You’ve decided you’re ready to buy a home. Where do you start? What do you need to know? While every transaction is different, these are some general guidelines:
Financing/Agent: You can’t buy a house without money, obviously. If you have a financing plan already (you’re paying cash, you’ve already chosen a lender you trust, etc.), it’s time to choose a real estate agent to work with. If you haven’t, it’s fine to choose your agent first and ask them to help you find the lender that’s best for your specific situation. Choose your agent well–you can’t have more than one! Agents are only paid when we sell a house, so please make sure the one who does the work gets paid in the end. A good agent is trustworthy, easy to reach, and knows what they are doing. Most of the time, the seller will pay for your agent, so it really is in your best interest to have a professional helping you through the transaction.
House Shopping: Your agent will work with you to choose houses to look at that fit what you want AND what you can afford. Sometimes it can take a couple months to get just the right fit.
Buying A Home: Once you find the right home, your agent will submit a purchase agreement for you to the listing agent and seller of the home you like. Most of the time, you’ll need a proof of funds from your lender (or bank) and earnest money ($500, $1000, or a percentage of the purchase price). The seller looks over your offer and decides if they will accept it, reject it, or counteroffer.
Escrow: Assuming your offer is accepted, the earnest money will be held until closing and used toward your closing costs. An inspection is performed (you have to pay for this), title work is ordered (you won’t pay for this till closing), and your lender will begin putting together your loan, which takes a few weeks to complete (they have their own requirements). An appraisal company will check the value of the home to make sure your lender is funding something worth the money they are loaning you (you have to pay for this), and a survey will be ordered as well (if you chose to get one done, and you or the seller would pay for this). Your agent will be responsible for coordinating all these events, making sure they are completed in time according to your purchase agreement. If at any time during this period of time (“escrow”) between acceptance of your offer and closing, you change your mind about buying the house (unless you have a REALLY good reason), you might not get your earnest money back. The seller keeps it as the cost of their wasted time and loss of marketing. However, if your inspection reveals a major defect or you lose your job…you might get that money back. Your agent will set up a final walkthrough to check and make sure the property condition is still the same as when you wrote your offer.
Closing: After you’ve successfully navigated the escrow period, you’ll attend a closing with your agent. You’ll have to wire money or bring some to closing (depending on your situation), and you’ll sit down and sign a bunch of paperwork. Then you’ll get your keys and be able to move into your new home. Don’t forget to change your locks!