The (Most Common) Steps of a Home Buying Process
Click on each item for more information.
1. Talk to Mortgage Lender for Pre-Approval Letter and Email Copy to Agent
This is one of the most important steps in the home buying process. Knowing your budget helps us understand which homes to show you. Also, offers will not be presented to sellers unless accompanied by a mortgage pre-approval letter or proof of funds (POF) statement for cash buyers.
2. Initial Consultation with Buyer’s Agent to Answer Questions and Concerns
This meeting will allow for you to become more comfortable with us. At this time we will build the parameters of the home search together, review the process of purchasing a home, and answer any questions that you may have. Using the agreed upon criteria, we will begin emailing you a list of homes for sale.
3. Review Agency Disclosure
Many people think that this refers to a contract – it doesn’t. Agency disclosure is simply a form that clearly states all types of real estate relationships relevant to you, and our duties and obligations as Realtors® to you.
4. Look at Homes with Your Agent
By physically visiting homes, you get a better idea if it is a good fit for you. This can also help you narrow down the factors you are using to choose a home. It is also a great opportunity to ask your agent questions about the property. The average buyer sees 7-12 homes before making a decision on a home to purchase.
5. Select a Home to Purchase
This can be an exciting time for a home buyer, especially if the search process has taken longer than expected. It is at this point forward that having an experienced and ethical agent really matters.
6. Review Seller’s Disclosures
The purpose of the disclosures is for the seller to tell the buyer what they know about various aspects of the property. There are certain things that the seller is legally obligated to disclose, and some that are voluntary. The disclosure statement is not a warranty of any kind, and does not take the place of an inspection performed by a qualified professional home inspector. Additionally, a Lead Based Paint Disclosure is required by law on any residential property built before 1978.
7. Compose the Purchase Agreement with Buyer’s Agent
The main focus points of the purchase agreement are the offer amount, earnest money deposit, inspection timeline, closing timeline, and concessions (if any). This may be completed in person or electronically.
8. Buyer’s Agent to Present and Negotiate the Offer with Seller and Listing Agent
Negotiations are typically handled over the phone or via email. Your agent’s fiduciary duty is to you, so they will do their best to get you the best deal.
9. Agreement is Reached, and Offer is Accepted
Changes made to the purchase agreement, if any, will need to be completed and the final purchase agreement is to be signed by all involved parties.
10. Buyer Sets Up Home Inspection with Licensed Inspector
You will typically have about 5-10 days to complete the home inspection, dependent on the conditions of the purchase agreement. We have a list of trusted inspectors that we provide to our clients, but you may use whomever you choose. Any issues raised by the inspection that you want addressed by the seller will need to be negotiated.
11. Send Transaction Documentation to Your Lender
We will send all relevant paperwork to your loan officer so that they can begin the process of administering and approving your loan.
12. Mortgage Company Orders an Appraisal of Property
The appraisal is the bank’s method of insuring that the property is worth equal or greater than the loan amount. This is typically done once the inspection has been completed, and all issues that arose out of it are satisfied. If the appraisal amount is lower than the purchase price or acceptable Loan-To-Value, further negotiation may be required. The appraisal is paid for by you, the purchaser.
13. Mortgage Processed and Underwritten
The job of an underwriter is to assess a borrower’s risk profile. Factors that are used to determine a buyer’s full approval are the borrower’s ability to repay the mortgage, credit history, and home value and type of property being financed. During the process of buying a home, please consult your lender prior to making any other major purchases (automobile, large furniture purchase, etc). Not doing so may put your loan’s approval at risk.
14. Loan Commitment/Approval
Your mortgage is approved. Hooray!
15. Review Closing Papers the Day Before Closing
While your agent will review the closing papers, it is very important that you review them for errors as well. Reviewing your spelling of your name, your social security number and your closing figures are some key elements to verify when reviewing your closing documents.
16. Transfer Utilities to New Property
Call gas and electric companies to have utilities transferred prior to closing, set to begin on the day of closing if the seller does not have occupancy as part of the purchase agreement, or on the day of key exchange if they do. (see #19) Water does not need to be transferred as it is billed to the address rather than an individual. Instead we have the seller order a final water read for the day of closing/occupancy turn over or as close to that date as possible.
17. Final Walk Through
This typically occurs on the day of closing, or the day before. This final inspection of the property before closing ensures that nothing has been removed that was not negotiated, and that there have been no unexpected changes to the property (burst water pipe, leaky roof, etc)
18. The Closing
Get your writing hand prepped, because you will be signing your name in a lot of places. All negotiated monies are brought to the table, and the transaction is finalized. Congratulations on your new home!
19. Occupancy and Key Exchange
This is only part of the transaction if the sellers need to continue living in the home after closing (i.e. to allow for the purchase of their new home to complete). If so, the seller typically pays your mortgage payment (prorated daily) for the amount of time they occupy the property after closing. These funds are held by the title company until the end of the occupancy period. Occupancy can be any agreed upon amount of time from 1-60 days. At the completion of the occupancy period, you will receive the keys to the home.