1. Choose a Realtor
A Realtor is your best asset in finding the right property and then making it yours. Your Realtor will educate you about the market, help you evaluate properties, negotiate a winning contract on your behalf, and represent your rights on the way to the closing table. The right Realtor for you is not only competent and reliable, but also someone you like and trust. Plus, to buyers, the services of a Realtor are 100% free.
2. Get pre-Approved
Talk to a lender to set your price range. Your Realtor can recommend some great local lenders to contact. A lender will help you determine your price range, your monthly mortgage payment, and your out-of-pocket costs for purchasing your home. Once you are pre-approved, you can act quickly when you see “the one.” Plus, a pre-approval letter will make your offer look more attractive to sellers.
3. Search for a House
After discussing what features you are looking for and what neighborhoods suit you, your Realtor will send you property listings that match your criteria. If a house stands out, then your Realtor will set up an appointment and accompany you to see it in person. With a Realtor’s trained eye and expertise by your side, you are well-equipped to choose the right house for you and your needs.
4. Make an Offer
When you find the house you love, make an offer! You and your Realtor will strategize and compose an offer that is favorable to you and likely to be acceptable to the seller. Your Realtor will also research recent comparable sales, so that you can be confident that your sale price is in line with fair market value. Sometimes the seller makes a counter-offer and you may follow that with your own counter-offer. Your Realtor must be a great negotiator so that you get the best deal, considering all market factors and each party’s bargaining position.
5. Pay a Deposit
Immediately after your offer has been accepted, you have to submit a deposit check to the seller. The amount of this check is usually around 1% of the sale price. The deposit will be returned to you if you choose to cancel the contract due to unsatisfactory inspections, low appraisal, or failure of financing. If you choose to proceed with the sale, the deposit will be credited towards your down payment at closing.
6. Schedule Inspections
Inspections of the property will allow you to assess the condition of the property. Your Realtor can recommend reputable inspectors in your area. If there are defects that you were not aware of when you made your offer, then your Realtor will negotiate with the seller to either fix these deficiencies or pay an appropriate amount of money towards your closing costs. If the inspections or any other research into the property reveals that this is not the house for you after all, you will be able to cancel the contract.
7. Order the Appraisal
Your lender will require and order an appraisal to be done. The appraisal will inform the lender of the estimated value of the property to ensure that you are not overpaying. If the appraised value is lower than your sales price, your Realtor will negotiate with the seller to adjust the price. However, if the seller refuses to lower the price, then you may cancel the contract.
8. Obtain Insurance
Your lender will require that you obtain homeowners’ and flood insurance for the property. Your Realtor can recommend some reliable insurance agents. If possible, you should obtain these quotes during your inspection and due diligence period. Plus, getting quotes sooner rather than later will clarify your exact out-of-pocket costs at closing.
9. Hire a Title Attorney
Find a title attorney to verify the title, provide title insurance, and coordinate the closing documents with your lender. Your Realtor can recommend good title attorneys and companies in your area. The title attorney will assure you that there are no issues with or liens on the ownership of the property. If there are, the title attorney will remedy them before closing.
10. Get Final Loan Approval
Although you already submitted some documents during pre-approval, your lender will require you to submit additional documentation to verify your funds and income. Your loan application will then pass through the lender’s underwriter before it is finally approved and you receive your mortgage.
11. Attend the Final Walk-through
A few days before the closing date, you and your Realtor will walk through the house to make sure that it is in better or the same condition as the day that you made your offer. Make sure that the seller has fixed any defects that they promised to fix at the end of your inspection period.
12. Buy Your New House!
Shortly before the closing, the title company will tell you the final amount of funds that you must bring to closing. This amount will include your down payment, insurance premiums, escrows, lender fees, titles work fees, title insurance, and potentially prorated property taxes, rents, or condo dues. Any seller paid costs, including the amount you negotied after inspections, will be taken off your bottom line. The title attorney will have you sign all of the paperwork at the closing. Finally, you get the keys to your new house! Congratulations, homeowner!