So You Want to Buy a Home...Now What?

Buying a home is a milestone that many people dream their entire life about.

They grow up thinking about the future and what they imagine their ideal home to be like. Does it have a large backyard for kids or pets to play in? Is it on a private cul-de-sac, or is it smack dab in the middle of acres of land with no neighbors for miles? How many bedrooms does it have? What about bathrooms?

These questions are pretty common when starting to talk about buying a home, yet many never make it to that point. They tell themselves that they can’t even dream of the possibility that buying a home could happen for them.

This is a common belief that the media likes to fuel, but is it the truth?

The long and the short of it is this: no, it’s not the truth. While the homebuying process may not be the most simple in the world, it is much more approachable than many people believe it to be.

The process can be broken down into four different stages: pre-approval & research, seeing homes & submitting offers, offer acceptance & contract fulfillment period, and closing on the new home!

Let’s look at them all a little closer. 


Stage One: Pre-Approval & Research

When a buyer has really gotten serious about buying a home, a few things need to happen before they can start physically stepping into homes. Unless the buyer is paying cash, the first thing that will need to be done is to speak to a mortgage loan officer to get a pre-approved interest rate and maximum amount for the loan that will fund the home. The loan officer will pull all necessary financials and lay out what the buyer can realistically afford. Buyers can get discouraged at the thought of this, especially thinking of a down payment, but loan officers want to get their clients into homes and know all the programs that can help make it happen. That’s why it’s important to shop around during this stage and talk to multiple lenders for the best deal possible.

If the buyer already has a real estate agent that they are working with, their agent should be able to provide a few different trusted officers that the buyer can speak to. If the buyer doesn’t have a real estate agent already, many different loan officers have agents that they work with and can recommend.

An agent is necessary in most circumstances for the buyer. Potential buyers can view homes at their own discretion during open houses, but to get into a home for a private showing they’ll need a licensed agent with them.

While the loan officer works on the financial aspect, their agent starts the research. They will ask a lot of different questions about buyer preferences like location, non-negotiables, number of bedrooms and bathrooms, price range (within their loan maximum), etc. Once they have a good picture of what their buyer is looking for, they will set up a home search and comb through possible homes meeting the criteria. When they feel as though they’ve come up with some good options, they will send to the buyer and begin the second stage of the process: getting boots on the ground and looking at homes in person.

Stage Two: Seeing Homes & Submitting Offers

As soon as the buyer has picked out properties that they’re interested in from the agents search, it’s time to look at potential future homes in person!

This is the longest step in the entire process a lot of the time. A few buyers get lucky and find their dream home in the first week or two of their search, but this is not the norm for most. Buying a home is a huge investment! It isn’t something to take lightly, so thoroughly looking at each potential home and it’s pros and cons is important. Walking through with a knowledgeable real estate agent who knows what to look for is recommended, especially for first time buyers. They have seen it all and can identify a possible problem in a home much quicker than untrained eyes.

When the buyer has looked at a home and decided that it fits all of their needs, their agent will write up an offer to send to the selling agent. They will again ask questions about what the buyer is willing to negotiate from purchase price all the way to possession date of the home. Once all terms are decided, the buying agent will send the offer over to the sellers and their agent.

A few different situations can play out at this point. If the seller has an offer that they like more, they will decline the buyers offer and the buyer will go back to searching. If the seller loves the offer, they will sign it and both parties will officially be in contract. If the seller likes a lot of the offer but there are some things they would change, they will send a counter offer back that the buying agent can discuss with the buyer. The buyer and seller can keep countering back until both parties are in agreement or decide to leave the negotiation. When everyone has signed the counter offer, the buyers are in contract on their new home officially!

Stage Three: Offer Acceptance & Contract Fulfillment

 

Once the buyer goes into contract, the next and most in-depth stage of the process begins. There are a few things that need to happen almost immediately after contract acceptance, the specifics of which can vary depending on each individual contract and what is necessary. There will almost always be an inspection period within the first few days of being in contract due to the fact that the entire process is time sensitive. If the inspection of the contracted home turns out to be a problem for the buyer in some capacity, they can withdraw from the contract and the home can go back on the market for a new buyer to snag within a few days. Hence why the inspection comes first! Whether the seller will remedy any findings in the inspection is up to individual negotiation, but it’s best for the buyer to know what they are buying regardless.

The buyer will also need to complete an official loan application with their mortgage officer to continue the process that was started with the pre-approval. The loan officer will lock in an interest rate and loan amount for the buyer and start working on the financials on their end to get the home fully financed.

Again, each contract is different, but many will add an earnest money deposit as insurance for the sellers. This is a payment that gets credited to the buyer at closing, so it goes toward their purchase price. If the buyer would break the contract without valid reasoning, however, the seller may keep the money for the breach. This payment is usually due within the first week or two of being in contract.

After the inspection and possible remedy period, the lender will order an appraisal of value to be made on the home. This is not always necessary, but it is for a majority of buyers who are financing a home. The bank essentially wants to make sure that the home is worth what they are funding. If it isn’t, negotiations between buyer and seller will begin again in some capacity to decide how to move forward if it hasn't already been discussed in the contract. If the home does appraise at value, the process can keep moving along with no hiccups.

The last bit of the process happens mostly in the background for the buyer. The loan officer and title company will continue to ask for necessary documentation and information until they have all conditions met to close on the property. Getting the clear to close means there’s only a few hurdles left standing in the way of the buyer and their new home.

Stage Four: Closing On The New Home

The final step that the buyer needs to take before officially closing is walking through the home with their agent to do a final check that everything is in working order and ready to go. This is within 48 hours of closing and all remedies should be completed by this point if they were necessary. After the buyer does their final walkthrough and all looks good, it’s time to sign some paperwork!

Closing will take place at the title company for the transaction more often than not. Sometimes both the buyers and sellers will close together, but usually the seller will sign their paperwork ahead of time. The buyer will then sign their paperwork and voila, they officially own the property!

Possession of the property is also negotiated in the contract, so timing may vary on when the buyer can actually get into their house. Often possession is at closing but can be delayed for many reasons, like if the sellers are unable to move out until a later date. The date will be agreed upon with both parties well before closing.

Once the keys are in the buyers hands, the homebuying process is complete. The owner can go ahead and enjoy their new home!

Have Any Questions?

So there it is, the homebuying process. This explanation is definitely a generalization of a simple real estate transaction that has no issues or hiccups, but it is a good snapshot to get an idea of the steps. We unfortunately know that in the real world things can’t always be that easy and that problems will probably arise at some point. That is why someone thinking of buying should have a seasoned real estate agent beside them, or in our case, a team of them.

The Chudik Group is here to help any homebuyer, whether it be first-time or not, find the perfect home for them. Contact us today to talk about what that may look like for you specifically!