When it comes to buying a home, the whole process from beginning to end can be broken down into 10 steps.
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The home buying process does not have to be overwhelming or frustrating. Here is a 10-step guide of what to expect and what you’ll have to do:
- Pick a Realtor. Since buying a home is a major decision, it is important that you choose the right Realtor to represent you. I recommend that you interview two or three Realtors before you choose one just to make sure you’re making the right decision.
Some factors to consider when interviewing a Realtor are:
- How familiar they are with the neighborhoods and areas you’re looking in.
- How experienced and knowledgeable they are.
- Whether you will have a good working relationship with them moving forward.
Not every agent is right for every buyer, so make sure you learn what each agent has to offer so you pick the right person to represent you during one of your biggest financial decisions.
- Choose the area. We recommend driving around, walking through, and exploring each individual neighborhood to get a good sense of where you would like to live. Sit down and brainstorm over which factors are most important to you and your family so you know which areas to focus on. As a Realtor and San Francisco native, helping clients tour all the different neighborhoods in the Bay area is my favorite part of the job.
- Get pre-approved. Because of the competitive nature of our market, only offers that are accompanied by a pre-approval letter by a reputable mortgage lender or bank will be seriously considered. Also, it is important that your Realtor knows the exact loan amount you are pre-approved for so you can have a maximum purchase price number set and are looking at the appropriate properties. There is nothing more discouraging than falling in love with a home only to find out that you cannot afford it, which is why—just like with Realtors—you should interview two to three mortgage lenders and compare their rates, fees, and customer service before picking one.
- Search for a home. Once you have identified the areas you want to live in and have a pre-approval letter in hand, it is time to look for a home. Homes that are for sale are posted into the MLS by Realtors, and you can also view them on websites like Zillow. Your Realtor should set you up with automatic updates whenever a new home gets listed. You can view homes during open houses on the weekends, or whenever your Realtor schedules an appointment to view one.
- Review disclosures. Once you have identified a property you like, your agent should request a disclosure package. To learn more about disclosure packages, you can view a previous video I did about them here. Before writing an offer for a property, you must review its disclosures in great detail so you know what you’re getting into.
- Review comparable sales. Buyers decide how much to bid on a property by reviewing the recent sales of similar homes in the neighborhood. Because the homes in our area are so unique, it is hard to compare apples to apples. Additionally, because inventory is low in our market, there are not that many homes to compare your property to. This is why you need to keep in mind that, while this is an important method of determining your offer price, it is just one of many different methods you should use.
- Make an offer. Now that you have established an offer price, it is time to decide on the terms of your offer. What is the timeline for your close of escrow and your appraisal, loan, and inspection contingency removals? Will you be removing some or all of them? A lot of this depends on what the seller provides in the home’s disclosure package and the level of competition among other buyers.
- Negotiations. Sellers don’t always accept an offer right off the bat. There is usually some negotiation over the offer price and/or the terms of the contract (or any other contract details) before an agreement is reached. This is where you need a strong negotiator on your side who will get you the best possible deal.
- The escrow period. Once your offer is accepted, you will wire or deliver a check to the escrow company. An escrow company is an independent third party who acts as an intermediary between the buyer and seller and handles the money throughout the transaction. The escrow period can last anywhere from 10 to 45 days, depending on which type of financing you have. If you have a traditional mortgage, the escrow period will last about 30 days. During this period, you will also conduct your inspections on the property. The bank will also hire an appraiser to verify the purchase price, and the bank’s underwriters will work on approving your loan.
- Closing escrow. One your loan is approved, your lender will send you the closing documents for your review. The escrow officer will schedule a time for you to sign everything either at the escrow company’s office, or they will send a mobile notary out to you. Once signed documentation is received by the lender, they will send the funds to the escrow company, who will then provide the funds to the seller and record the deed in your name with the county.
If you have any other questions about the home buying process or you have any other real estate needs, please feel free to reach out to me. I would be glad to help you.