BUYING - The Home Buying Process
The Home Buying Process
1. Homeownership is a Good Financial Investment
Homeownership is a form of forced savings, provides tax savings, allows you to lock in your monthly housing costs. Buying a home in most cases is cheaper than rent, no other investment lets you live inside of it. Homeownership increases your net worth, builds your family’s wealth and saves you money.
2. Find a Qualified Buyer’s Representative – It’s All About Relationships
Buying a home requires patience and hard work. It also requires trust. When you start your journey, make sure you work with experts you trust.
A buyer’s representative can provide the expertise you need throughout the entire transaction, greatly improving your buying experience and potential results. Besides, retaining a buyer’s representative seldom adds any expense to your transaction, the seller compensates them.
A buyer’s representative is an advocate for the buyer – not the seller. The seller is represented by the listing agent and will be advocating for the seller. Mike is an Accredited Buyer’s Representative (ABR®) with the National Association of REALTORS® and has completed training and specialized education to represent buyers. You will receive a copy of the “The Law of Real Estate Agency” that will explain the roles that the buyer representative and the listing agent play in a transaction.
3. Initial Appointment
The purpose of the initial appointment is to understand your “needs and wants” as a buyer. This may be the most critical meeting of the home buying process. During this appointment, the entire purchasing pathway will be discussed.
4. Determine the Purchasing Parameters
There are three criteria every buyer uses to find their home: location, price and style/condition. These criteria, along with your “needs and wants,” will determine the properties we search for and the homes we initially view. Finding a new home can be exciting. But deciding what you truly want and need – and within your budget – can be challenging. Making these decisions begins with setting priorities among many different preferences. Most home buyers invariably face trade-offs.
We’ll help you find the right home to purchase. 52% of home buyers want help finding the right home to purchase. We can set you up on our website or give you a mobile app for home searches or you can use anyone of the major websites.
5. Acquire a Mortgage Loan Pre-approval
Viewing homes without a pre-approval usually leads to disappointment. Buyers who are wise discuss their financial situation with a reputable lender and acquire a pre-approval. A pre-approval creates an opportunity for you to not just understand what you qualify for, but ultimately to decide what you can afford.
Your mortgage payment will include principle, interest, property taxes, home insurance and in some cases mortgage insurance. Having a pre-approval greatly enhances your negotiating position – especially in a competitive market like we are in now, in most cases a seller will not look at an offer if the potential buyer has not been pre-approved.
Taking a further step in the process is to have your lender underwrite your loan as a guarantee they will grant you a loan. Sellers will find any offer you make more attractive as your loan is already granted and just waiting to find a home to buy. Also, the benefit is in the length of closing can be shorter.
If you don’t have a mortgage lender, we have a couple that we can recommend to you.
6. View Homes
The process of viewing homes provides you with information in order to make the best decision possible. Helping you find a home is a process of elimination; not a process of selection. Viewing homes you don’t like is not a waste of time; it helps build a frame of reference to help you find what you do like.
Choosing a home involves choosing a neighborhood. It’s important to consider future resale value, it’s also important to choose a home and neighborhood that you and your family will enjoy living in. Depending on your particular needs and preferences, some factors may be more important than others: Neighborhood Profile, Household Data, Crime Rate, Quality of Schools, and Amenities.
We always tell our clients: “You can always change the house, but you can’t change your neighborhood.”
7. Make an Offer
When you’ve found a home that’s right for you, it’s time to make an offer. Depending on market conditions, you may have to act quickly, before another buyer steps ahead of you. Several factors will be involved in negotiating the terms of the offer and those will be determined based on the information received about the home. Price, type of financing, amount of earnest money, closing date, contingencies (such as financing, inspection, title and others as needed) and type of market we are in whether it is a seller’s market or buyer’s market all play an important part of the offer.
The seller’s response to your offer can be either: accept it, reject it or counteroffer. We will guide you through the these.
29% of home buyers want us to help negotiate the terms of sale and the price of the home, Mike is a Pricing Strategy Advisor (PSA ®) with the National Association of REALTORS®.
8. Deposit Earnest Money
An earnest money deposit is the best way of communicating to the seller that you’re serious about purchasing their property when you submitted the offer. When your offer is accepted, you’ll have two days to make the earnest money deposit. Earnest money is kept safe in a trust account until those funds are used to close the transaction.
A 1% of purchase price is a common amount for an earnest money.
9. Finalizing Your Mortgage
Make sure you contact your mortgage lender and tell them you are under contract. They will start the loan process more completely, so it will be important for you to follow-up with any document request they sent to you.
They will also order an appraisal on the home and you will get a full report. Appraisal costs are usually paid by you the buyer, ask your lender what the fee will be.
10. Perform the Home Inspection and Seller Disclosure
After the contract is fully accepted and all terms are agreed upon, a home inspection can be performed if the contract allows. The inspection will allow you and the inspector you hire to take a more thorough look at the property. Based on the inspection report, the inspection contingency will allow you to either accept the house as is, request appropriate repairs or reject it allowing you to cancel the contract without obligation.
A typical inspection will cost between $450-$550.
You will also receive a seller disclosure form were the seller has answered several questions about the condition of the home and known material defects. For homes built before 1978 you will receive a lead paint disclosure.
11. Final Walk Through
3 days before closing day, a final walk through is encouraged. On the final walk through, you will re-inspect the property to ensure it is in an acceptable condition and that any personal property conveying is present.
12. Execute the Closing Documents
Once the contract is accepted, inspections performed and mortgage approval, the closing will be sent and final documents will be executed. You will be directed by the appropriate party as to the time and date of this event. Either a formal closing date will be established by a closing attorney, or an escrow officer will close the transaction.
13. Home Delivery – Time to Celebrate
Upon conclusion of the paperwork and transfer of ownership, you will receive the keys, garage door openers, and any documents/warranties that convey with the property. You will then become the rightful owner. It’s time to move in!
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