The Buying process made easy
The buying process can seem overwhelming, even if you’ve been through it before, but it’s much less intimidating than it looks. Below, we’ve broken down the 10 core steps of buying real estate to give you a better understanding of what's involved. If you are thinking about purchasing a home, don’t be afraid to get started early. Getting out ahead of your deadline, by even as much as 6 months or more, will give you time to get a good feel for your market and will ease some of the stress from your search. Don’t worry if you’re on the fast track, though. You can still hit most of these steps.
STEP #1 Become pre-qualified with a lender- See Lender options on this tab.
The first thing you’ll want to do before anything else is talk with a lender and get pre-qualified. This will let you know how much you’re able to spend. The last thing you want to do is fall in love with a home only to find out that you don’t qualify for a loan large enough to purchase it.
The pre-qualifying process takes less than 30 minutes and can easily be done over the phone. They will ask you for some financial information like your gross monthly income, gross monthly expenditures and savings balance. They will then be able to give you a fairly confident idea of what you can afford. If you’d like to go one step further, a pre-approval is even better. It takes a little longer to complete, but you can feel more confident in the result and you’ll even reduce some workload for yourself during your loans final approval process.
STEP #2 Share this information with your agent
Let your agent know that you have been pre-qualified and the amount that your lender has pre-qualified you for. This will also be the time to discuss your goals with your agent. Things like the area you’d like to live in, the features you want in a home, the school district you’d like to be in, etc.
STEP #3 Start learning your market area
Once your agent has the information you provided from the last step, they’ll set up a search that will send you properties fitting your criteria. If this is done well in advance, you will have a good opportunity to see what’s really possible within your budget before you get too close to your move date. This is also a great time to learn more about the local area including schools, parks, recreation, etc. For school reports click here -
STEP #4 Start viewing properties
More exciting times have arrived and you are ready to get in the car to view properties. You’ve seen many listings through pictures, but now you’ll work with your agent to schedule showings to see them live. This usually takes place 2-3 months before your desired closing date.
STEP #5 Making an offer and negotiating
Once you have found the right home for you, it’s time to submit an offer with your desired terms. Your agent will pull comps and help you arrive at the right place to start. Rarely does an initial offer get accepted, so be prepared for some negotiating back and forth with the seller. Your agent will be there to help you make decisions during every step, but the more time that you’ve had evaluating properties the better you will feel during this part. Once all the details have been negotiated and the contract is accepted by both parties, you’ll be ready to move on to the next steps.
STEP #6 Applying for your mortgage
Your agent will handle, or assist you in handling, most of the steps in the entire buying process. However, one area that falls entirely on you is making the loan application and providing the requested items throughout the entire mortgage process. The contract will require that you start your mortgage application process within a few days. So, it is imperative that you do just that. An appraisal will be ordered by your lender only after you have made the application.
STEP #7 Time to do your Due Diligence
You have made an offer, the terms have been accepted, and the contract is complete. Now it’s time for your Due Diligence period which was negotiated in your offer for a specific time frame and for a non-refundable fee, payable directly to the Seller. The longer the time frame, the higher the amount of Due Diligence fee a Seller typically expects.
You know your Due Diligence time frame now, but what needs to be completed? You can decide which of the following you feel should be done as well as anything else you’d like to do in order to investigate the property and neighborhood. We recommend all applicable items to ensure the best outcome. The items below are typical, but some properties may require more specific inspections.
- Home inspection
- Wood boring insect inspection
- Radon inspection
- Well inspection (if applicable)
- Septic inspection (if applicable)
The items you have selected need to be scheduled and completed as quickly as possible. Your agent will handle this, though and will make sure they completed on time. Getting started early allows the reports to come back with ample time to evaluate the results and work out any problems that are discovered. A Due Diligence Repair request will then be created and submitted to the Sellers of the property. This is your official request for the Seller to repair or replace non-functioning and or unsafe items. This is also a negotiating process, but once the Seller has signed your request, an agreement to have the items corrected prior to closing is now in place. After all the work has been done and as long as everything else checks out including your appraisal, you will be ready to move on to the final few steps.
STEP #8 Examining your closing disclosure
The week before your scheduled closing, your lender will send a closing disclosure, or CD for short, to you in a secure email. The date and time that you open and read this email will be documented. Lending regulations require that you view your CD a full three days prior to your closing date. Sunday’s, national holidays, and the day of your closing do not count, though. So, it is important that you are looking for the CD to arrive and that you review it in time to fulfill this requirement and keep your closing on schedule.
STEP #9 Property walk through
Your agent will accompany you during a walk-through of the property which will generally occur one to three days prior to closing. The purpose of this inspection is to make sure that the Seller has removed all belongings and cleaned up after the move. The home should be in the same condition or better than it was when you made your offer. Another function of this final inspection is to make sure that the items in the Due Diligence Repair agreement have been completed. In a situation where a home has many items or something structural in nature, then the home inspector would be hired to return for a re-inspection. If this is case, the re-inspection would be scheduled three or more days prior to closing.
STEP #10 Closing on your home
This is the culmination of all the steps you have worked through. Prior to closing, your lender or agent will give you a final amount for the funds needed at closing. Attorney’s do not take personal checks, so you will need to obtain an official bank check payable to the closing attorney. You may also obtain the attorney’s wiring instructions and send the funds electronically. Most attorney’s send you an agreement to sign, prior to closing day, that explains their fees and individual procedures for the closing. Also keep in mind that you’ll need to show a valid driver’s license or passport when you arrive at the attorney’s office.
Once the closing starts, the Seller will have just a few documents to sign which are typically completed before the buyer’s portion. You as the buyer will have much more to sign and review than the seller.
Although you may want to move in immediately, you’ll want to refrain from scheduling any movers to begin right after the closing because even though everything has been signed, that doesn’t mean you will receive the keys immediately. The closing will need to be funded by your lender and the property will need to be recorded at the courthouse for the county that the property is located in, before the keys are given. This process can take several hours depending on the day and time of day you close, which could mean you’ll need to wait until the next business day. After the recording process is completed you are the legal owner and your keys will be made available to you.
You’ve now completed all ten steps and are a home owner! This is a very exciting time, but it is also an important financial step. A home is one of the largest investments most people make. It will be the place you call home, but if done right, will also build equity for your future.