Buying a home is a very exciting time in your life, but can also be extremely overwhelming. We have created a cheat sheet for you so that you can better understand the home buying process and how everything should tie together to make you a homeowner in the end :-).
Step 1: Meet and Greet – Talk to a Real Estate Professional
We love to meet with our clients over coffee/drinks and discuss their situation and what their options may be. There is no pressure, just fun conversation about your real estate goals and a game plan to set you up for success! Many of our buyers will meet with us and don’t end up buying for months, but they use that time to prepare financially by improving their credit or paying down debt. We will put you in touch with the industry’s best lenders who will advise you on what your best options may be – which takes us into step 2.
Step 2: Get the Money Squared Away – Preapproval
Getting a preapproval by a lender is the best way to establish your budget. As a home buyer, you will fill out an application for a loan and provide documentation on your finances such as pay stubs, taxes, and credit. Based on this information, a lender will provide you a preapproval of the highest amount you will be granted a loan. This may be WAY more than you’d like to spend on your home purchase. Your lender will help you stick to a budget and give you the best options for financing based on your situation.
Step 3: What You Think You Want VS. What You Truly Want – Analyzing Your Wants & Needs
Okay, so we’ve gotten the budget in place, now it’s time to find your home! Many of our clients think they know exactly what area and type of home they want before they begin their home search. It is our job to help you find a home, but it is also part of our job to help you eliminate homes and areas, too. To stay on top of the inventory in your preferred area, we provide our clients access to an exclusive service that sends them the most up to date listings in the price point they have chosen. If you’re curious about this, send us an email and we’d be happy to sign you up 🙂 (you don’t need to be in the market to buy to stalk pretty real estate). Once we establish your needs and wants, you will choose the homes you to see and the discovery phase begins.
Step 4: Let the Games Begin! – Let’s Start Touring Homes
At the beginning of our home tours, you will begin to eliminate the areas and type of homes that you do not like. Although it might feel discouraging that you aren’t instantly finding your home, this is actually a good thing! You are discovering what you like and don’t like, (hence discovery phase) which will ultimately bring you closer to finding your home. Everyone’s different, some clients buy the first home they see and some buy the 9th home they see. Do not feel pressured on making a move if it does not feel right. Purchasing a home is an emotional process. You’ll know if it’s the one!
Step 5: It’s Getting Real! – Submitting an Offer
You’ve found the one and you’re ready to submit an offer! What does this mean? This means that you are ready to sign a contract offering the seller a price and unique terms in turn for the deed of their home. The offer consists of a boiler plate template created by the real estate board in your jurisdiction. Along with the signed contract, we will submit a copy of your earnest money deposit check or EMD check to the listing agent. The EMD check is usually 1% of the sales price and is a deposit made in good faith to show the seller your intent to purchase their home (under the conditions outlined in the contract). If all parties agree to the terms of the contract (we will be officially “under contract”) you will deliver the EMD check to the title company. This money will be deposited to the title companies escrow account and held there until settlement. At settlement the money will be used toward your down payment. If you default on the contract, meaning you pull out of the contract with no contingencies in place, you risk losing your EMD check to the seller. We will be advising you at every step of the way and will make sure you are informed and knowledgeable of all the risks you are exposing yourself to as we proceed through the contract. In other words, we got your back!
Step 6: A Buyer’s Best Friend – Contingencies
Let’s go a little deeper on these things called “contingencies.” Contingencies are a buyer’s best friend! They give you a way out of a contract if an unforeseen event occurs during the transaction. The most common contingencies include home inspection, appraisal and loan approval. Contingencies protect you from losing your EMD check or being pursued through legal action. Some contingencies will come with a deadline that will require you to remove the contingency and proceed with the transaction without that contingency in place. We will only remove contingencies if you agree to the terms and/or that contingency has been satisfied.
Step 7: The Big Finale – Settlement
Finally, the day has come for you to take your piece of that real estate pie! During the transaction all parties involved, buyers, sellers, realtors, lender, title company, are working toward one common goal – getting us to the settlement table! So by this point, all contingencies have been satisfied, your loan has been cleared to close and you are ready to sign a stack of papers to make the home yours! The title company and lender will produce the documents required in your home sale. These are the documents you will be signing at settlement. A typical settlement day goes like this: First we do the final walk through of the home to make sure the home is in the condition that we expect it to be in. This usually occurs right before settlement. Then we all head to the title company office where the title attorney will walk you through all of the documents. You will review and sign and the keys to your new home will be handed over! And just like that, you bought a house! Ta-da!
I hope this blog didn’t freak you out and scare you out of buying a house 😉 We love what we do and it would be our pleasure to help you or any of your friends and family through this process. Happy house hunting!