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 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-Approval This is the first step in the home buying process as you want to make sure you qualify for financing. 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-approval letter when you do find a home that you want to make an offer on. A seller won't take you seriously without a pre-approval letter. You will also become familiar with what your approximate monthly payment and closing costs will be. 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) House Hunting 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 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".
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) Appraisal- An appraisal is ordered by the lender to inspect and value the home. If you are getting a loan from a bank, this is a requirement. The bank wants to ensure they are making a good investment and that you are not paying too much for the home.
8) Tending to the Details- There are a lot of things that REALTORS take care of behind the scenes. They are making sure that all contingencies in the contract are met. Examples of some of these details are checking in with buyer's lender, ordering and reviewing the title work, and ensuring surveys or other required inspections are completed (well and septic, sidewalk inspection, etc).
8) Closing- Closing usually takes an hour and lots of papers are signed. Keys are handed over at this time, or may be at a later date depending on what was negotiated. Congrats! You just sold your house!
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.