Okay, so you got through my first 3 steps in the Home Buying Process;

1. Budget

2. Understand and Monitor ​Your Credit

3. Get Pre-Approved; Meet With at Least Two Banks/Lenders​

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Now let's cover the remaining steps. This is where things can move very quickly. We are talking 45 days from putting an offer to moving in and even fewer if you are lucky enough to do a cash offer! To clarify, the number of days is chosen by you but it should be a direct reflection of what your LENDER needs to underwrite, appraise the home, and process your loan. If you put too short of a timeline you risk voiding your contract and losing your house and your earnest money!  It is always better to put more days, say 60, and close in 45....then to put 45 and ask your seller for two more weeks when they have already purchased a new home and are now paying  utilities in two places. It may be in their best interest to give you extra time, but legally they do not have to! Bottom line, ask your lender how much time they need. 

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Find a Buyers Agent to Work With:

This is a critical step. I am not advocating that you work with me. If you do, great; but the true takeaway here is to work with a real estate professional who you get along with, trust, and communicate well with. This person is your guide through the whole process so you want your rock, your trust pilot, your guru, not just uncle Jed's cousin... also named Jed.

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Is it free? MOST of the time. No guarantees here, but the way real estate commissions work is that the seller agrees to a percentage of the homes value to be offered when the home sells. It is up to the listing agent to split this how they see fit with the buyers agent. Transactions typically range from 4-6% total commission for the sale and are split accordingly. When you sign an exclusive buyer representation agreement with your agent, you will discuss their percentage fee and it will likely be in the 2-3% range and if you do need to pay, it may be 0.5%-1%, although this is unlikely. Chances are greater that you will pay a portion of your agents commission if you are buying unlisted property or a for sale by owner property. Have hope here, because if you work with a good agent, it is likely they will be able to negotiate with the private seller and use their market savviness to get you a better deal than you would if it was listed by another agent. At the end of the day you pay them 3% and they may save you 5% on your purchase price. 

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Look for Houses:

After all of your budgeting and meeting with your lender for pre-approval, you now know what you can afford and this really brings into focus your comfortable range of the market. Now that you have a solid agent to work with, you can nail down details of what you are looking for. They can set a custom search for homes for you and get updates on new listings in real time. What is most valuable is their access to additional information on properties. Although the photos online look great, with a quick pull of some documents and a phone call to the listing agent, your agent may be able to flag this property as a must see or not worth your time due to issues such as needing a new septic or roof. This is a major asset to have so you can focus your time and energy on properties that check your boxes and fit your price range.

 

Put in an Offer:

You had a great time walking around a home today that felt just right. You are so excited to call it your own and cannot wait to put in an offer. After a quick lunch, you meet with your agent to nail down the details and sign to get your offer in as soon as possible. THIS SHOULD NOT BE THE FIRST TIME YOU SEE A PURCHASE AND SALE AGREEMENT. If fact, click here to download one right now! Reading this over and having even a basic understanding before you put in an offer is highly advised. It takes off so much stress and gives you confidence. What I recommend is to read it over and then ask your agent questions. Even better if you can sit down with your agent and go line by line so you know exactly what the fine print means.

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Now that you have given it a look over; here is some food for thought that your agent should also cover. If your market is hot and this is a fresh property, this may be your first and only offer on this home, so you want to make it your best. Put yourself in your sellers shoes and think of how a low ball offer feels on your family home of 25 years. Again, critical reason to have a good and trusting agent so you can pick their brain and see a list of comparable properties to put in the best price for you that is also fair to the sellers. At the end of the day, you want to be happy and feel like you got what you paid for and also have the sellers feel mutually satisfied. Details of your offer other than price can really set your offer apart from others. Fewer number of days for inspections, more money down, and fewer requests for furniture/appliances can be compelling reasons to select your offer over another. How about the icing on the cake? Take a half an hour a craft a letter to the sellers and share your vision of why you love this house. I have seen sellers pick a lower priced offer just because of the letter from the buyers! Could be a life changing letter and I advise giving it a go! Click here for a closer look at writing a letter. 

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Inspections:

The time has come for you to kick it into high gear; your offer was accepted and now you have a set time (usually no more than two weeks) to do your due diligence, present your findings, and negotiate as seen fit. Wow, well let's get on with it!

