Step 1

You’re about to make one of the largest purchases in your lifetime. More than that, you’re deciding where to enjoy life with the ones you love. It’s a big deal. Truly, this is a decision that should not be taken lightly.

All real estate agents are not the same. There are many, many agents to choose from. If you think hard enough, you probably know a handful. However, trust and qualification are very important in choosing the right person to represent you in the purchase of your largest investment.

Availability matters. Part-time agents mean well but can lack experience and more importantly--availability. For a successful buying process, you need an agent who knows how to navigate the myriad of potential pitfalls along the way.

Time is limited when making an offer. A part-time agent may not be available when it counts, which can result in losing out on your dream home. At the end of the day, a full-time Real Estate agent is more likely to have solid experience and the availability necessary for a seamless home-buying process.

A great agent knows the current market, is actively previewing and showing homes, is trained and experienced in effective negotiating practices, has expert knowledge of the local contract and the buying process, and has a basic understanding of home construction and repairs including the costs associated with them, and most importantly, integrity while protecting your interests.

Step 2

Select a Lender

If you can't or don't prefer to pay for your home purchase in full out of your pocket, you will need financing.

In some cases, a home seller can offer financing. In most cases, you will need a lender at a traditional lending institution. Whether it is through a bank, credit union, or mortgage company, choosing a good lender is important.

What’s the difference?

Like your real estate agent, the lender you choose can have a profound impact on your real estate transaction. Shopping around for the best interest rate is just a small piece of the bigger picture. You will find most lending institutions are going to be fairly comparable when it comes to interest rates. Interest rate is only one factor in selecting your lender, and some would argue it is not the most important.

Good loan officers are problem solvers. A good loan officer is able to offer creative solutions to any issues that may and usually will arise. Because each individual has a unique circumstance, an experienced loan officer will have the knowledge and resources to find creative ways for providing the best interest rate and loan options. Whereas if your issues were in the hands of a lesser lender, you could completely lose out on your potential dream home or find yourself losing out on a great loan option customized to best fit your finances.

Many factors have to be met to get you from prequalification to funding. This includes qualifying buyers, satisfying underwriters, meeting requirements by appraisers, and following the many government regulations! A good loan officer can manage all of these moving pieces and get you to closing. They will identify the best loan program for your needs and get you the best rates.

Loan officers that lack experience, creativity, organizational skills, and care cause delays in closing--sometimes even the loss of a deal. This especially applies to online lenders who do not offer one-on-one representation and are untimely in responding to extremely time-sensitive issues that can directly impact your transactions.

For these reasons, when a buyer selects a lender with whom their real estate agent is unfamiliar, it’s not unusual for that agent to show concerns. An experienced real estate agent will have good working relationships with several lenders and will be happy to recommend proven lenders so that you can find the right fit for you and your needs.

Pre-qualification is the initial step in the home loan process. This term represents the initial step in the home loan process--the stage at which the lender gets a general overview of your financial situation. Based on the information that you provide the lender, they will be able to give you an idea of how much you can borrow. The information they need for this assessment will include income, debts, and assets. Because this information has yet to be verified at this stage, the total amount you can borrow is subject to change. Essentially a prequalification is a lender saying, “This is an estimate.” and does not hold the same weight as a pre-approval.

Pre-Approval for a mortgage is a much more involved process than being prequalified. This term applies to a much more involved process for a mortgage than just being prequalified. In a competitive market, it’s very important to have a “pre-approval letter” from your lender that your REALTOR® can present with your offer to let sellers know that you are a serious buyer! Pre-approval holds an advantage in that it means you have officially applied for a home loan and your lender has verified your financial standing to make a purchase. At this stage, the lender will assess your income, debts, and assets, and will check your credit score. They will tell you what amount you can afford. In some cases, you may be able to lock in an interest rate at this point.

Step 3

Find your Home

This is where things get exciting! Shopping for a home is like any other kind of shopping in that it can be an incredibly fun experience or an incredibly frustrating experience.

When homebuyers jump into home shopping without a process, it can quickly become overwhelming and stressful. Once buyers become stressed, one of two things happens, depending on the individual’s personality. Either a decision is made in haste, or they avoid making a decision altogether. Both scenarios are not ideal if your goal is to find the right house and get the best deal possible.

