Buying

Buying 10 Steps to Buying

1. Are You Ready to Become a Homeowner?

Whether you’re becoming a homeowner for the first time or you’re a repeat buyer, buying a house is a financial and emotional decision that requires the experience and support of a team of reliable professionals.

2. Get a Realtor

In the maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local Realtor who serve your area.

3. Get a Mortgage Pre-approval

Most first-time buyers need to finance their home purchase, and a consultation with a mortgage lender is a crucial step in the process. Find out how much you can afford before you begin your home search.

4. Look at Homes

A quick search on realtor.com will bring up thousands of homes for sale. Educating yourself on your local market and working with an experienced Realtor can help you narrow your priorities and make an informed decision about which home to choose.

5. Choose a Home

While no one can know for sure what will happen to housing values, if you choose to buy a home that meets your needs and priorities, you’ll be happy living in it for years to come.

6. Get Funding

The cost of financing your home purchase is usually greater than the price of the home itself (after interest, closing costs and taxes are added). Get as much information as possible regarding your mortgage options and other costs.

7. Make an Offer

While much attention is paid to the asking price of a home, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value or additional costs – for buyers.

8. Get Insurance

No sensible car owner would drive without insurance, so it figures that no homeowner should be without insurance, either. Real estate insurance protects owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.

9. Closing

The closing process, which in different parts of the country is also known as “settlement” or “escrow” , is increasingly computerized and automated. In practice, closings bring together a variety of parties who are part of the real estate transaction.


10. What’s Next?

You’ve done it. You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you’re a first-time buyer or a repeat buyer, you’ll want to take several more steps



Closing Tips

Contingencies and Sellers

While the burden is on the buyer to finalize financing for the home purchase and to obtain homeowners insurance, some contract contingencies will impact you, too, especially if you’re living in the home. Most transactions include a home Inspection, so you’ll need to make your home available to the inspector and then negotiate with the buyers about anything the inspection turns up according to the terms of your contract.

Besides the home inspection, some contracts and some lenders call for a termite inspection and a radon gas inspection. In each case, you or your listing agent or the buyer’s agent will need to make the home available for inspection.

Another important step prior to closing is the appraisal. If the appraisal comes in higher than the sales price, then the buyers can relax and be happy that they have purchased a home for less than its market value. Once the contract has been signed, you as the seller cannot renegotiate the price higher. However, if the appraisal comes in lower than the sales price, then the buyer’s lender will limit the loan amount to that lower value. The buyer may have to come up with additional cash to cover the financing gap or may ask you to renegotiate the contract. Your realtor can advise you about the best way to handle this situation, but in any case you and the buyer are also bound by the contract terms.

Before you go to settlement, you and your listing agent should go over the contract and make sure you’re fulfilling all the promises you made in terms of what items will be conveyed to the buyer and any repairs or improvements you promised to make.

Settlement Date

Buyers and sellers typically negotiate a settlement date that is mutually agreeable. If you have sold your home and are not yet ready to move into your next residence, you can sometimes negotiate a rent-back with the buyer that allows you to stay in the home after the settlement by paying rent to the buyer.

Alternatively, some sellers allow the buyers to move in before settlement. In either case, it’s crucial to have a written agreement about who is responsible if something happens to the house or its contents during the

transition period. Generally, you’re restricted to a maximum rent-back of 60 days because lenders would require the buyers to finance the home as an investment property if the rental period is any longer.

Settlement Services

The decision about who provides settlement (also known as closing or escrow) services varies from one market to another. In many places, the buyer chooses the settlement company, but in others the seller chooses. At the closing, the buyer will provide funds to buy your home and the settlement agent will review the sales agreement to determine what payments you’ll receive. The title to the property is transferred to the buyers and arrangements are made to record that title transfer with the appropriate local records office.

At a typical closing, adjustments are made to the final amounts owed by the buyer and you as the seller. For example, if you’ve been paying your property taxes through an escrow account, you may be credited extra for prepaid taxes or you may receive less money at settlement if the property taxes haven’t been paid properly. Once the settlement papers are signed and the house keys are transferred, you’re free to move onto your next home.