Buying a house can be one of the most exciting and rewarding experiences in life. After all, many financial experts believe buying a home is one of the best steps you can take toward building wealth. However, it can also be one of the most stressful times if you don’t know what to expect! So whether you are a first time home buyer or have bought a house before, this information should be helpful to you. With no further ado, below is a step by step guide to buying a home.
Table of Contents
- Meet With a Realtor
- Get Mortgage Approval
- Select Search Criteria
- Make an Offer
- Get an Inspection
- Closing Time
- Costs of Buying a Home
Step 1: Meet With a Realtor
Congratulations! You’ve decided to move forward with buying a house! Now it’s time to meet with a real estate agent to discuss what you are looking for in a home. There are two main reasons to use a realtor – to gain access to all the properties on the market and to provide guidance with the complex real estate contracts.
One mistake I see people make when buying a house is to go through the listing agent on a home they are interested in. To understand why this is a mistake, you must realize that a listing agent represents the seller. By law, a listing agent has a fiduciary responsibility to watch out for the seller’s interests, not a buyer’s. How can you be sure you are not overpaying for a home if you go through the listing agent? It’s much wiser to hire your own agent (it’s actually FREE for buyers). Trust me, you’ll be glad to have someone looking out for your best interests when it comes time for contract to be written.
Step 2: Get Mortgage Approval
When buying a home, one of the most important first steps is to get pre-approved for a mortgage. If you don’t have a mortgage company in mind, your real estate agent will be able to provide you with some recommendations. This step involves providing your chosen lender with all the information they need in order to approve your home purchase. This includes such things as tax returns, bank statements, pay stubs, and retirement balances. It’s one of the more frustrating parts of the home buying process, but that also underscores the importance of choosing the right lender.
Getting pre-approved actually has two huge benefits, especially in today’s competitive real estate market. It will not only help you decide on a budget, but it will also put you in better position to have your offer accepted when you find the right home! In this competitive real estate market, you’ll need to have all your ducks in a row before making an offer!
Step 3: Decide on Search Criteria
Now that you’ve been pre-approved, you can begin to narrow your home search. Brian Buffini, one of the most renowned real estate agent coaches in the world, puts it this way “Buying a home is a process of elimination, not a process of selection.”
The key here is to be specific – what are your must have’s? What are your nice to have’s? What are your deal breakers? The more specific you can be up front, the more smoothly the home search process will go. You’ll appreciate this tip as you are going through the process!
Step 4: Make The Offer
So you’ve found the home of your dreams! Now it’s time to make the offer! Your agent will review the “comps” (similar homes that have sold recently) to make sure you know what the market value of the home is. Your agent will also look at factors such as days on market and condition of the home. As you talk through these things with your agent, you’ll begin to come up with a precise offer.
Step 5: Get an Inspection
Now that your offer has been accepted, it’s time to hire an inspector to check the house for any potential damage or repairs that need to be made. The cost for this is around $400-$500, but the peace of mind you’ll have far outweighs the cost! If there are any repairs that need to be made, this is where you’ll negotiate with the seller to take care of them!
Bonus tip: Don’t skimp on the inspection, especially if it’s an older home. Make sure to do your due diligence when hiring a home inspector. The requirements for obtaining an home inspection license are not exactly difficult, so look for additional certifications when hiring an inspector, such as structural engineer or similar.
Step 6: Closing Time
Well, you’ve almost made it! All that’s left is closing. This is where the deed transfer occurs, your mortgage is finalized, you sign your life away (not really, but it will feel like it!) and you receive the keys to your new house! Congratulations! You’re a homeowner!
Bonus: Other Considerations when Buying a House
It’s important to talk about the costs involved with purchasing a home in order to manage expectations. The last thing you want is a financial surprise that you weren’t prepared for. Many people don’t realize all the costs associated with buying a house. It’s best to know as much as you can up front, so keep these costs in mind as a good rule of thumb when buying a house:
- Downpayment – generally around 3% of sales price (can vary depending on your situation)
- Example: $300,000 purchase price X .03 = $9,000
- Earnest Money – in the DFW market, 1% of sales price is customary
- Example: $300,000 purchase price X .01 – $3,000
- Option fee – $100-$200 depending on the sales price
- Inspection – $400-$500
- Closing costs – a good rule of thumb is 3% of sales price
- Example: $300,000 purchase price X .03 = $9,000
Check out this closing cost estimator tool from Nerdwallet.com
As you can see from the steps outlined above, buying a house can be a little intimidating. And in a competitive market like we are in now, it can be down right frustrating for buyers. But knowing what to expect is half the battle. If you are thinking of purchasing a home soon, I would highly recommend finding a local real estate agent to help guide you through the process and answer your questions along the way. I hope this breakdown of the home buying processing was helpful and provided you with some guidance and direction as you begin to look for a home. Happy house hunting!
Looking to buy in Dallas/Fort Worth? Visit my home search page.
About the Author
Jonathan Kobler is a real estate agent with Keller Williams in Southlake, TX. He enjoys the personal side of real estate and building relationships with his clients. Got real estate questions? Contact Jonathan today at 817-905-4317 or firstname.lastname@example.org