Luckily, we have a process, based on experience and science that helps buyers find the right home, make a decision with a clear mind, and get the best deal possible.

The perfect home does not exist. We’ve worked with many, many buyers, and they always find a home that they love, but it’s never “perfect”. Even people with a seemingly limitless budget who build a custom home will at some point find some fault with their home. It’s very important to set realistic goals and understand that you’re not trying to find the “perfect” home, but the “right” home. Make a list of priorities - what features and amenities are most important to you in your next home - and understand that you may have to compromise on some things, especially if your “wants” exceed your budget.

One of the most important aspects of our job is to help our clients achieve clarity. Confusion and clouded judgment never leads to a good decision. To avoid confusion, we try to avoid information overload. The best way to do this is to use the process of elimination to narrow the options to the top 3 homes. Once we’ve found the 3 best homes, we then dive in a little deeper and start to analyze the information on the homes, determine market values, and look at utility costs, etc. One of the things that can cloud judgment is emotion. Home buying is an exciting experience! Being overly enthused about a house can lead to buyers paying too much. Also, anger during the negotiating process can cause buyers to walk away from a home that is a good value and the best fit for them. Our job is to help diffuse those emotions and encourage our clients to think rationally, and make the best decision for themselves and their families!

Step 4

Write an offer

So, you’ve found the house that you love - it’s time to move on it! If it’s a seller’s market, homes may sell in a matter of hours with multiple buyers competing for it - so there may not be much time to think about it or sleep on it. However, it’s never wise to rush into a purchase - especially when it’s likely the most expensive purchase you’ll make! As your advisors, we’ll do the research to let you know what the fair market value for the home is, and work with you to develop a negotiating strategy so that you can make an informed decision, and not miss out on a great property.

We will prepare the offer on our Contract form and send it to the listing agent. Ideally, we like to meet with you in person to go over the Contract. We want to make sure you understand what you are signing. The Contract covers the terms of the sale - what is included in the purchase, the sales price, contingencies, etc.

Once we’ve prepared our offer, we’ll send it to the listing agent, and notify them by phone that we have sent an offer over. They will have three options: best case scenario - they accept our offer. They also may counter with a different price or terms, or they may reject it entirely.

Once we’ve come to an agreement on price and terms, and all parties have signed the Contract and addenda, we are officially Under Contract! We’ll send the contract to your lender and the title company so they can begin preparing the loan and the closing documents.

Obviously, as a buyer, you want to get the best deal possible, and we as your representatives want that for you too! We will look at several factors - comparable home values, days on market, motivation of the seller, market conditions, buyer competition - to come up with a good offer price to make sure you get the best deal possible. In most instances, we try to avoid “Lowball” offers. Coming in too low can often backfire on you. Just as purchasing a house is an emotional experience for you as a buyer, it is a very emotional experience for a seller as well - this isn’t just a house, this is their home that they’ve made memories in, and that they’ve often put a lot of work into. When you come in too low, sellers often feel insulted and they will not respond favorably, often rejecting your offer rather than countering. This immediately sets a bad tone for negotiations and can cause you to miss out on the house entirely. A good agent understands the psychological aspects of negotiations and will help guide you accordingly.

Step 5

Do the Due (Diligence)

You’ve found the house you want to buy, you’ve made an offer, maybe negotiated back and forth with the seller, and you’re finally under contract! Go ahead and celebrate a little, you deserve it. Now, take a deep breath, and let’s get back to work! Once you’re under contract, your inspection/due diligence period begins.

This is a period of time, during which you may have the property inspected and, based on the results of the inspection, ask the seller to correct defects found.

Your inspection period is dictated by the terms of the contract you signed. Typically, the inspection period begins immediately upon execution of the contract. The initial inspection period is usually 7-15 days (consult your contract). Once the seller has received your list of defects that need to be corrected, they have a period of time (usually 7-10 days, dictated by the contract) to deliver a response.

Most of the time, buyers will hire a general home inspector who will thoroughly inspect the home and deliver a report of all defects found. Some buyers elect to hire one or more specialists (plumbing, electrical, roofing, HVAC, etc) in addition to, or in lieu of a general home inspector.

