the property. Once a title search is complete, the title company issues a Preliminary Title Report detailing the current status of title.

  • Remove Contingencies And Fund The Escrow Account

    Sometimes law mandates that contingencies of the sale are released in writing, but it's commonly done as a formality regardless. You'll also have to place the funds needed to purchase the home into the escrow account, and the agency will then release the money to the seller after the documents are complete.



  • Sign The Final Documents And Receive The Keys!

    At long last, the home is nearly yours. You'll need to sign documents that say you're receiving the property and that you accept responsibility for the payments. You'll likely receive the title, though some lenders opt to hold onto it. In the background, the title company will file the necessary documents with the proper governmental agencies, like the register of deeds. Once everything is finalized, you'll still need to wait until the agreed-upon occupancy date to enter the home. During this time, you can pack, prepare for the move, and set up services like power, water, and Internet. Although your real estate agent will be with you every step of the way, you can always call them if you have questions or need help; before, during, and after the sale.



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