The Home Buying Process
Are you ready to buy a home? That’s so exciting! Are you a first time buyer? Or maybe it’s been awhile since you’ve bought a home. Either way, understanding the home buying process will assure you that buying a home is a step by step process. You and your agent will navigate through these steps until you are a new homeowner.
Meet Your Team
Real Estate Agent
A home purchase begins by finding the right buyer’s agent. A professional buyer’s agent does far more than unlock the front door. As your representative in the home buying process, your agent will be by your side to guide and educate you so that you can find the right home for your needs. From negotiating the purchase price and repairs to ensuring your get a good home inspection disclosures and appraisal, they monitor each step of the process and protect your interests.
Mortgage Loan Officer
The right lender can make a huge difference in the real estate buying process. The “right” lender could be your bank or a mortgage broker. The important thing is that you have an open and communicative relationship. Just as a real estate agent controls the escrow process, the mortgage broker is responsible for shepherding the loan to funding.
Escrow is a neutral third party to the transaction. The escrow officer is your agent in that office. Escrow takes the terms agreed to by the parties and enacts them. They run the file and arrange funding and change of title on the day of closing.
Meeting With Your Agent
Your first meeting could be in their office or perhaps at the local coffee shop. In this meeting your agent will want to learn more about you, your family, your needs and expectations. They will talk about what you can expect from the buying process and learn how you’d like to proceed. If you have not contacted a lender yet, they can help you find someone so that you have a pre-qualification letter in hand. This way you will be prepared to write an offer when you find the right home.
This is the fun part. Once you identify what you want in your ideal home, your agent will take your criteria and get to work. You will go to see the listings on the market which fit your needs and your agent will make sure you’re the first to hear of new listings.
Writing the Offer
Now it’s getting exciting! You found a home that you like and it’s time to write the offer. Before you write an offer, your agent will reach out to the listing agent to gather any information they have to share. They will research the comparable properties in the neighborhood so that you can decide what purchase price to offer. At this time you will also talk about terms with your agent. How long of an escrow do you need/want? If there are multiple offers on the home, you might play with terms or price to package your offer in a favorable light.
Of course the best possible response is a resounding “yes”! But often there will still be negotiations, either in price, terms or both. If the seller wants to amend the offer it will be done on a counter offer. There could be multiple counters back and forth before and agreement is reached. This is normal and does not mean the seller does not want to work with you.
Once there is an agreement, then escrow is opened and the contingency period and closing process begins. It is also at this time that your deposit check will be cashed and held with escrow.
The offer will include timeframes for different contingencies. These contingencies are really just a gathering of further information so that you can make a final decision to close on this home. Contingencies include things like seller disclosures, title reports and home owner’s association documents among others.
While all of these contingencies are important, the two primary contingencies are home inspection and appraisal.
The home inspection should be done by a licensed home inspector. The inspector will perform a comprehensive inspection of the home and its major systems. This includes plumbing, electrical, appliances, roof, heating and air conditioning, and much more. Based on the outcome of the home inspection, you might need to bring it additional specialists such as a mold expert or roofer. Most buyers also ask for a termite/wood rot inspection.
Depending on the results of these inspections, you can submit a request for repairs to the seller. The seller is under no obligation to accept your list however. If they refuse your request, you can either accept the home as-is or cancel the transaction.
The appraisal is ordered by the lender as part of the final loan package for approval. The appraiser is an independent professional who will create a report identifying the home’s value. The appraisal is your insurance that you are not paying more than the market value for the home. It also protects the lender from potentially loaning more than a home is worth.
Signing Loan Documents and Closing
Once you remove all your contingencies and are comfortable with the home, it’s time to close. Signing your loan documents will be handled by escrow and then they will arrange the funding and change of title.
Once title records the change of ownership, you are a happy home owner! Congratulations!
Home buying is a series of steps. As you move through the process, you learn a little more about the home, its condition and your loan. As long as all the information you receive is positive and fits your needs, then you will close on your new home.