The Home Buying Process Simplified
For First-time buyers, or
those who haven't purchased a home in a long time, the process of buying
or selling a home can be a little daunting. Having a general
understanding of what to expect can help.
This is an outline of
the typical home buying process. Emphasis on process -- because it's
not an event , it's a process that can take weeks to months, depending
on a lot of variables. We also can emphasize typical, because the
process can b
e different, depending on
what type of purchase you have, like whether it's a short sale or
foreclosure, and it can differ depending on your type of loan or your
contingencies.
The process is broken down into 8 general steps:
1. Pre-approving. Whether you've begun searching online for a home,
like 90% of today's buyers do, or whether you've contacted a REALTOR® or
not, you're real first step should be to get in touch with a lender and
get pre-approved. This way you'll know how much you can afford and you
won't waste time looking in the wrong price range. You'll also have that
all important pre-approval letter when you do find a home that you want
to make an offer on. Otherwise, a seller won't take you seriously.
When looking for a lender, it's really important to get a
recommendation. Either from family or friends, or from your REALTOR®. As
a REALTOR®, we are interested in the buyer’s satisfaction as much as we
can control that. If they are happy with the home buying experience and
with our service to them, they are more likely to refer us to their
friends and family.
2. Home Search.This is where an experienced
buyer's agent comes in handy. Someone who knows the neighborhoods and
the values, and someone who knows how to listen and help the buyers hone
in on what they really want.
3. Making an Offer. There are
several things to consider when you make an offer, not just price,
although that is the most important consideration. There is time frame
-- it helps to know the seller's motivation. Maybe they need time to
find another home themselves, or maybe they've already moved out and
would like to settle as soon as possible.
Another issue is closing cost help. Does the buyer need it? Does the seller have enough room to pay it?
And if there are competing offers the buyers have to find ways to make their offer more desirable.
4. Negotiations.Many times the negotiation might go back and forth a
time or two before the buyers and sellers come to "a meeting of the
minds". That's why your agent should have good negotiating skills. [Not
the "beat-you-to-a-bloody-pulp" kind of negotiating, but the "win-win"
kind of negotiating.] Both parties have to be a little flexible; the
best kind of negotiation is when both the buyers and the sellers come
away feeling like they've gotten what is most important to them. There
can be several times during the process that require more negotiating.
5. Loan Application.The contract will stipulate a certain number of
days to make application, and then a certain number of days for loan
approval. Somewhere along the process the lender will order an appraisal
to determine the value of the house. A wise buyer will include an
appraisal contingency in their offer, so that if there is a problem with
the appraisal, ie. too low, the terms can be re-negotiated, or in a
worse case scenario, the buyer can back out.
6. Home
Inspection.The buyer has a right to a home inspection, as well as other
inspections, like radon, and there may be other inspections that the
lender will want. After the inspections there are more negotiations that
take place as to how to address repairs if any are needed. A home
inspection is a good idea, in case any material defects are uncovered;
the seller will have to deal with them before settlement.
7.
Underwriting.Once the repairs, if any, are done, and all contingencies
are met and signed off... then the file goes to underwriting. Once the
underwriter gives the OK, then we all go to settlement.
8.
Closing.Closing usually takes an hour and lots of papers are signed.
Keys are handed over. That's that. The typical process can take between
30 to 45 days from contract to close. If there are difficulties, like
with an appraisal, or longer than anticipated repairs, the buyers and
sellers can sign an extension.
So, if buyers have a move-in date in mind, its best to start the process 3 or 4 months before that.
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