The home buying process is much more than finding a house and arranging financing. I have been guilty myself of not fully explaining the steps a buyer will encounter and previous posts have only overviewed the home search, selling, home inspections and appraisals but never constructed a sequence of events.
Home buyers are people who have experienced a change in their life and now the current living situation is inadequate. A new job, families having children, children leaving the house, retirees (Baby Boomers) and a host of other influences to determine when is the right time. But now that housing is in your mind you’ll want to start off with two items; interviewing loan officers and real estate agents.
Since everyone is different and all have different needs of a professional, what works for me won’t work for you (though we do make professional recommendations). Look for qualities that are similar, important and that your personalities compliment each other. The home buying process is not as short and working together is key for a enjoyable experience.
Before starting the home search, physically and not online, take the time to sit with a lender and get a prequalification letter. It is never fun to find a house you love only to learn it is out of financial reach. The prequalification also builds confidence and strength as a purchaser. A listing agent will ask the buyer’s agent (your agent) if the buyer is prequalified to help them determine if you are a sound buyer (it’s a great service listing agents give their clients).
Now you have found a lender, agent and prequalified letter in hand it is time to search the inventory for that hidden gem. After analyzing the homes on paper, to weed out all the immediate “no’s”, you and your agent will make appointments to preview the rest of the selection. After searching you find that perfect house (which may or may not be as perfect) and want to submit an offer.
The offer is called a Purchase & Sale Agreement (P&S). The P&S contains all the information to create binding contractual agreement to purchase real property. Your agent will include items like the price, escrow monies, method of payment, provisions, contingencies and signatures.
Then as the offer/counter offer tennis match begins with the P&S which will go through many revisions until the terms are reached. At that point, you the buyer, will be going back to the lender to set the financial gears in motion. Have all the documents organized long before so the lending process is smooth because lenders and underwriters are going to scrutinize every detail before giving final approval.
Final approval comes and then the lender will order the appraisal and home inspection. The property gets appraised (I won’t go into “what if a property doesn’t appraise” question just yet) and the home inspection is performed. Appraisers determine the value of a property while the home inspector determines the structural integrity of the property. Both items are used in determining the approximate value of the property.
Sometimes, after the home inspection a renegotiation will begin because of the built in contingencies of the P&S. Your agent will share various strategies to take if defects arise on the property. An example is the roof; not uncommon in Washington. The buyer may request the seller to fix the roof or have the buyer fix it on the condition of a price reduction. Two different strategies but have similar results.
After some back and forth negotiations the agreement is signed by the buyer and seller and the transaction moves onto escrow.
Escrow is a neutral third party, designated in the P&S, that prepares the Settlement Statement (HUD-1) and notarizes the documents. This is when the seller receives the purchase price minus closing costs, if any, and the buyer receives clear title. You are now the proud owner of 1234 Old Oak Rd.
Being the owner doesn’t mean you immediately get to move in. But Toby, you said “you are now the proud owner” and moving in is out of the question? Sometimes it is. One of the items the seller may counter in the P&S is the closing date. The seller will typically ask for “closing plus 3″. Closing plus 3 is that the seller has the closing data plus 3 addition days to move out of the home. This gives them some added time to get moved and have the placed cleaned; now you can move in and get settled.
As we have seen, there is much more to the home buying process than just finding a home and making a purchase. It involves negotiations, contingencies, evaluations and a whole lot of patients. But in the end it means better living conditions and a new place to begin the stage of your family’s life cycle.
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In a poll released today by Fannie Mae, nearly 2/3 of Americans say right now is a good time to purchase a home and the bottom has arrived. With that said, Snohomish [...]
Typical Steps a Home Buyer will Encounter
The home buying process is much more than finding a house and arranging financing. I have been guilty myself of not fully explaining the steps a buyer will encounter and previous posts have only overviewed the home search, selling, home inspections and appraisals but never constructed a sequence of events.
Home buyers are people who have experienced a change in their life and now the current living situation is inadequate. A new job, families having children, children leaving the house, retirees (Baby Boomers) and a host of other influences to determine when is the right time. But now that housing is in your mind you’ll want to start off with two items; interviewing loan officers and real estate agents.
Since everyone is different and all have different needs of a professional, what works for me won’t work for you (though we do make professional recommendations). Look for qualities that are similar, important and that your personalities compliment each other. The home buying process is not as short and working together is key for a enjoyable experience.
Before starting the home search, physically and not online, take the time to sit with a lender and get a prequalification letter. It is never fun to find a house you love only to learn it is out of financial reach. The prequalification also builds confidence and strength as a purchaser. A listing agent will ask the buyer’s agent (your agent) if the buyer is prequalified to help them determine if you are a sound buyer (it’s a great service listing agents give their clients).
Now you have found a lender, agent and prequalified letter in hand it is time to search the inventory for that hidden gem. After analyzing the homes on paper, to weed out all the immediate “no’s”, you and your agent will make appointments to preview the rest of the selection. After searching you find that perfect house (which may or may not be as perfect) and want to submit an offer.
The offer is called a Purchase & Sale Agreement (P&S). The P&S contains all the information to create binding contractual agreement to purchase real property. Your agent will include items like the price, escrow monies, method of payment, provisions, contingencies and signatures.
Then as the offer/counter offer tennis match begins with the P&S which will go through many revisions until the terms are reached. At that point, you the buyer, will be going back to the lender to set the financial gears in motion. Have all the documents organized long before so the lending process is smooth because lenders and underwriters are going to scrutinize every detail before giving final approval.
Final approval comes and then the lender will order the appraisal and home inspection. The property gets appraised (I won’t go into “what if a property doesn’t appraise” question just yet) and the home inspection is performed. Appraisers determine the value of a property while the home inspector determines the structural integrity of the property. Both items are used in determining the approximate value of the property.
Sometimes, after the home inspection a renegotiation will begin because of the built in contingencies of the P&S. Your agent will share various strategies to take if defects arise on the property. An example is the roof; not uncommon in Washington. The buyer may request the seller to fix the roof or have the buyer fix it on the condition of a price reduction. Two different strategies but have similar results.
After some back and forth negotiations the agreement is signed by the buyer and seller and the transaction moves onto escrow.
Escrow is a neutral third party, designated in the P&S, that prepares the Settlement Statement (HUD-1) and notarizes the documents. This is when the seller receives the purchase price minus closing costs, if any, and the buyer receives clear title. You are now the proud owner of 1234 Old Oak Rd.
Being the owner doesn’t mean you immediately get to move in. But Toby, you said “you are now the proud owner” and moving in is out of the question? Sometimes it is. One of the items the seller may counter in the P&S is the closing date. The seller will typically ask for “closing plus 3″. Closing plus 3 is that the seller has the closing data plus 3 addition days to move out of the home. This gives them some added time to get moved and have the placed cleaned; now you can move in and get settled.
As we have seen, there is much more to the home buying process than just finding a home and making a purchase. It involves negotiations, contingencies, evaluations and a whole lot of patients. But in the end it means better living conditions and a new place to begin the stage of your family’s life cycle.