The 7 Steps to Buying a Home
Buying a home can be intimidating and for many, this may mean they avoid it altogether. However, real estate is still one of the best ways of creating wealth. And if you break it down into steps, you can manage it better with a good real estate broker. We’ll discuss the 7 basic steps to a real estate transaction and how a real estate broker can assist you them with each of them.
A pre-approval is the first step and is very valuable in the home buying process because it means the lender has checked your credit and verified your documentation to approve a specific loan amount (usually for a particular period, such as 90 days). Final loan approval occurs when you have an appraisal done and the loan is applied to a property. However, you should be careful to estimate your comfort level with a given house payment rather than immediately aiming for the top of your spending limit.
A showing is a professionally scheduled appointment that gives a potential buyer the opportunity to tour your home. Either your real estate agent will accompany you to the home or another licensed sales professional who has likely been initially screened and approved by your agent will do so in their absence. For liability reasons, buyers should avoid viewing homes without an agent present.
You and your real estate agent will put together your offer, aiming for the perfect dollar amount and closing terms. Your agent can help you with an offer letter to show the seller you’re really committed to buying their house. Your agent reviews and submits the offer, but what can you expect next? “Once you submit an offer, one of three things can happen,” says William McCoy, a real estate broker in Hyattsville, MD. “Your offer is either accepted, rejected, or countered. And in either of those cases, I help my clients figure out a strategy on the home moving forward.”
In the process of closing a home sale, the buyer typically hires a home inspector to come to the house and perform a visual observation. In accordance with the state’s standards, the home inspector identifies health, safety, or major mechanical issues. Tim Buell, the president of the American Society of Home Inspectors, says “We look for things that are significantly deficient, unsafe, near the end of the service life, or not functioning properly.” Once the home inspection is completed, the buyers have the option to proceed with the purchase of the home, or if there are items that need attention and the seller and buyer cannot agree, they choose to end the contract. In most cases, the buyer and seller can agree on terms that are acceptable to both parties.
Real estate appraisals are bank-required reports that provide details about the home you’re interested in buying. Information is gathered from recently sold homes that compare to the subject property, and from local public records. A licensed appraiser uses research, an inspection, and property records to prepare an appraisal report. Federal regulations require appraisers to complete a written report that complies with established uniformity standards. “If the appraisal is up to the purchase price, then great! If it comes in lower than the purchase price, we have to negotiate with the seller on the buyer’s behalf to conform with the appraisal,” says William McCoy, real estate broker of Friealtor [Friend + Realtor].
A final walk-through in real estate can be easily described as the final inspection of a home prior to the signing of all the documents which make a sale official. The time at which a final walk-through is completed will depend on your local real estate purchase and sale contract. The walk-through should be completed when the home is empty. Here are some items to check along with any other items buyer and seller agreed will be fixed. Check these items thoroughly:
- Turn on and off every light fixture
- Run water and check for leaks under sinks
- Test all appliances
- Check garage door openers
- Open and close all doors
- Flush toilets
- Inspect ceilings, wall, and floors
- Run garbage disposal and exhaust fans
- Test heating and air conditioning
- Open and close windows
- Make sure all debris is removed from the home
Closing and Settlement
Closing day is an exciting event for homebuyers. “When everything goes smoothly, it usually concludes in a toast with a friend, a picture with me, and a new set of keys, explains William McCoy, real estate broker of Friealtor [Friend + Realtor]. But before all that, buyers and sellers sign the papers and exchange money to officially seal the transfer of ownership. These documents include loan, disclosures, government notices, and deed paperwork. It’s also your last opportunity as the buyer to make any final changes to the transaction. “If my clients want to read all the closing documents, which they’re allowed to do before they sign, we will contact the escrow agent in advance and ask for a copy,” William says. “This way they can review them before they go to the escrow agent to sign the documents.”
Every real estate transaction will have different scenarios, but we’ve found these seven steps to be the most common in a transaction. With an experienced real estate broker, these will seem effortless and drama-free.