ANATOMY OF A HOME PURCHASE
For most people, finding the right home begins with a house-hunting strategy combining personal preferences, guidance from others (including an agent) and a mix of neighborhood exploring and online search. For some, the search takes a while; others find what they want right away. In either case, your real estate agent can be a huge resource of insight and guidance, working through issues or complications that arise along the way. Here's a general outline of what to expect during a home purchase, from the buyer's perspective.
BUYER MEETS WITH THEIR AGENT TO GET A GAME PLAN
To serve you better, there should be an initial meeting with your agent where you talk about what you're actually looking for in a home purchase. This will include number of square feet, bedrooms, bathrooms, other spaces that are important, part of town, schools, closeness to work, health care or whatever is most important to you. The more information you share with your agent, the better they are able to represent you and actually find the properties that meet your needs.
BUYER GETS PRE-QUALIFIED FOR A LOAN
Most agents will want you to get pre-qualified for a loan just so there are no suprises. Knowing what the limits are for your purchase will keep you from looking that properties that you can't afford, or selling yourself short because you think you can't afford more. This is not preapproval which includes tax records and other hard information to be supplied to the lender, but they can pull most of the needed information, with your guidance, from public records to let you know what you actually will qualify for.
BUYER AND AGENT SEARCH FOR A PROPERTY
Working together, the buyer and their agent search for the right kind of properties to meet their needs and through the process of trial and error, find just the right fit for them. Sometimes that happens quickly, sometimes it takes more time, but this is a very serious decision, the most important financial step most people make in their lifetime, and should not be taken lightly. When you find the right fit, you'll know.
BUYERS MAKE A PURCHASE OFFER
This is it! You've found the home of your dreams, looked over disclosure documents, reviewed comparable sales data, talked it over with your agent and submitted an offer. The sellers may accept your first offer, but more often will return a counteroffer. In fact, additional negotiations are common, and your agent will help you through this generally stressful stage.
THE SELLERS ACCEPT
Once everyone is happy with the terms, the parties have reached what is known as mutual acceptance and enter into a purchase and sales agreement.
BUYERS PUT UP EARNEST MONEY
To solidify your intent to buy, you'll place a deposit, or earnest money on the property. The amount varies, but is generally at least 1% of the purchase price. You'll write the check to the escrow company, not the seller. Note: This money counts toward your down payment later.
The earnest money deposit goes into an escrow account, where all funds will be held until closing, when they are then distributed to the right people, (lender, mortgage broker, title insurer, real estate agents, etc.).
BUYERS APPLY FOR A MORTGAGE
This step is streamlines if you've already been preapproved for a loan (which is a smart thing to do). If not, you'll begin the loan applicaton process now.
THE LENDER INSPECTS TITLE HISTORY AND ORDERS A PROPERTY APPRAISAL
The lender needs key information about the property before granting a loan. this is when potential problems can come to light. For examply, the appraisal could show a lower value than the purchase price, or the lender could have trouble finding comparable homes. Also, the title search could turn up liens or other problems.
A HOME INSPECTION TAKES PLACE
You'll hire an inspector - generall, your agent will suggest one, or provide several options - to check the home and point out minor and major problems that should be fixed before closing. At this point, you still have the option of backing out of the transaction. Through your agent, you'll submit a list of requested work, and the sellers have the option to complete the tasks, do some of them, but not others, or reject the request. The sides will negotiate until reaching an agreement.
NEGOTIATING THE HOME INSPECTION
Like the original contract, the buyer and seller need to come to a meeting of the minds as to what is going to be acceptable to both parties for the transaction to move forward. This is where your agents experience will prove invaluable in guiding you through what is ordinarily done in these situations.
If the house passes inspection, appraisal and title search, and everything is good to go, then all contingencies can be removed, paving the way to a closing.
FINAL WALK THROUGH
Before you actually go to the table to close, you take one more walk through the property to make sure it is in the same condition it was when you wrote the contract and that all repairs have been made to your satisfaction. If appliances and other things were there when you wrote the contract, or both sides agreed that certain things should stay, you need to make sure that is still the case and that everything is working properly. It is extremely important that everything is done to both sides satisfaction before you come to the closing table.
CLOSING TIME ARRIVES
Once contingencies are removed and financing is set, all parties sign a seemingly endless stack of documents, and the transaction closes.
CONGRATULATIONS! YOU'RE A NEW HOME OWNER