The Home-Buying Process in 12 Easy (?) Steps
This blog will cover the basic home-purchasing process, start to finish, in very simple terms but don't be fooled. Purchasing a home requires your time and attention, care, diligence, thoroughness, seeking out the best professionals to work with and proper preparation. The basic steps are laid out below but be sure to consult with a professional working on your behalf and ask questions, plenty of questions all along the way.
Think carefully about your options.
Typically this is the rent vs. own analysis. Consider your other obligations, the time it can take to properly care for a home of your own vs. letting the landlord do all the work. Review your basic finances and whether owning is in your budget. Consider how long you intend to remain in the area; if short term, buying is probably not a good idea due to the costs of purchasing the later selling but if you expect to remain in the area for at least the next five years or longer, owning makes more and more sense.
Get prequalified by a local lender.
We do not recommend online financing ventures – far too many surprises and frustrations in many cases. Work with a local bank with a strong reputation. In the prequalification process, the bank will determine on the basis of your income and credit history how much loan you can manage. Some people find they may have to clean up some credit issues before they can qualify. Better to learn this right from the start.
Link up with an experienced and dedicated realtor.
A realtor is a member of the professional association of the National Association of Realtors. Commit to working with a licensee who has a proven track record of success and commitment to the business. As with anything in life, some licensees simply do a better job. The entire purchase process has many hurdles and challenges so working with the best you can find will absolutely make a substantial difference in the outcome of the entire transaction.
Now the house hunting begins in earnest.
You and your real estate professional, whether an agent or a facilitator, will begin the process of sifting and sorting through all the properties that fit your criteria from price range to size, location, lot size, school district, distance to employment, age, condition, amenities etc. etc. There may be only a handful at first or there may be a dozen or more and you will want to take the time to look first at all the information available through your realtor through the Multiple Listing Service and do some drive-bys as well. An experienced realtor member of MLS can present to you any property listing so no need to go bouncing around from one firm to another. Find that good agent and stick with them. That way they will commit to you just as you commit to them.
After making your initial selection, head out on the road and see the properties. At this stage it's time to check out the houses you have narrowed down in your initial search. You're going to get emotional impressions of homes, pro and con, so pay attention to that. Let's face it, for 90 percent of all purchasers, the emotions rule and take precedence. Pay attention to those feelings. However, be sure to be practical as well. Maybe you fell in love with the view but the house is way too small or needs too much work. Pass that one up unless you can spend the added money to fix it the way you need it to be.
Do your due diligence once you narrow the options to a few top choices.
Besides the home itself and property, it is almost as important to investigate the surrounding area checking to see if you would feel comfortable with neighbors, the general area, highways, sources of noise or any negatives that might impact the property from your perspective. One couple purchased a home they fell in love with only to discover to their alarm on moving in that there was a model airplane club nearby and the sound was very disturbing to them. Neither of the agents, theirs or the sellers had mentioned this and neither did the seller.
Once you've settled on the house now put your realtor to work on value.
Every property has an asking price but how that price relates to value is a whole other topic. Your representative needs to do his/her homework including checking the deed, gathering the information available from the town or city, checking the public record for debts and liens as well as preparing a thorough comparative market analysis of comparable properties that have sold in order to provide you with a sound basis for making a judgment about value. In the end, however, value really is "in the eye of the beholder" and that's you.
The negotiating process.
Some licensees are better at this than others, that is for certain and the difference can mean thousands of dollars to you. Here again, experience and ability really make a big difference. Your representative, be they an agent or facilitator will do the talking back and forth with the other side but you will need to make the crucial decisions. Here's also where one other element comes into play and also makes a potentially HUGE difference. As a buyer, ideally you will need and want a realtor who is independent of the seller. This means you need to either find a buyer's agent or a neutral facilitator who can work independently for both buyer and seller. This subject is covered in more detail in other blog posts.
The contract to purchase.
This is the very important document that spells out all the vital terms and conditions of the purchase including price of course, down payment, financing details, closing date and any conditions or "contingencies" to your purchase such as inspection and financing, plus personal property that may be included. You'll definitely want and need your agent, facilitator or attorney to prepare this. In most areas, realtors have forms approved by the bar association that are in common use.
Inspections, appraisal, financing, contingencies.
Now you're under contract on the house and property you want to purchase and this is time within which the property is poked and prodded, inspected inside and out, appraised and everything checked to insure the property is what you expect and there are no problems you either can't get resolved or repaired and the property value is confirmed by the appraisal. Assuming this part of the process works out successfully … .
This is the interim period while the property is firmly under contract. Now is the time to make those final preparations for the move, contacting and establishing accounts with the various utilities for the day you take ownership. This period of time may be as brief as a few weeks or as long as a month. Longer times may require a larger deposit to reassure the seller.
The big day has finally arrived. First you need to meet at the bank or your attorney's or broker's office, wherever the parties all agreed to conduct the closing and handle all the paperwork. This typically will take about an hour if there is a lender. If by chance you're paying cash the closing might be a mere half hour. At the closing, you'll be signing lots of papers and the sellers will sign a few documents. Finally, when all the paperwork is completed, forms passed around, last-minute details settled, the funds will be distributed to the sellers, the brokers and smaller checks written to cover recording costs etc. Now you'll receive the keys to the property and it's yours!
Of course it isn't quite official until the deed is recorded so one of the attorneys heads off to handle that detail. You meanwhile, having shaken hands and gotten over your jitters at realizing that yes, you really did it, you have actually made the commitment to purchase a house which soon becomes your HOME.
Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.
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