Teresa Cunningham
Always Professional, Always Personal

Buying

Buying

The home buying process – a brief, step-by-step overview

If you’re like most people, buying a home represents your single biggest

investment – and debt. As such, the home buying process can be one

of the most exciting, but sometimes also stressful, experiences you ever

go through. This may be true whether you’ve bought many homes or

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you’re looking to buy your first, whether you’re in the market for

a new primary residence, an investment property or that perfect

vacation getaway.

Moreover, never has the real estate market offered more great

opportunities, or been fraught with more risks, than now. There are

many factors to consider and many decisions to make. That’s why,

when buying, it’s crucial for you to have all the available resources

necessary to make a well-informed decision, together with the time

required to make complete use of them. That’s also why you should

enlist the help of a trusted REALTOR® who’ll be able to provide you

with expert consultation at each step of the buying process.

Generally, finding and purchasing a home includes the following steps,

some of which are examined in more detail throughout this page:


  1. Define Your Goals, Research Your Options, Make Your Plans

 

 Given that buying a home is such a big step, it’s all the more important

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for you to educate and prepare yourself as much as possible in

advance. This means clearly determining why you’re buying and what

kind of home you’re looking for. And because buying and financing

a home are so closely related, it also means examining your current

financial situation and projecting how much you can afford.

Once you’ve answered these questions, even tentatively, you’ll be in

a better position to research your housing and mortgaging options,

as well as create an action plan and timelines for moving forward. You

may want to do this yourself, but you may also benefit by consulting an

experienced REALTOR® right from the start.


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2. Contact A REALTOR®

Buying real estate is a complex matter at the best of times, given

that there are so many factors to consider and no two homes or

transactions are alike. However, with all the unique opportunities and

potential pitfalls of the current market, it’s even more important for you

to contact a REALTOR® once you’ve definitely decided to buy.

In choosing a REALTOR® to guide you through the property search,

financing, negotiation and transaction processes, you should consider

their local market knowledge, experience and track record.


3. Get Pre-Approved For A Loan

 

Generally, it is recommended that you get pre-qualified for a loan before

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you start viewing homes with the serious intention of buying. The pre-

approval process involves meeting with a lender and authorizing them

to examine your current financial situation and credit history. On the

basis of this examination the lender will provide you with a document

that details how much you can borrow to buy a home.

You may want to consider looking online to see what different lenders

offer, such as on MortgageMatch.com, or contacting your local bank or credit union.

The benefits of pre-qualification include:

• You’ll have information about what you can afford and be

able to plan accordingly

• As a qualified, motivated buyer you’ll be taken more seriously

when you make an offer on a home

• Lenders can tell you whether you qualify for any special

programs that will enable you to afford a better home

(particularly if you’re a first-time buyer)

Real estate financing is available from many sources, and an

experienced REALTOR® will be able to suggest lenders with a history

of offering excellent mortgage products and services.


4. View Homes And Select THE ONE

Simply put, key to the home search process is knowing what you’re

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looking for. Among other things, that means distinguishing between

“must-haves” and “like-to-haves”. To help you to target your search

and define your home preference priorities, this guide includes a Home

Search Worksheet on page 28.

That said, here are a few recent facts about the search process that

might put your experience in perspective:

• Almost 90% of buyers use the Internet to search for homes1

• The typical buyer searches for 12 weeks and views 12 homes1

• 81% of buyers view real estate agents as very useful in the

search process*

There are many benefits to starting the search process at a real estate

website like REALTOR.com®, the world’s most extensive source for

property information. You can view many homes and their details, take

video tours and access neighborhood info.

However, it’s also important to view homes in person. While their

property details may seem similar online, homes can actually be very

different in terms of layout, design, workmanship and other aspects. In

addition, you should ideally view homes with the help of an experienced

and eagle-eyed REALTOR® who’ll notice things you might miss, provide

expert analysis, and act as an impartial sounding board.

*National Association of REALTORS® Profile of Home Buyers and Sellers, 2010


5. Make An Offer And Negotiate With The Seller

Now that you’ve found the home you’d like to buy, it’s time to make

an offer. Your local real estate association, working with legal counsel,

has developed the contracts that are used for transactions in your

area. These contracts enable you to specify a sale price and also

include many clauses for specifying various terms of purchase, such

as the closing and possession dates, your deposit amount, and

other conditions. You should carefully review these clauses with your

REALTOR® to ensure that they express your desired offer. In addition to

drawing up the contract, your REALTOR® will be happy to address all

your questions about the offer process.*

Once you’ve written the offer, your REALTOR® will present it to the

seller and/or the seller’s representative. At that point, the process –

given that a home’s eventual sale price is subject to supply and demand

– will depend on the kind of market you’re in. Generally though, the

seller can accept your offer, reject it, or counter it to initiate the

negotiation process. Successive counter-offers, with deadlines for responding and meeting

conditions, will be exchanged between you and the seller until a

mutually-satisfactory pending agreement is reached or the

negotiations breakdown.


6. Secure Your Financing

Once you have a pending agreement, it’s time to go back to your

chosen lender to finalize your mortgage details so you can close the

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deal. This means finalizing your down payment, interest rate, regular

payment schedule and any other financial conditions associated with

the closing.

As noted in the section on loan pre-approval, if you’ve already been

qualified with a lender for a certain loan and home purchase, this phase

of buying your new home should be a relatively straightforward

matter that centers around finalizing the loan details and signing

the mortgage papers.

As the old saying goes, ‘let the buyer beware’. Particularly in these

times, when so many buyers are suffering the consequences of having

not fully understood their financing decisions, it’s crucial for you to work

with people you trust. In this regard, a good REALTOR® can be a true

friend for life.


7. Close The Deal

If you’ve efficiently taken care of everything connected with purchasing

your new home, the experience of taking ownership will be a positive

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joy with no surprises. Key steps to the closing, also referred to as the

“escrow” or “settlement”, include:

• Getting a Title Search – an historical review of all legal

documents relating to ownership of the property – to ensure

that there are no claims against the title of the property. It is

also necessary to purchase Title Insurance in case the records

contain errors or there are mistakes in the review process.

• The Final Walkthrough – you’ll be given the chance to look

at the home to make sure it’s in the same condition as when

you signed the sale agreement.

• The Settlement – typically, on the Closing Date you’ll go to a

lawyer’s office to verify and sign all the paperwork required to

complete the transaction. The settlement will include paying

your closing costs, legal fees, property adjustments and

transfer taxes. At that point, you’ll receive the property title

and copies of all documentation pertaining to the purchase.

Oh, and one more thing – you’ll get the keys. In most cases,

Possession Date will fall within a couple days, at which point you’ll be

able to move into your new home.