If there is an issue that the general home inspector believes is beyond their scope, they may recommend that the buyer hire a specialist. It is recommended (and oftentimes, required as a condition of the loan) that you have the home inspected for termites.

Often, a general home inspector is qualified to inspect for termite activity or has a relationship with a pest control company, and the cost of the termite inspection is already factored into the general home inspection.

Step 6

Appraisal

If you are obtaining financing for the property, it’s likely your lender will require that the property be appraised. This is to mitigate risk on their end - they want to make sure that they’re not loaning more than the property is worth. Also, it ensures that you are not paying too much for the house! If you are paying cash for the property, you are not required to have it appraised, but it is advisable to make the contract contingent upon an appraisal, to ensure you’re not paying too much.

If you are obtaining an FHA, USDA, or VA loan, there may be some repairs that are required by the government as a condition of the loan. The appraiser will point out any issues they find that are out of compliance with these government stipulations.

This is completely separate from the home inspections/due diligence. The appraiser is not a home inspector, but they are trained to look for those specific items the government deems necessary to address before issuing a loan on the property. If you’re obtaining some type of government financing, there is an addendum that is submitted with your initial offer which makes the sale contingent upon your ability to obtain that particular type of loan, and it will also enumerate the highest dollar amount the seller will pay towards making repairs required by the government.

If the cost of repairs required by this loan exceeds what the sellers agree to, the contract can either be terminated or you can negotiate further with the seller on these repairs. In most cases, to avoid going through the hassle of putting the house back on the market and starting the process over again, the seller will make necessary repairs to ensure the buyer can obtain financing and complete the purchase.

If the appraisal comes back too low (the appraised value is lower than the agreed-upon sales price) and you are obtaining financing, it’s likely that your lender will not approve the loan, and since you have a contingency for financing, the contract will be terminated. So now what?

In most cases, the seller will find it to be in their best interest to reduce the sales price to the appraised value so that the sale can proceed. At this point, if the seller decides to allow this sale to terminate and put the house back on the market, they’ll have to go through the stresses of showings, negotiations, inspections, and repairs, and they may end up in the same spot again with the appraisal coming in low.

If you’re not obtaining financing, and the house appraises below the sales price, and you’ve made the appraisal a contingency of the contract, you have the option of proceeding with the sale at the agreed-upon sales price or asking the seller to reduce the price. If they refuse to do so, you may opt to terminate the contract.

Step 7

Closing Time

FINALLY! We’ve cleared all the hurdles - made it through inspections, repairs, appraisals, loan conditions - it’s time to close the deal and officially transfer ownership from the seller to you!

As soon as the lender received an executed contract they began working on your file. The lender is primarily concerned with making a loan that is not too risky. This involves vetting the property (through appraisal) and vetting you, the borrower.

Throughout the entire process, the lender is trying to assess how risky you are as a borrower - are you likely to make your payments on time, can you afford this specific property, are you at risk of defaulting on the loan? Since you are asking them for money, they will be slightly intrusive - they’ll pull your credit report, look into your taxes, ask you for explanations of late payments, they may ask for verification of employment, explanation of income, etc. It’s important that you get them all the information they need in a timely manner so that we can close on time!

Prior to closing, the lender will issue a “clear to close” - this is what we’ve all been waiting for! Once we’ve got a clear to close, the lender will send you a Closing Disclosure (CD), which is a disclosure of all charges to you as a buyer, any credits on your behalf - this is essentially a tally of all debits and credits involved with the transaction and will tell you how much money you’ll need to bring to closing (if any). You’ll also receive a Settlement Statement from the closing company, which is essentially the same as the CD you receive from the lender.

It’s important to review both the CD and the Settlement Statement to ensure accuracy.

On the day of closing, make sure to bring a couple of things: any funds needed to close (usually the closing company requires these to be certified funds - a cashier’s check is usually appropriate) and a photo ID.

The closing agent will explain what you are signing and have you sign a mountain of documents, so rest your writing hand the day before!

Once all documents have been signed by all parties, and all necessary funds have been transferred, the sellers will give you any keys they have, and you will have officially closed and may take possession of your new home!