18 Steps to Buying a Home
Are you a first time homebuyer and don’t know where to start? Has it been over 5 years since you bought or sold a home? It may be a good idea to quickly review the home buying process.
- Access your personal and financial readiness
- Find Realtor & sign a Buyer/Broker Agreement
- Find a Lender & start the mortgage pre-approval process
- Start your home search online
- Tour homes and find the one
- Make and offer & negotiate
- Open Escrow
- Conduct all necessary inspections
- Order HOA docs (if applicable)
- Shop for homeowner’s insurance
- Get an Appraisal
- Seller repairs home as needed or offers credit
- Do a final walk-through
- Transfer the Utilities
- Review the HUD/Settlement Statement
- Procure Title Insurance
- Attend closing & get keys
- Move In!
Access your personal and financial readiness
Choosing to buy a home can be a daunting process for first time home buyers. However, it’s not as tricky as you may think. If your rent is comparable to what your monthly mortgage payment would be then it’s time to think about buying a home. Historically, rents will continue to rise but your mortgage rate will continue to stay at what you have it locked in at. Take a look at your personal finances and career choice to see if it is the right path for you.
Find Realtor & sign a Buyer/Broker Agreement
Did you know that the seller pays your Realtor? It is completely free for you to utilize a buyers agent. So, why not take advantage of some help? You will want to find someone you work well with and understands your needs and wants for a home. A more experienced agent may know the ins and outs of the town more but a newer agent may end up putting in more time for you. Whoever you decide, make sure you have clear communication in regards to your needs, wants, pricing and timeline.
Find a Lender & start the mortgage pre-approval process
The California market has been extremely competitive the last few years. Most Realtors won’t even start showing you homes until you have a pre-approval letter from a lender. I would suggest talking with at least 2-3 lenders to get an idea of what you can qualify for. Different lending offices have various programs they can offer to help buyers. You will need to lock in your loan the day escrow is opened in order to get the appraisal ordered on time. Once again, this is a free service provided by lenders.
Start your home search online
You may have started looking around on Zillow or Realtor.com dreaming of homes before you got the ball rolling to buy. Now it is time to get serious. What do you actually want in a home? Where can you compromise and what are the must haves? Let your Realtor know what you love and hate so they can help in your search process as well. If you have a good Realtor they may just know of the perfect pocket listing before it hits the market.
Tour homes and find the one
Your Realtor will need to set up appointments to view properties. Most homes take at least 24 hours notice. As a Realtor I would suggest seeing no more than six properties in a day. It gets confusing when you see everything at once. Pick out the best ones from online and narrow down your search before you go.
Make and offer & negotiate
What do I offer for a home? This can be a tricky question for first time home buyers. Homes are appraised based on the comparable properties sold in the past 90 days. These numbers can be clear in a tract neighborhood with similar floor plans. It is more difficult in an area where you have a log cabin next to a new mega mansion. Your Realtor will be able to pull comps for you to review and let you know how the market is performing. If there are multiple offers on a home the offer price may end up going above comp value based on the demand for an area. If the home has been sitting on the market for longer than normal and still hasn’t had any offers it is more than likely over priced. In this situation you more than likely can offer less than the offer price. Regardless of the accepted price the appraisal value must be close enough to the loan amount for it to be funded. I have seen situations where an offer was accepted over asking and then it fell out of escrow because the appraisal came back different than the loan amount was approved for. This is why it is important to have a savvy Realtor on your side.
Your Realtor with most likely have an escrow company they are comfortable working with that he/she can suggest. You are welcome to choose your own. Often times companies will charge different amounts for closing costs. It is good to get an idea of what you closing costs will be so you can budget accordingly.
Conduct all necessary inspections
In California you have 17 days to get in all of your home inspections. As the buyer you will be able to access the house easily to perform all necessary inspections. In the Lake Tahoe market it is best to get a pest inspection and a home inspection. If there are any red flags on the report it is advised to get another specialist out to check out the home as needed. In the Lake Tahoe market it is customary for the buyer to pay for the inspections of the home.
Order HOA docs (if applicable)
Most condo complexes are within an HOA. There are very few neighborhoods in South Lake Tahoe that have an HOA. It is good to know what the HOA covers with its fees. Often times it covers a lot of items you would be paying anyway like exterior maintenance, snow removal and refuse.
Shop for homeowner’s insurance
You will need homeowners insurance. Now is the time to start shopping. Your Realtor should be able to give you a list of companies to contact.
Get an Appraisal
You will have 21 days to get the appraisal done. The lender will order the appraiser once we go into contract and open escrow. If the appraisal comes back much different than the contract amount then the loan may not be funded. In California there has been a shortage of appraisers. This can potentially take longer than 21 days and may need an extension if it cannot be completed within the timeframe. This is something that could extend an escrow past 30 days.
Seller repairs home as needed or offers credit
Most homes are not brand new so there is going to be some wear and tear. If the inspection reports show the home needs a serious repair the buyer may ask for the seller to fix it or for the seller to credit the buyer at escrow. The credit amount must be approved by the lender to make sure the loan can still be funded. The seller is not required to fix or credit items as California is an “as is” sale. If the seller refuses to repair or credit and the buyer and the buyer does not think the home is worth it he can back out of the sale. Keep in mind, once contingencies are signed your deposit may be at risk.
Do a final walk-through
This is also called a verification of property. Before escrow closes, the buyer is to do a walk through with their Realtor and verify the property is in the same condition as it was when the contract began.
Transfer the Utilities
The day or so before the property is to close the buyer will switch the gas, electric, phone and cable into their name. The city will automatically transfer the refuse and water and bill accordingly.
Review the HUD/Settlement Statement
Before you close escrow will provide an HUD/Settlement Statement to review. It is important to double check this for any issues
Procure Title Insurance
Your lender may require you to procure title insurance. Your title insurance company will be able to provide you with estimates.
Become a Homeowner
“We are on record!” the escrow company will let you agent know. You are now officially a home owner. Most of the time this takes place in the afternoon. There is a small chance it can get pushed to the next day depending on Title’s schedule.
Your Realtor will provide you with your keys. It’s now time to move in and enjoy your new home! Don’t forget to give your Realtor a raving review online and tell all of your friends, if they exceeded your expectations!