Purchase Process Basics
It’s usually recommended that homebuyers work with an experienced real estate professional. We will assist you in your search, matching the best possible options that fall your criteria, and provide professional advice and support throughout the process—contract negotiations, financing, home inspections, closing, etc.
So you think you've found your new home…the next step is to make an offer! Every market is different, but if you've found the right one, it's best not to wait. We will work closely together on the offer, to determine the best price possible for the home.
- How long has the home been on the market and its current condition?
- What's the current market like? When rates are lower, more buyers are apt to make an offer and, possibly, submit higher bids.
- Are there any other offers on the property? Multiple offers can influence the price, often pushing it higher.
We will also look at other properties in the neighborhood— we will pull “comps” or “comparables” of recently sold homes to get a feel for the fair market value of the home you are thinking of buying. Once we decide on a price, we will prepare the contract reflecting your desired terms of sale (Closing date, Financing, Inspections period etc), then we will present it to the selling agent and work to negotiate the offer further if needed.
If you and the seller agree to the terms of the contract, then the offer is officially accepted and you’re on the way to purchasing your new home! But before you get to closing, you’ve got a few more things to do.
If your offer wasn’t accepted, it can be a frustrating and disappointing result. But don’t give up—homes come on the market every day. Keep house hunting and your dream home could be right around the corner!
If you were pre-approved, you need to contact your lender to let them know you have a contract in place. They will update your application and finalize the loan process. If you did not get pre-approved (and the seller accepted the offer), you will need to submit your mortgage application as soon as possible.
When you’re working with a lender to finance the home, the lender will typically order an appraisal on the property. The lender should have a licensed real estate appraiser evaluate the property and complete a Uniform Residential Appraisal Report, Form 1004. This report shows the calculation of the fair market value of the home by comparing the property to recently sold homes in the neighborhood. The report should also show the market value based on a “cost approach to value”—calculating the value based on the value of the land plus what it would cost to build a house of similar size and quality. In addition, the report should list detailed information about the property and the neighborhood.
You typically will need to pay what’s called “earnest money” which shows the seller you are serious about buying the home. Think of earnest money as a deposit you are providing the seller (usually around $1,000 - $10,000 or a certain percentage of the offer price) that will be applied to the purchase once the contract is finalized.
Another important step is the inspection process. Most buyers should request a home inspection before closing and this is typically a condition written into the sales contract. This allows you to uncover any potential issues with the home—structural, plumbing, electrical—that may not be visible when you visited the property.
Usually there is an inspection period that’s defined in the contract, and you must have the inspection completed within that time frame. If some issues are uncovered during this time, you can walk away from the property—even with the contract in place—without penalty (other than potentially forfeiting the earnest money)
- Hire a qualified professional to inspect the property—you don't want to cut corners here!
- Ask your agent for referrals for a reputable inspector.
- Review the inspection report with your agent to determine what repairs (if any) you will ask the seller to remedy. Keep in mind, the seller doesn't have to make any repairs, but you can also walk away from the contract if you aren't satisfied with the inspection/resolution.
- Don't ignore any potential issues. Just because you love the home, it doesn't mean you should overlook potential problems.
- Don't ask the seller for more than what's fair. Normal wear and tear should be expected (especially if you are purchasing an older home), so don't assume the seller will replace older (but still working) items.
Please Note: Some homes are sold "as-is" which means you agree to accept the home in its current condition. You can still get an inspection, but the seller will not pay for any repairs that may be needed.
You’ve found your dream home, your offer has been accepted, the financing is in place, and the inspection is complete. Now, there’s just one more key step in the process—closing! The closing occurs when all the conditions of the contract have been met (full loan approval, evidence of clear title, mortgage insurance is in place, etc.). Prior to the actual closing date, expect to review the list of fees and the terms and conditions of the contract. In addition, you'll need to know the amount that you'll need to bring to closing. Your real estate agent and lender will assist you with this process. Closings usually occur at law office of the attorney that represent the Buyer. The lender arranges the closing and ensures that the closing agent has all the necessary documents in place. Some closings may be required to take place at a closing attorney’s office, while others may use a title or escrow company. At the closing, the lender “funds” the loan with a cashier’s check, draft or wire to the closing agent who disburses funds in exchange for the title to the property. This is the point at which transfer of ownership occurs and the buyer receives possession of the property. Remember to carefully review all documents before signing—ask the closing agent if you have any questions or concerns.