How To Buy Real Estate: The Buying Process in 9 Steps
1. DETERMINE GOALS
– Congratulations on your decision to buy a home! Begin by focusing on WHY you are buying a home. Maybe you are another bedroom for a new family member, something closer to work, or are ready to begin building equity instead of renting—whatever your reasons are, know what is important in your home search. Once you can clearly state your end goal, it will be much easier to work with your real estate agent to find the perfect fit for you! Make 2 lists: one list of your absolute dream home (the “nice to have” list) and the other list the absolute must-haves (the “deal breakers.”) It would be amazing if you can find a home with everything on both lists—unfortunately, in all likelihood, some of the things on the dream home list may not be in your future home, but it is very helpful for your agent to know what perfection is for you so she can do her best to find it! Your home will likely be a blend of both the lists, but the most important list is the “deal breaker” list—things that the home ABSOLUTELY must have. For instance, if you must have at least 3 bedrooms, your agent needs to know. There is no reason to waste time looking at anything that absolutely won’t work!
– Once you have your goals ready to roll, you are one step closer to buying your home! Only one thing is stopping you (and it’s a BIG one)—how much can you afford? You will need to contact a mortgage company or your preferred lender. You will need to gather previous year’s tax returns, check stubs, financial documentation, etc. Once you discuss with your lender, you can either get preapproved or prequalified for a mortgage. These are not one and the same. A preapproved buyer is actually approved for a loan of a certain amount; a prequalified buyer is only told that they might be approved for a certain amount.
- Preapproval is a much more involved process and will help your negotiating power, so it is in your best interest to get preapproved. A Preapproval is more involved but gives you the exact amount you are qualified to buy (and you will have to do it to buy anyway, so might as well save yourself some grey hair and get it over with!). Preapproved buyers are much more attractive to home sellers, as the paperwork has already been done and the financial background has been completed which is more of a “sure thing” as far as the ability to purchase the home
- A prequalification is a simple process and can be completed over the phone or online. A prequalification is only as good as the information provided, as none of the numbers are verified, so it is not always the exact amount you could qualify for and does not always even mean you will qualify! Prequalifications hold much less power than a preapproval. As you can see, it is definitely in your best interest to get the preapproval instead of just a prequalification.
- If you would like some recommendations for local lenders, feel free to call 903-948-3343 or email us.
3. BUYER CONSULTATION
– Meet with your agent to discuss buyer representation, go over your buyer contract, discuss home buying goals, the buying process and discuss any interesting properties.
–Let the fun begin! Once you and your agent have narrowed the list of available properties to those that meet your criteria, it is time to schedule the property tours! Remember to always be candid with your buyer agent; it will help her to find your dream home!
5. MAKE AN OFFER
– Once you’ve found your home, it’s time to make an offer! Time is of the essence once you find the house, you don’t want it to go under contract before you make an offer! Your real estate agent will consult and advise you on how to create an offer with the highest chances of acceptance. Your agent will make sure that everything is in writing with no verbal agreements. Once the offer is written by your agent and signed by you, your agent will present the offer to the seller. Your contract negotiation points will include (but are not limited to) the following:
- Offer price
- Down payment Amount
- Financing Details (aren’t you glad you got preapproved!)
- Amount of Earnest Money Deposit
- Length of option period for inspections and inspection rights
- Any repair allowances (if applicable)
- Any appliances or non real-property that conveys with the sale of the home
- The closing date
- Any relevant contingencies
- Title company & closing office detail
- Transfer fees / Closing fees and who will pay them
Any questions or concerns need to be addressed prior to sending the offer to the seller, as once signed, it may not be able to be changed. There are NO stupid questions and you will never regret asking too many!
–- After your offer is accepted, it becomes “the contract.” Once the contract is effective, a flurry of activity will begin during the option period. Your agent will coordinate all the vendors and oversee them on your behalf.
- This is the time to schedule any property inspections, so they fall into the option period. If there are issues or inconsistencies brought to light during this time, it may delay or even nullify the contract depending on the contingencies set forth in the contract.
- Once the inspections have been satisfactorily completed, the survey (if needed) and the appraisal (if needed) will be ordered. Your agent will coordinate with all the vendors for property access and oversee them on your behalf.
- Homeowner’s Insurance – Now is the time to get your homeowner’s insurance in place for closing. If you are getting a loan to purchase the property, you cant close on the property until insurance is in place. Your agent can also help with this, if you need suggestions on who to call for quotes. When comparing quotes, be sure you are comparing apples to apples on coverage, as coverage details can vary drastically.
Your agent’s experience will be invaluable in making sure that everything is completed professionally and on time.
– As the closing date approaches, your agent will keep in close contact with you, your lender and the title company to make sure everything is progressing on track for a timely close. As the closing date draws near, your real estate agent will contact the escrow company or closing attorney and your lender to make sure that all the necessary documents are being prepared, and that they are complete, accurate, and delivered in a timely manner. Your agent will also need to confirm that the documents will be delivered to the correct location so they can be reviewed and that they will be ready for the appropriate closing date. You will receive a copy of the HUD-1 Closing statement prior to closing (probably the day before) and schedule a final walk-thru of the house. Your agent will help to arrange a convenient closing time. Your agent will tell you what the check amount will be to bring on closing day and who to make it out to. Closing funds are typically paid in the form of a bank cashier’s check.
8. CLOSING DAY
– A “Closing” is where the property ownership is legally transferred to the new buyer. Closings are usually held at the title company office, but can also be completed by mail or another location. The title company closing agent coordinates the document signing and collect the funds and your real estate agent will be on hand to look over the documents on your behalf, answer any questions or solve any last minute details. For a smooth closing, be sure to bring your cashier’s check for your portion of the costs, any necessary paperwork and your identification.
9. WELCOME HOME
— Congratulations on the purchase of your new home! Be sure to schedule moving services, utilities, etc. Your agent can provide you a list of the local providers, if needed! Now it is time to sit back, relax and enjoy your new home!