Blog

Get in Touch Today

Call Kelly at 585.704.1619

So, how does the home buying process work?!

There are a lot of moving parts in the process of owning a home. The thought of it can be overwhelming for someone just starting to look. However, with the right Realtor to make it as simple and stress-free as possible, it can be broken down to these 11 simple steps! And, really, you don’t need to remember any of them if you have the right Realtor guiding you!

 

  1. Select your Realtor. Buying a home is likely the biggest investment you’ll make in your lifetime, so chose your Realtor wisely! Do your research and choose one that you truly connect with – a Realtor you feel will be proactive and has good experience and reputation. Don’t be shy to call us up and quiz us! Interview a few of us! Below are some common mistakes.
    • You feel obligated to use a family member or friend in the industry. As much as you love your Uncle Joey or your BFF Suzy Q – you know them better than anyone else and you’ve read their Zillow reviews. If you didn’t know them at all, would you trust them with your biggest purchase? Don’t let a sense of obligation turn into an obstacle. This is about you – choosing your Realtor is your business.
    • You want to avoid using a Realtor to help you in your purchase because you don’t want to pay commission. Surprise – buyers typically don’t pay any commission to have a Realtors guidance!!! The seller of the property pays both the listing Realtor and the buying Realtor. So, you get professional real estate guidance for FREE!

 

  1. Get Pre-Qualified. Your Realtor should have several preferred lenders for you to choose from. With a quick 15-minute conversation on the phone you will have taken the first active step in making your homeownership dreams a reality. The lender will review your income and debts with you as well as your credit history. They will then let you know what loan type is the best match for you (FHA is a great one for first time home buyers that don’t have a lot for down payment, Conventional loans come with great interest rates, VA loans are a great 0% down option for veterans, etc). If you don’t qualify for a loan right away, don’t stress over it! Your Realtor and Lender can give you tips to improve credit, pay down debt – whatever the case might be. It isn’t the end – it’s the beginning!

 

  1. House Shopping. Your Realtor with discuss your price point and criteria in a home with you. Do you like 2 story homes or ranches? Are you looking for an easy to maintain yard or acreage? What total monthly payment are you comfortable with? Make sure you really know the location you want to live in – whether it’s the school district driving you or closeness to family/friends, etc. – location is the one thing you can’t change about a house! After discussing criteria, your Realtor will set you up on a listing search. When a home catches your eye let your Realtor know and they will schedule a showing for you. A common mistake is waiting for an open house so you don’t ‘bother’ your Realtor. It is our job to help you – let us work! That dream home might be sold by the time it gets to the open house.

 

  1. Submit an Offer. Once you find ‘The One’ your Realtor will prepare an offer for you. The offer can be created and printed so you can sign a hard copy or you can take advantage of the efficiency of signing it electronically. We’ve come a long way! On a side note, we’re in the middle of a Seller’s Market right now – so if you run into a bidding war or your offer isn’t accepted, don’t be discouraged! Onward with the search! Below are the major components of an offer:
    • Purchase Price – How much are you offering to buy the home for?
    • Contingencies – Contingencies are criteria that have to be met before the contract can truly become binding to both the seller and buyer. The most common contingencies are obtaining Attorney Approvals of the contract, having a Home Inspection, and getting Mortgage Approval (you will need to indicate which loan type and how much you will be putting down on the loan in the offer – unless you’re buying cash).
    • Life of the Offer – How long do you want to give the seller to respond to your offer? You don’t want to be too pushy, nor leave too much room for someone else to put in an offer. 24 hours is an average life of an offer.
    • Deposit – If your offer is accepted you will need to provide a ‘deposit’ check within two days of acceptance. Your Realtor will help you determine that amount based on the price point of the home. Between $1,000 – $3,000 is average. If something goes amiss at the home inspection or with the loan that can’t be remedied, this amount is fully refundable. If everything goes smoothly this money is deposited into a holding (escrow) account and then applied towards your closing costs.

 

  1. Home Inspection. To avoid buying a lemon it’s always a good idea to have the home you are buying inspected by a professional. The home inspection happens within 7 days (on average) and the out of pocket cost to you is approximately $350. The point of an inspection is to look for what might be a major repair – plumbing, electrical, structural issues, etc. You can address these concerns by asking the seller to make repairs before moving forward with the purchase. Be mindful that yourself and the seller have already agreed to a price and terms – this isn’t an opening to nit-pick small things like a small rip in a screen or countertop that needs some caulk.

 

  1. Loan Application. Immediately after the home inspection you will schedule your loan application with your lender. Your lender will provide you with a list of items to bring (1099’s , W2’s, etc).

 

  1. Appraisal. Your lender will process your file and order the appraisal on the home. The average out of pocket expense for the appraisal is $400. The appraisal is a safety measure put in place for you and the bank financing your loan. The appraiser will tour the home you are buying and valuate it. If it appraises equal to or more then the purchase price you are in excellent shape! Sometimes, the appraisal can come in lower – at this point the contract is up for re-negotiation. In the best-case scenario, the seller and buyer come up with a compromise to bridge the gap. But don’t stress – its uncommon the home will not appraise for the purchase price.

 

  1. Loan Approval. Time to celebrate!! At this point all of the major terms of the loan have been met and steps in the home buying process have been completed. Get excited – but not so excited you run to Raymour and Flanigan and start buying furniture! Your credit is still being monitored until you close – make NO big purchases!

 

  1. Clear to Close. My favorite three little words! You will sign closing statements with your lender and the buying and selling attorney will be notified to schedule your closing.

 

  1. Final Walk Through. Within 48 hours of the scheduled closing you will do a final walk through with your Realtor. The purpose of the final walk through is to make sure the home is left in good condition, that any repairs agreed to in the contract are complete, and that any personal property that’s included with the contract (appliances, window coverings, etc.) is in the home.

 

  1. Closing! The closing typically takes place at the bank attorney’s office and usually doesn’t take more than an hour. You’ll sign a lot of papers, provide a cashier’s check for the amount due to close (your attorney will give you the final and exact numbers a day or two before closing), and you’ll gain the keys to your new home sweet home!