The home buying process

A brief, step-by-step overview

There are many factors to consider and many decisions to make. That’s why, when buying, it’s crucial for you to have all the available resources necessary to make a well-informed decision. That’s also why you should enlist the help of a trusted REALTOR® who’ll provide you with expert consultation at each step of the buying process.

Generally, finding and purchasing a home includes the following steps:

1. Define Your Goals, Research Your Options, Make Your Plans

Given that buying a home is such a big step, it’s all the more important for you to educate and prepare yourself as much as possible in advance. This means clearly determining why you’re buying and what kind of home you’re looking for. And because buying and financing a home are so closely related, it also means examining your current financial situation and projecting how much you can afford.

2. Contact A REALTOR®

Buying real estate is a complex matter at the best of times, given that there are so many factors to consider and no two homes or transactions are alike. However, with all the unique opportunities and potential pitfalls of the current market, it’s even more important for you to contact a REALTOR® once you’ve definitely decided to buy.

^{3. Get Pre-Approved For A Loan}

^{Generally, it is recommended that you get pre-qualified for a loan before you start viewing homes with the serious intention of buying.  A lender will provide you with a document that details how much you can borrow to buy a home. You may want to consider looking online to see what different lenders offer, or contacting your local bank or credit union.}

4. View Homes And Select THE ONE

Simply put, key to the home search process is knowing what you’re looking for. Among other things, that means distinguishing between "must-haves" and "like-to-haves". 

While their property details may seem similar online, homes can actually be very different in terms of layout, design, workmanship and other aspects. In addition, you should ideally view homes with the help of an experienced and eagle-eyed REALTOR® who’ll notice things you might miss, provide expert analysis, and act as an impartial sounding board.

5. Make An Offer And Negotiate With The Seller

Now that you’ve found the home you’d like to buy, it’s time to make an offer. Your local real estate association, working with legal counsel, has developed the contracts that are used for transactions in your area. These contracts enable you to specify a sale price and also include many clauses for specifying various terms of purchase, such as the closing and possession dates, your deposit amount, and other conditions. You should carefully review these clauses with your REALTOR® to ensure that they express your desired offer. In addition to drawing up the contract, your REALTOR® will be happy to address all your questions about the offer process.*

Once you’ve written the offer, your REALTOR® will present it to the seller and/or the seller’s representative. At that point, the process – given that a home’s eventual sale price is subject to supply and demand – will depend on the kind of market you’re in. Generally though, the seller can accept your offer, reject it, or counter it to initiate the negotiation process.

Successive counter-offers, with deadlines for responding and meeting conditions, will be exchanged between you and the seller until a mutually-satisfactory pending agreement is reached or the negotiations breakdown.

Negotiations can involve many factors relating to different market conditions, homes and sellers.

6. Secure Your Financing

Once you have a pending agreement, it’s time to go back to your chosen lender to finalize your mortgage details so you can close the deal. This means finalizing your down payment, interest rate, regular payment schedule and any other financial conditions associated with the closing.

As noted in the section on loan pre-approval, if you’ve already been qualified with a lender for a certain loan and home purchase, this phase of buying your new home should be a relatively straightforward matter that centers around finalizing the loan details and signing the mortgage papers.

As the old saying goes, ‘let the buyer beware’. Particularly in these times, when so many buyers are suffering the consequences of having not fully understood their financing decisions, it’s crucial for you to work with people you trust. In this regard, a good REALTOR® can be a true friend for life.

7. Close The Deal

If you’ve efficiently taken care of everything connected with purchasing your new home, the experience of taking ownership will be a positive joy with no surprises. Key steps to the closing, also referred to as the "escrow" or "settlement", include:

• Getting a Title Search – an historical review of all legal documents relating to ownership of the property – to ensure that there are no claims against the title of the property. It is also necessary to purchase Title Insurance in case the records contain errors or there are mistakes in the review.
• The Final Walkthrough – you’ll be given the chance to look at the home to make sure it’s in the same condition as when you signed the sale agreement.
• The Settlement – typically, on the Closing Date you’ll go to a lawyer’s office to verify and sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments and transfer taxes. At that point, you’ll receive the property title and copies of all documentation pertaining to the purchase.

Oh, and one more thing – you’ll get the keys, at which point you’ll be able to move into your new home.

 Considerations for first-time home buyers in this market

Buying your first home is a major step. There’s a lot you need to know to make the right decisions – and also to avoid making the wrong ones. And that’s particularly true in this current buyers’ market, when there are so many homes available and sellers have such diverse motivations.

The good news is that if you know what you’re doing, or if you’re working with a highly-experienced REALTOR® who does, this market offers fantastic opportunities to get a great home at a great price.

Owning Versus Renting

Without question, owning a home comes with responsibilities and risks that you don’t have to worry about when you rent, such as a mortgage, taxes, homeowner’s insurance, maintenance and repairs, to name a few.

However, financial advisors – not to mention homeowners themselves – say there are far more advantages to owning:

• Historically, it has trended that over time, you’ll lose money by renting instead of owning your own home. Why not build up equity in a home instead of paying your landlord’s mortgage?
• Although there are periodic market drops, historically owning a home has been a prime financial investment 
• You can take advantage of many ongoing tax benefits, like deducting the interest on your mortgage and property taxes from your income tax
• Owning a home isn’t just a good investment in financial terms, it’s also an investment in a higher quality of life – particularly if you have a family or if you’re planning one.
• There is a special kind of pride in the ownership and upkeep of a home that you won’t get with renting.

At the end of the day, it just feels good to own your own home. You can decorate it any way you like, renovate or build additions, personalize your landscaping

Do You Qualify To Own?

There’s only one way to find out: go to your bank and/or another lending institution and allow them to perform a credit check and analyze your financial situation.

You might be surprised to know that there are many renters who financially qualify to own their own homes, but don’t realize it. Are you in this category? It would be a shame if you wanted to own your own home, but didn’t know you could – particularly in this perhaps once-in-a-lifetime buyers’ market.

Also, keep in mind you may be eligible for loans insured by the Veterans Administration (VA) or the Federal Housing Administration (FHA).

Is It A Good Time To Buy?

Generally speaking, if you’re financially qualified, your timing couldn’t be better. In fact, few markets have ever offered the kinds of opportunities that currently exist for first-time home buyers, because:

• Home prices are down generally
• Mortgage rates are historically low. You might be able to lock-in at a very low rate on a 30-year mortgage!
• There is a large listing inventory generally – i.e. plenty of homes to choose from
• There are many foreclosed homes and distress sale listings available at greatly reduced prices
• There are many builder liquidations – i.e. new homes – available at greatly reduced prices

So the bottom line is that if you are currently renting but really want to own a home, this is a fantastic time to buy. And again, you may qualify to buy and not know it. So talk to a knowledgeable, experienced REALTOR® about your options. Your REALTOR® will not only be able to guide you towards getting all the financial support you qualify for, but you’ll also get the scoop on the many and various great real estate opportunities currently available.

Not only that, but in case you didn’t know, all the work that a REALTOR® does to help you find,

finance, and purchase a home won’t cost you a penny – it’s all paid for by the seller!

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