The Home Buying Process

Before you start house hunting, you need to talk to a lender. With him/her, you can determine how much house you can afford and what you want your monthly payments to be and most importantly, you can get pre-approved for your loan. So you know the price range of homes to look for. 

 

Once we have had a buyer consultation, discussed your preferences and did an in-depth search, we will go out and look at homes. You may fall in love right away or it may take a little longer. Once you find the home you like, we will submit an offer to the seller. We will discuss the contract and the different parts of the offer in detail. Once the offer is submitted in writing by sending it to the seller’s agent, we wait for the seller’s response - which can come within a few hours or it can take several days. Good nerves and patience are necessary while waiting to hear back. The response can be a counteroffer, an acceptance or rejection, or - if the seller received multiple offers - the request to submit your highest and best offer. And then negotiations start. Once everyone agreed to the conditions of the contract and both parties have signed, the contract is executed. 

 

Once the contract is executed, the buyer has three days to pay the earnest money, which is delivered to the title company and held in an escrow account until closing. The buyer also has three days to pay the so called option fee. The option period (normally around a week long - that is negotiable) gives the buyer the opportunity to terminate the contract for any reason without losing the earnest money. After the option period is over, it is much harder to terminate the contract without risking to lose the earnest money. If you back out during the option period, all you lose is the option fee. If the transaction closes, earnest money and option fee will be credited to the buyer at closing. The option period begins the day after the contract is executed and ends at 5 pm of the last day of the time frame agreed upon in the contract.

 

During the option period, the inspection should take place (as soon as possible to give enough time for checking into and negotiating possible repairs). It is also recommended to get a termite inspection. And often the inspector recommends to seek the opinion of another specialist such as roofer, foundation inspector, heating and ac technician, electrician, plumber… As soon as buyer and agent receive the inspection report, we well discuss potential issues like fire, health and safety hazards. Based on the findings of the inspection, there might be re-negotiations with the seller.

 

After execution of the contract, lender and title company start working on their end to get the loan approved and to do the title work. 

 

In most cases, the lender will order an appraisal to make sure the home has the value that the lender pays for it and is not overpriced. Both, lender and title company work closely together with each other as well as the agent to retrieve information and keep everyone updated on the process. 

 

During this time, the buyer will need to find homeowners insurance. It is also advisable to get a home warranty that covers appliances and certain components of the home for issues that have not been visible prior to closing.

 

When all of this “work” is finished, it is time for closing. In our market, seller and buyer generally sign their documents separately. When everyone has signed and the title company received the payment, the transaction has funded. And the buyers can pick up the keys to their new home.