Buying a House: Phase 2
Find The House & Make An Offer
Congratulations you’re in Phase 2 of the Home Buying process! Let’s get to the fun part! You know, everything you see on HGTV. Ha!
Phase 2: Find The House & Make An Offer
By this point you’ve met with your Real Estate Agent, narrowed your criteria, and are ready to see some homes! Once you find the right home for you it’s time to make an offer.
Step 1: Find Your Home
Searching for homes is a little like dating: you have a pretty good idea what will make a good match, but you never know exactly when the sparks will fly. As you’re visiting homes in person, keep in mind your wants and needs. The right house for you is the one that meets all of your needs and some of your wants.
Helpful Tip! – As you’re visiting houses think of naming each one to keep it straight in your head. Maybe “the house with the pool” or the “purple front door house” for example. Most likely, you won’t remember the exact address (that’s what your real estate agent is for).
Step 2: Make An Offer
You’ve found a home you absolutely love. Now you need to make a compelling offer. There are several things to consider when it’s time to make an offer.
- Consider the purchase price.
- How long has the property been on the market?
- Are there other buyers interested as well?
- How long will it take you to obtain financing?
- What’s the most reasonable closing date?
- How long will your Due Diligence period be?
Step 3: Under Contract
Congratulations! You’re Under Contract on your new home! The day you go under contract the clock starts ticking on several important timelines. Here are the most common important dates to keep in mind:
- Earnest Money – This “good faith deposit” needs to be delivered to the holding company within the time frame outlined on the contract. Often times the Earnest Money is held by the Listing Company. It’s applied toward your expenses at closing and will be refunded to you should you decide to terminate within your Due Diligence Period.
- Due Diligence Period – During this time you should perform any inspections (home, termite, etc.). Inspection will be scheduled by us. If you have a preferred inspector please let us know. You have a right, within this period, to terminate the contract for any reason. After the home inspection, buyer and seller will negotiate through repair items noted in the home inspection. Once this period ends, should you terminate you will be in default of the contract. We strongly recommend you contact an insurance agent during this time to secure a quote on your new property.
- Financing Contingency – During this time you should procure financing as described in the Financing Contingency Exhibit of the contract. Should you not be able to secure the financing described in this exhibit you have the right to terminate the contract.
- Appraisal Contingency – During this time your lender will order an appraisal on the property. Should the property not appraise at or above the current contract price, the buyer and seller can negotiate a new contract price.
Other important things to consider:
Using an FHA or VA loan – There will be an FHA or VA appraisal of the property. There may be repairs required by the FHA or VA appraiser. As per the FHA/VA exhibit, these repairs are the responsibility of the Seller and should be completed prior to closing. Once repairs are complete, the FHA or VA appraiser will need to do a final inspection of the property to sign off that the repairs are completed satisfactorily.
Homeowners Insurance: Please contact your insurance company to secure a homeowner’s policy on your new property. Let us know if you need recommendations on local insurance providers.
Congratulations! You’ve just completed Phase 2 and are ready to enter Phase 3: Perform Due Diligence and Prepare For Closing
Buying a House: Phase 1
Make A Plan and Hire Your Team
Recap of Phase 1
You’ll want a team you can trust when it comes to buying a home. In fact, by the time you’re handed the keys to your new house approximately 30 professionals will have helped you along the way. But don’t be overwhelmed! You only need to focus on two key players.
Step 1: Hire Your Agent
A licensed real estate professional provides much more than the service of helping you find your ideal home. Realtors are expert negotiators with other agents, seasoned financial advisers with customers, and superb navigators around the local neighborhood. A professional Realtor is your best resource when buying a home.
Step 2: Secure Financing
Unless you’ve got a rather large coffee can of cash buried in the back yard, chances are you’ll need to obtain a loan to purchase your home. In real estate terms, this is called a Mortgage. There are a wide variety of mortgage loan products out there today. Talk with your lender to determine the right fit for you.
Step 3: Narrow Criteria
The next priority is to develop a detailed description of the home you hope to find. This is where the Buyer Consultation comes in handy. We will schedule a meeting with you to help you solidify your list and determine your wants vs needs when it comes to features. Be specific. Include architectural style, number of bedrooms and baths, location, lot size, and other special requirements. Number your preferences in order of greatest importance to you. We’ll also educate you on the current status of the real estate market in you area so you are well informed!
Buying a House: Phase 3
Perform Due Diligence & Prepare For Closing
Phase 3: Perform Due Diligence & Prepare For Closing
Now that you’re under contract, Phase 3 is all about the details. During this time you’ll perform any and all inspections on the property. We highly recommend a Home Inspection and a Pest Inspection. The Home Inspector will review systems, identify any disrepair, and help you understand how your house works. The Pest Inspector’s job is to identify if there are any active infestations of termites, powder post beetles, etc. After inspections, you’ll have an opportunity to negotiate through any requested repairs with the Seller.
Your lender will also order the appraisal. The appraiser will visit the house to determine if the purchase price is in line with other comparable homes in the area. Their job is not to tell you the value of the house, but rather does the data support the price you’re paying.
Of course the final stretch is your lender’s underwriting process. Think dotting the “I’s” and crossing the “T’s”. During this time it’s important to NOT make any major purchases and keep yourself credit worthy. Just because you saw a great deal on new living room furniture doesn’t mean you should go buy it. WAIT until after closing!
On Closing Day you’ll meet at a local attorney’s office to sign a rather large stack of papers, but in the end you’ll walk away with keys to your new home! And that’s worth all the hand cramps.