Home Buying Process
The home buying process can be quite intimidating since there are usually many different factors at play. The most stressful of which could be from committing to a long term decision with large amounts of money on the table. Not properly understanding the process and how to navigate through can feel overwhelming.
That’s why we’ve put together this guide on the home buying process from start to finish. Think of it as a map that you can reference so that you can see where you’re going and what you’ll have to do along the way.
In a broad sense, the buying a home is pretty straightforward. You look for a home, submit an offer, and eventually close on the home. However, there are a few important steps to take along the way to improve the home buying process. Following these steps will greatly help identify your ideal home as well as put you in the best position to acquire it.
1. Getting a preapproval letter
If you’re planning on financing your future property, we highly recommend getting a preapproval letter. The letter is documentation that shows how much of a loan you have been approved for. It doesn’t mean that you’ve gotten the loan, but it’s an important piece of information that can help move the process along quicker and more smoothly. A preapproval letter will be beneficial for all parties involved in the transaction. As the buyer, this also puts you in a favorable position.
There are a few reasons why this step puts you in a good spot for buying a home. First, when you find a house that you like, having a letter of preapproval shows the seller that you’re motivated. It lets them know that you’re serious about buying the home. The preapproval letter essentially provides proof that you can access proper funding to acquire the home, and the transaction will be unlikely to fall apart. Which is why a buyer with this information supporting their offer can be very appealing.
However, don’t confuse prequalification letters and preapproval letters. They’re similar but not quite the same.
2. Start home search
Now comes the fun and exciting part. Shopping for the right home for you!
When it comes to buying, it’s extremely important to identify expectations before browsing. Looking for a house is not like looking for a new phone. Each house is unique, and there will be some things that you like about it and others that you don’t.
By defining your expectations, you are mentally and emotionally preparing yourself for what is likely your biggest financial purchase ever. This may seem like a simple and unnecessary step, but it’s the key to find the best home for you. Nobody else can identify what the best home will look like for you, so it’s important to spend time on this step.
The purpose for defining expectations is to plan out ahead of time what is it you’re looking for, so that when the time comes, you’ll already know what you want in a home and what is just icing on the cake.
The next thing to do is to look for a real estate agent to work with. You want to work with somebody who is knowledgeable in their market, so that they can pair you with the best homes available at the price point that you can afford (according to the preapproval letter). After having equipped yourself with your expectations for your future home, you want to communicate that information clearly to the agent so that they have a clear picture of what it is you’re looking for. A good agent should also be available to discuss your expectations through some sort of brainstorming & prioritization session.
During the search process, your real estate agent should be a resource to help narrow your options to the best choices available. They should have an unbiased perspective that can counter your emotional decisions. The home buying process is full of emotions so you want to be as objective as possible when deciding.
3. Submitting Offers & Option Period
Now that you’ve identified your ideal home, have your real estate agent prepare and submit an offer.
If the seller accepts your offer, you want to pay an option fee. An option fee is a payment to the seller to acquire a period of time for further analysis of the home. This is where you have someone check to see if there are any underlying problems with the condition of the home. Your agent should have a network of at least a few inspectors available for you to choose from.
Hire an inspector to check the property, and review the report with your agent to see if there are any issues. If there are problems regarding the property condition the offer can be terminated before the option period expires. Concerns can be also be brought up to the seller for further negotiation in some cases.
4. Close on the property
Once the negotiation process is over, it’s time to close on your home. This is when you as the buyer will finally receive ownership of the home.
Home Buying Process Recap
- Get preapproval letter (if financing home)
- Start home search
- Define expectations
- Choose real estate agent to work with
- Submit offer
- Option period & inspection