The Home Buying Process
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For those who haven't purchased a home in a long time, or for the First Time Home
Buyer the process of buying or selling a home can be a little daunting. Having a general
understanding of what to expect can help.
This is an outline of the typical home buying process. Emphasis on process -- because it's
not an event , it's a process that can take weeks to months, depending on a lot of
variables. We also can emphasize typical, because the process can be different, depending
on what type of purchase you have, like whether it's a short sale or foreclosure, and it can
differ depending on your type of loan or your contingencies.
I've broken the process down into 8 general steps:
1. Pre-qualifiying. Whether you've begun searching online for a home, like 90% of
today's buyers do, or whether you've contacted a Realtor or not, you're real first step
should be to get in touch with a lender and get pre-qualified. This way you'll know how
much you can afford and you won't waste time looking in the wrong price range. You'll
also have that all important pre-qualification letter when you do find a home that you
want to make an offer on. Otherwise, a seller won't take you seriously.
When looking for a lender, it's really important to get a recommendation. Either from
family or friends, or from your Realtor. As Realtors, we're going to recommend someone
with a good track record, someone we trust to do a good job for our buyers. We're
interested in a successful outcome for our buyers, and we are interested in their
satisfaction as much as we can control that. If they are happy with the home buying
experience and with our service to them, they are more likely to refer us to their friends
and family.
2. Home Search. This is where an experienced buyer's agent comes in handy. Someone
who knows the neighborhoods and the values, and someone who knows how to listen and
help the buyers hone in on what they really want. 3. Making an Offer. There are several things to consider when you make an offer, not
just price, although that is the most important consideration. There is time frame -- it
helps to know the seller's motivation. Maybe they need time to find another home
themselves, or maybe they've already moved out and would like to settle as soon as
possible.
Another issue is closing cost help. Does the buyer need it? Does the seller have enough
room to pay it? And if there are competing offers the buyers have to find ways to make their offer more
desirable. 4. Negotiations. Many times the negotiation might go back and forth a time or two
before the buyers and sellers come to "a meeting of the minds". That's why your agent
should have good negotiating skills. [Not the "beat-you-to-a-bloody-pulp" kind of
negotiating, but the "win-win" kind of negotiating.] Both parties have to be a little
flexible; the best kind of negotiation is when both
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the buyers and the sellers come away feeling like they've gotten what is most important to
them. There can be several times during the process that require more negotiating.
5. Loan Application. The contract will stipulate a certain number of days to make
application, and then a certain number of days for loan approval. Both parties must
remember the first words on the MAR real estate contract: "Time is of the essence".
Somewhere along the process the lender will order an appraisal to determine the value of
the house. A wise buyer will include an appraisal contingency in their offer, so that if
there is a problem with the appraisal, ie. too high or too low, the terms can be renegotiated, or in a worse case scenario, the buyer can back out.
6. Home Inspection. The buyer has a right to a home inspection, as well as other
inspections, like radon, and there may be other inspections that the lender will want. After
the inspections there are more negotiations that take place as to how to address repairs if
any are needed. A home inspection is a good idea, in case any material defects are
uncovered; the seller will have to deal with them before settlement.
7. Underwriting. Once the buyer has loan approval, the repairs, if any, are done, and all
contingencies are met and signed off... then the file goes to underwriting. Once the
underwriter gives the OK, then we all go to settlement.
8. Closing. Closing usually takes an hour and lots of papers are signed. Keys are handed
over. That's that.
The typical process can take between 30 to 45 days from contract to close. If there are
difficulties, like with an appraisal, or longer than anticipated repairs, the buyers and
sellers can sign an extension. So, if buyers have a move-in date in mind, its best to start the process 3 or 4 months
before that. Sellers need to consider the average time on market in their area, and contact
an agent who comes with a recommendation.
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Jan Deckard ABR, CRS!
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E-mail: [email protected]!
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Cell / Text (812) 327-5732!
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Office
(812) 335-8350!
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Fax
(812) 335-8360 !
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www.AbacusRealty.org