You want to buy a home?
Well, it’s a heck of a process!
Buyer Beware! Well that’s a scary concept! Who would want to buy a home with that attitude? It’s a phrase that made me cringe the first day in Real Estate school, and yes, that is the maxim for anyone buying real estate. Concretely, it’s a doctrine: The Doctrine of Caveat Emptor. The buyer has the burden, as Cornell Law School explains, “to reasonably examine a property before accepting responsibility of its condition.” Buyers have to do a lot of homework to buy a house, or any kind of real estate.
So, phew, now that we have that out of the way, let’s go over a few, very few, points on what the process of buying residential real estate entails. These are directed at a BUYER. Selling is a different ballgame altogether.
Ignorance is not bliss. Buying a home is a process which weaves money, time and emotions. It is exciting, life changing and challenging, everything at the same time. It will be frustrating, but if you know some of the steps in buying a home, you can minimize the stress of it.
HERE ARE the first 3 steps if you’re planning to buy a home.
- Search
- How much can I afford?
- Found it! Now what?
Searching for a home
You can start looking at homes by driving through neighborhoods looking for “FOR SALE” signs. However, these days you are not going to be very lucky doing it that way. Not because purchasing real estate has practically moved online, but because there is a shortage of homes for sale.
Before you really start searching, find out how much home you can afford. No sense going out there and locating the home you really want to buy and then finding out you can’t afford it, much less put an offer on it.
An easier option is to start searching online. There are plenty of platforms listing the sale of properties. If you know a real estate agent they may have a website and may have it capable of searching for homes. There are also other sites which will show everything all real estate agents and realtors have access to via the Multiple Listing Service, such as realtor.com, Trulia, Zillow or Redfin. All of these platforms are fed from the Multiple Listing Service, so they will be showing you the same properties with a few innovations.
But I have an important suggestion, before you really start searching, find out how much home you can afford. No sense going out there and finding the home you really want to buy and then you can’t afford it, much less put an offer on it.
Find a Lender
At the same time you are searching for a home, also search for a lender. That is of course, if you need financing. If you have all the cash in the world to buy a home and don’t want to use other people’s money, then go that route. However, if you are buying a property with financing, you need to take this step first. You need to know how much you can afford before EVEN LOOKING AT HOMES.
You can speak to your personal bank, if they do home financing, or find a mortgage broker. As a Real Estate Agent I suggest using a mortgage broker because they have access to a wider variety of financing opportunities for all types of buyers.
If you are financing the purchase of your home, you need to find a lender before you start searching for it.
Once you have spoken to that bank or broker, get Pre-Approved. That is when they study your current financial circumstances and can evaluate the value of home/property you can purchase. Talk to the lender BEFORE you start your car to go out and do the rounds of viewing homes. Another reason for getting pre-approved is you these days you have little time to place an offer on a home. Pre-approvals take a few days to process. You want to have better chances of getting an offer accepted. In the current market a seller is probably not going to look at an offer without a pre-approval letter.
Found it! Now what?
So, cool! You walked into a home and decided: this is the one! Now, you are to make an offer by filling out a contract form and submitting it to the seller. If you are working with an agent, this process is easier. I will not go into the details of a residential real estate contract, so get with that agent to explain it to you. I will have similar posts during the next few weeks on the topic, if you want to “come by” and check to get more info. Meanwhile, have the agent help you estimate what the home should be valued at so you can discern if the asking price is reasonable and you are comfortable making an offer on it. Likewise, now that you know you can afford the price because you have already talked to a lender who is confident you can get the financing for this amount, you’re on your way. Here is where that pre-approval letter I spoke of comes in handy.
Once the seller likes your offer and signs that form you sent him, you have a CONTRACT.
These are the first few steps before you get to the point of applying for a loan to buy a home. Here is where all the fun begins. Be aware as well, there are many time sensitive actions you will have to take between now and the moment you get the keys to your new home.
I will have similar posts during the next few weeks on the topic, if you want to “come by” and check to get more info.
