What exactly is the home buying process?

Recently, I got a new client that will be a first-time homebuyer.  When I said that I love first timers he had a puzzled look and asked why.  I replied because “First-timers are usually scared sh!tless.”  I’ve known this man for a few years now and he just found out I am an agent so I felt comfortable being candid with him.  I told him I will be there to “hold his hand” through the entire process and explain everything step by step and then explain again and again and again.  He looked so relieved when I said all this.  So, let me go over the home buying process step by step because sometimes agents forget that something they do day in and day out is not common knowledge for everyone.

1. Find an agent you are comfortable with

   1. The agent you choose should be someone you feel you can work with.  As agents, we are held to a high standard of ethics all of which will be given to you in a Consumer Notice upon our first meeting. Be open with your agent in regards to how you want to have communication (text, email, phone), who to include in all messages, what you are looking for, your budget, which we will get to more of in a moment, your musts vs your wants, etc.  I have a great “interview” sheet so that we can cover everything I need to know that we will do together.

2. Get a pre-approval!

   1. Getting a pre-approval FIRST is imperative when it comes to searching for a home.  If you are planning to pay cash, get a letter from your bank, on letterhead, that states your name, that you have funds in excess of a certain amount that you are planning on using for a purchase of a home, and signature from the bank manager or person in charge.  This is a normal thing that banks do so they know all the information needed for a letter.  If for some reason they put personal information such as account numbers, please black them out prior to giving a copy of the letter to me. But let’s get back to the mortgage side of it.  The last thing you want to do is to shop the house before you shop for what you can afford!  You may think you can afford a $250,000 house and you fall in love with a house.  You then find out you can only afford $200,000.  Unless you have a cool $50,000 sitting in the bank somewhere, the house you fell in love with is now off the table.  I have quite a few fantastic loan officers that I work with.  Ask your agent who they recommend in regards to what each product/programs a bank offers as not all of them offer the same options.  Financing for 203(k) rehab loans, USDA, FHA, Vacant Land, and Mobile Homes are all products that not every bank offers.

3. Begin your home search

   1. Now the fun begins.  In today’s market, you need an agent to be on the ball and on top of the listings that come on the market that meet most of your criteria.  Many years ago, I worked for a top agent in my area and she reminded her clients of her 80/10/10 rule.  As long as the home meets 80% of your needs (location, bedrooms, size, etc), 10% of the things you can change (paint, flooring, landscape, renovations), and 10% of things you can live with, THAT is the home for you.  Today, those words ring even more true.  As a buyer in today’s market, you need to be ready, willing, and AVAILABLE to go see a house within the first 24 hours of it hitting the market.

4. Make an offer!

   1. You have found it!  Your dream home.  You can’t lose this one! Work with your agent to build the strongest offer you can.  That may mean going over the asking price, paying for some of the SELLER’S closing costs such as transfer taxes or listing agent commission.  Depending on the price and the comps you may need an appraisal contingency.  Whatever you do, I highly recommend NEVER waive inspections.  There are other options we can use to make your offer appealing to a seller and still have a formal inspection.  You will make your offer, in writing with all signatures on an Agreement of Sale that your agent will prepare.  The offer will be given to the listing agent or perhaps personally presented to the listing agent and seller at the seller’s home or in an office.  Counteroffers are done verbally between buyer and seller with the agents acting as the middleman.  Once a final price/terms have been agreed upon, the buyer’s agent will correct any information needed and send it back to you for signature.  Signatures can be done with electronic signatures on a phone or computer.

5. Inspection Time

   1. I recommend you find an ASHI Certified Home Inspector.  Depending on what inspections you choose (well, sewer line, pest, radon) you should find an inspector that can do most if not all of the inspections at one time.  It saves time, usually money, and is more convenient for the seller because they need to be absent from the home when inspections are performed. I have a list of inspectors that I like using but you will be responsible for choosing which inspector you want to use.  Always remember, you get what you pay for!  The random guy down the street that says he will do it for $100 may not be such a deal if he misses some pretty big inspection issues.  Always go with a reputable company and do your research. Once you have the inspection and get the report back usually within 24 hours, you and your agent will go over it and discuss the issues that arise.  Every home has issues. No home is perfect.  Even brand new builds.  Inspection repair requests should be SAFETY issues only such as mold, foundation issues, electrical issues, water issues etc.  Just because you don’t like the pink bathroom tile does not mean you can ask the seller to replace it.  A skilled agent will be able to help negotiate repair requests so that all parties are satisfied.

6. Financing

   1. While you and your agent are going through the inspection period, you need to be working with your loan officer to turn in all financial documents they request.  Some mortgage brokers can get you “pre underwritten” before you even make an offer on a home meaning that you already turning in all your financial paperwork and the underwriters said “YES! We are committed to providing this buyer a mortgage based on fully examined financial and employment verification.” The buyer will be in regular communication with the loan officer during this time while the agent will be checking in with the loan officer to make sure the process is going smoothly and on time.

7. Homeowners Insurance

   1. Yes, you need to get your homeowner’s insurance lined up for the new home to be effective on the estimated day of closing

8. Transfer the utilities

   1. Call the utility companies and have the utilities begin in your name starting on the estimated closing date.  This will include gas, electric, water, sewage, and trash typically

9. Clear to Close!

   1. The best words a buyer, seller, and agents can hear during a transaction!  That means all of the financing went through, an appraisal is good, etc.  Let’s schedule the time and location of closing.  Prior to closing, the settlement officer will send a copy of the CD (Closing Disclosure) stating all of the financial information for each party separately.  This way, if there are any questions regarding the numbers, corrections or explanations can be made at that time.

10. Final Walk-Through

    1. Here is when the house is completely empty of the seller’s belongings and the buyer gets to walk through and make sure everything is as it should be.  The home is required to be “broom clean”, any items that were agreed upon have been left in the home, etc.

11. Closing Table

    1. Here the buyer and seller will sign the required documents needed to complete the transaction.  As a buyer, make sure to bring your state-issued ID, a certified check for any monies due at closing, and a blank personal check in case any last-minute number changes happened.  If the buyer gets money back at closing, the settlement officer can cut a check then and there.

12. Congratulations

    1. You signed everything.  You are officially a homeowner.  Make sure you get your picture taken with your agent to document this momentous event and share all the news with your friends!!  Congratulations!  You did it!!

Phew!  That was a lot!  I didn’t even include every detail of the transaction because a lot of it goes on behind the scenes and is managed by your agent and their team of loan officers, settlement officers, title, managers, and appraisers.  While this can seem overwhelming, your agent will be there to walk you through the process and be there for you to answer any questions you have.

When you are ready to begin your search, call me!  I love my first-timers and I love my experienced home buyers as well!

Susan Hillman, Realtor

Coldwell Banker Airport/Beaver Regional

724-630-7249

susan.hillman@cbrealty.com