For First-time buyers, or those who haven't purchased a home in a long time, 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 a brief synopsis of my buyer counselling session I provide to all my buyer clients.
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. I also can emphasize typical, because the process can be different, depending on what type of purchase you have, whether it's an investment purchase or a home for your family, and it can differ depending on your your of loan or your conditions.
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 rust 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. Knowledge of home types, amenities and market trends is invaluable.
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 sellers 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 costs. Does the buyer have necessary funds? Does the seller have enough room to pay out the loan so that the seller's lender will allow the property transfer?
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 several times 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 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 offer of purchase and sale will usually stipulate a certain number of days for the buyer to waive their "financing condition." Both parties must remember that "Time is of the essence". Somewhere along the process the lender will usually order an appraisal to determine the value of the house.
6. Home Inspection. The buyer has a right to a home inspection 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 signs gives the OK, then the purchase contract moves forward to closing.
8. Closing. Signing of the closing documents usually takes an hour and lots of papers are signed. Keys are handed over and the buyers can move into their new home.
The typical process can take between 30 to 90 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 amendment to extend time lines.
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.
If you have any questions regarding any homes you see for sale, would like a full buyer counselling session to see if buying a home is right for you, or would like to discuss the local real estate market please contact me today.
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