Buying real estate is one of the biggest decisions you will make in your life. It can be a complicated process and come with many different emotions, from excitement and fun, to stress and frustration.
This is why I always recommend a buyer be represented by a competent real estate agent. A good agent will be able to explain the process, help guide you through it step by step, be able to answer any questions you have, and most importantly help ensure that you are put in the best possible situation for success. The buyer's agent commission is almost always paid by the seller, which means it should cost you nothing to get this representation!
Lets go through the process:
Meet with a real estate professional -
Discuss the type of home you are looking for, price range, location, specific wants or needs, etc.
Ask questions, there are no dumb questions when it comes to buying a home.
Some questions I recommend asking: How long have you been an agent and licensed? How many sales have you had in the past 12 months? What is your experience in this market area and price range? Why should I use you as an agent?
Get pre-approved -
You can use any lender you want, but also ask your agent for any recommendations because they should have experience with lenders that can successfully get you through closing.
Its also important so you understand what you can afford.
Always remember that taxes, metro district charges, and HOA fees have a direct effect on the monthly payment and will directly affect the total price of home you can afford. These costs can vary drastically based on the area and different communities, for example you may qualify for a $400,000 home in one community, but not in another because those costs could add $300, $400, $500+ to your monthly payment.
The home search -
This is one of the most fun parts of the process! Your agent will run searches based on previous conversations and affordability, will schedule showings with the listing agent, and help find the right home for you.
Be sure to also share any homes with your agent that you have found on any other home search sites.
Offer, Negotiation, Under Contract -
Your agent will write up a contract on the state approved forms. This will include the price, lending information, timeline for different contract milestones and the many other details related to purchasing a home.
He/she will provide advice on how to make the strongest offer possible and will help negotiate on your behalf. Once everyone agrees and the contract, or counteroffer, is singed by both the buyers and sellers you are now in escrow!
Escrow and contract process -
Earnest money from buyer will be deposited into an escrow account, usually with the title company. This is the money, typically ranging from 1-2% of sales price, that the buyers deposit and put on the line to show good faith. A good agent will be sure that you meet the contract milestone deadlines so there is little risk of forfeiting the earnest money in case of the sale terminating due to any issues covered under those different milestone descriptions (ie: title, due diligence, inspection, appraisal).
Finalize your loan with your lender. Be sure to respond to the lender ASAP and provide the exact documentation they are asking for to ensure that the underwriting process doesn't get held up and delay the purchase of the property.
Title work and other documents will be provided to buyers for review and/or have their lawyers review if wanted.
Inspection. Do not skip this step, an inspector will look over the house closely and provide details of any issues from the small to the major. Every house is going to have issues come up in the inspection, but you want to be sure that you know of them beforehand. Your agent will help advise and give you recommendations on what your next steps are based on the inspection.
Appraisal will be ordered by the lender. The appraiser will give their opinion of the market value, which directly impacts lending.
Closing -
This is where you will sign all of your documents for transfer of ownership and financing.
In the past, the buyers and their agent were usually across the table from the seller and their agent, with the title person coordinating all of the signing. Those days are gone, at least for now. You will still sign all required documents just in a different way. Now closings happen without the other party present, through drive up closings where you sign from your car, or mobile closings where a closing agent will meet you.
CONGRATULATIONS - You have just purchased your home and its time to move in!!!