We all know what happens. You decide you want to buy a home, go looking and then you move in, right? Well what about in between? What should one expect? These are very good questions, that oddly enough, I never thought to blog about.
I currently have 2 new home buyers. I love new ones. They are so excited and pumped up about being a home owner. Tired of throwing away money in rent and delighted to get going. Well this past weekend, both asked me, “So what is the next step? How does this work?”
Well I’m gonna explain it step by step:
First, decide you want to purchase a home and call a lender. Lenders are there in the beginning to confirm that YOU CAN PURCHASE, based on credit and your past history. They will explain how much you can comfortably afford. This will help the Realtor know what price range of homes to search for. Also, the lender will get everything going to start the process. If you don’t know a lender, ask your Realtor. They usually have loan officers that they work with directly. In my case, I prefer to use my lender, just because I know your interests will be put first and you WILL get the best possible program, depending on your situation.
The next step is to start looking! This is the fun part. Your Realtor and you should be searching the Internet for homes and then setting up a time to go look. Typically, unless you are an out of towner and HAVE TO make a decision, I only take people to look at about 5 or 6 homes, at a time. This is because, once you get out in the car previewing, believe me, you will start mixing things up between the houses. Like putting one kitchen you saw in another house. Forgetting yards and where closets are. Things like that. So 6 houses is about the max before brain overload. Of course, you can separate out the day and view more.
Once you find a home, you will write an offer. This offer will be contingent on your financing and inspecting the home. You will include an earnest money check with the offer, usually about $1000.00 dollars. (Maybe less for cheaper homes and more for really expensive homes.) This money is held in an account to hold the house and show that you are a serious buyer. In the beginning, if something were to go wrong in inspection or financing, this money is refunded to you in full. The only time a buyer would lose their earnest money is if they decided, after inspection, financing and termite inspection that they just don’t want the house. Which would be about 2-3 weeks in. I haven’t had this happen before though, but have definitely heard various scenarios.
Also, when you write the offer, if you don’t have a lot of money up front to put down, you can ask the seller to pay your closing costs. In other words, you can ask the seller to pay all the closing costs and title insurance. That will, save you from having a bunch of money up front, out of pocket. This is a very common practice. Most people always ask for closing. The agreeing on price with the seller is the real negotiation part.
After you agree on a price and work out a deal, you will need to send proof to the seller that you are pre-approved. Your lender should take care of this and get it over the your Realtor. That is why getting approved in the beginning is important. This “pre-approval” will remove the “financing contingency” and move the home status into “inspection contingency”.
The home inspection is usually done within 10 days, of a binding agreement. You will need money for the inspection of the home which will be about $300-$350 depending on square footage. Some costs more, some cost less. Your realtor can help you find an inspector or you can find your own. Once the inspection is complete and the report is done by the inspector, you have a few options.
a. accept the house “as-is”
b. write a list of repairs you want done and see if the seller will agree to them
c. sign a written release that you want out of the deal
Note: The seller also has a right to counter this offer is of repairs.
Once the repairs or details of the home inspection have been worked out, the home should move from “inspection contingency” to “pending”.
The next step is the termite letter. The seller or buyers agent will meet a termite inspector at the property and check the house for termites. If the home has termites, the seller, basically, has to treat them to sell the home. The buyers have to have a clear termite letter, unless otherwise stated in the contract. Also, remember in Tennessee, termites are a common thing, most homes, especially if older, have had termites at one time or another. As long as the home has been treated and there are no “active” termites, you should be ok.
After the house has been inspected for termites, the closing is next. While all these inspections and stuff have been going on, on the other side, your lender was getting all your loan documents prepared. If the house passes all these inspections, you should be ready to close. (Every person’s circumstance is different, but usually after 3 or 4 weeks, everything is done.)
On the day of closing or the day before, you will do a final walk through of your future home. This is the time to check that any repairs from the inspection were done and make sure all the seller’s personal property has been removed.
At closing, you will go with your agent to a title company (previously picked out in the contract) and close on the home! This is the final step. You will receive the keys and any important documents that come with the house. Also, you will get copies of all your official loan documents. Then, after all this, you can relax or get ready to move in what ever you want. You will be a new homeowner!! YAY!
One more thing, as far as how I get paid, if you are wondering, it comes from the seller’s side. When a seller puts their home on the market, they have agreed already with the listing agent to pay a commission, usually 6%. This is split between listing and selling agent. Buyers do not pay me any fees directly!
Does this all make sense? Let me know if you have any questions. Most people will work with you! Also, all homes are different. Some have special circumstances. This is just how the steps usually fall into play. Please let me know if I can help!