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Why do inspections? Really, why? 

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Well there are many schools of thought here and I go with better safe than sorry. This is possibly your biggest investment of your life. Let me ask you this, if you buy a used car, would you like to have a mechanic look at it other than the one selling it to you? Hard to say no to that. 

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Furthermore, if you are getting a mortgage, there are likely one or two items they will require you to check. Beyond that, it's a good idea to get some of the major items looked at. It is important to consider having the water tested, septic inspected, air tested, and a general home inspection. If you suspect mold, get a mold test. If you think the furnace looks rough, get a technician in to give it a look. It is very rare that a buyer does all of their desired inspections and is upset that they did.

 

Often they find minor issues that can be resolved before closing or decidedly will not be, but they are now known, and often something comes up with issues that the seller had no idea about. This is where the inspections are worth their price. Let's say you do a septic inspection and find out the whole system needs to be replaced. Even if the seller will not replace it or budge on the price, at the end of the day you can back out of the deal and save yourself from putting down your life savings only to realize in time that you need another large sum of money to replace your septic system. 

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Inspections are not cheap. About $500 for a septic inspection, $500 for a home inspection, and the list goes on. Sure, it adds up, but this is for the house.... the home... the abode... the bungalow.... your dream. Inspections are advised and at the end of the day if you find nothing wrong, well you paid for peace of mind :) 

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Title Inspection & Appraisal:

Investigations are over and you have negotiated your findings or if you are so very lucky, have nothing to negotiate! At this point there are a few big items left to cover and for the most part it is out of your hands. Your title company or title attorney will do a title search on your property to review the chain of title (transfer from past owners) to make sure that nobody else has a legal claim to the property and therefore you cannot buy it. Once the title is deemed clear, the sellers attorney will draft up a deed for your attorney to review that you will sign at closing and will ultimately be registered at your counties registry of deeds. 

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Depending on the loan type, the appraisal will be ordered right around the time the title search is commenced. The appraisal is done by an independent third party where they valuate the property you wish to purchase by comparing it to other properties in the area while looking for both similarities and uniqueness. From their examination and comparison to other properties, they will give it a price or value. This amount needs to be equal to and or higher than the price you have offered to pay in order for your lender to give you a loan. The lender will not give you a loan if you are trying to pay more for a property than it has appraised for because it is seen as a poor investment and an inherent risk for the lender to back that loan. If the property does not appraise at and or above your offered price, you can negotiate if the seller is willing or you can request a second appraisal and, yes, you will have to pay for it. 

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Closing:

The final finish line! Just days before you close you will receive your settlement statement from your title company to review. This will have details for both the buyer and seller that outline the cost to close and the proceeds minus fees for the seller. You will see the exact amount you need to bring to the closing. This is most normally done with a bank/cashier's check made out to the title company (you pay them and they pay the seller out of their client trust account). After you review this document and give it the OK, you are one more step closer.

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If you are taking out a mortgage, by law you must be given three days to review your closing disclosure. This is the final details to include the terms and conditions of your loan. Given that you have been in contact with your lender throughout the process, there should be no surprises here, but if there are you have three days to sort things out or decide to not commit to taking the mortgage. 

 

You will need to do your final walkthrough of the property, which is typically done within 24 hours of closing. This is to ensure you see the property in acceptable condition just before it becomes your own. Let it be known that the standard of cleanliness is "broom swept clean". Mind you, this means vastly different things to the array of homeowners with a life of sweeping experience. Moving can be extremely hectic, so it should be expected that the home will not be spotless and you should prepare to give it cleaning when you move in. Put yourselves in the seller's shoes and think about moving out while tending to a 40 hour work week; they too may be buying a home and doing the full shuffle. 

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After the walk through you simply need to to show up to closing with your bank check, your IDs, and a positive attitude. Closing with lending involved usually takes about an hour and fifteen minutes with some small talk between signing papers. Be prepared, there are lots of documents to review and sign as this is a major commitment between you and the lender and it is a tedious job done by your title company and or title attorney. 

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****Let it be known that you should not buy anything big and or quit your job before closing. They will ask you at closing if you have made any major purchases and or had a change of employment. Please note that a promotion is OK :) If you have decided the best part of your new home is your new truck to park on the front lawn, it may hinder you from going home with the keys. Manage your spending and get ready to go back to your new home!