The Process of Buying a Home

Step 1: Meet With A Real Estate Professional

The first step in the series of steps to buying a house is to meet with a REALTOR®. During this meeting, you will discuss the process of buying a house, search criteria, desired locations, and budget. Your realtor will go into more depth about your criteria and discuss market conditions with you. A buyer’s agent will find and show you homes that match your criteria, present your offer, and negotiate the price and terms. The agent will oversee the process from end-to-end, acting as a project manager to keep everything on track and on time. As a buyer, you have the benefit of being represented by an agent at no cost. The seller is responsible for paying the commission to the listing agent and to the agent who represents you.

Step 2: Get Pre-Approved for Mortgage Financing

As the second step to buying a house, your REALTOR® will advise you to speak with a mortgage lender. Your agent will recommend lenders they have done business with before. These are lenders the agent has confidence in to help you secure financing. The lender will require you to provide information and documents for the pre-approval. These documents include pay stubs, W2s, and bank statements. The pre-approval will be provided to your agent to include with offers. Making offers without one will result in sellers rejecting your offers so this is another critical step to buying a house. Depending on your timeline, the lender may offer you an interest rate lock to protect you from rate increases during the effective period. It is critical that you do not make large purchases or obtain other credit during this period. Doing so could impact your affordability and jeopardize your loan approval.

Step 3: Searching for Homes

This fun step in the process of buying a home includes going out and viewing homes. Your agent will recommend homes based on the criteria you established in the first step. Through their internal networks, your agent will have access to homes that you will not find on other popular websites. The agent will have advanced search capabilities and understand your criteria ensuring you only view homes that match your criteria. At Modern Living Arizona, we would rather show you 5 homes that you love than 50 homes that you hate. Therefore, we complete a comprehensive questionnaire that helps both you and our team understand your criteria to the fullest.

Step 4: Making An Offer

Once you find the perfect home, your agent will review recent sales in the neighborhood and provide a recommendation for the price and terms to include with the offer. There may be competition from other buyers, and the offer must stand out to the seller. It is important to work with an agent who advises you on the appropriate terms and presents your offer in the best possible light. This is an extraordinarily complex step in the series of steps to buying a house. You should never rely on a listing agent to help you with the offer. The listing agent is working in the best interest of the seller not in the best interest of the buyer. This makes it is important to already have your buyer’s agent selected before you begin searching for your new home.

Step 5: Negotiation and Contract

In this part of the process to buying a house, your agent showcases their negotiation skills. A confident and capable agent understands the process of buying a house and has experience negotiating deals of all difficulty levels. Because of this, they understand what can happen at every step of the process. Knowing what to say, when to say it, and how to say it is critically important. The negotiated contract will provide you with a timeline for obtaining financing and a 10-day period to inspect the home. If your agent has negotiated contingencies into the contract, you will have a period that allows you to cancel the contract. Reasons include that the home does not appraise or something falls through with your financing from the lender.

Step 6: Opening Escrow

When your offer is accepted by the seller, you will provide an earnest money deposit. This is provided to the escrow officer at the title company. The escrow officer will hold this money in escrow until your closing date. At that time, it will be applied to your purchase. In some cases, the earnest money deposit is refundable. Your agent can help you understand when it is refundable.

Step 7: Due Diligence and Inspections

During this period, you have 10 days to perform inspections. One of the steps to buying a house includes hiring a home inspector to thoroughly inspect the home. The cost will vary depending on the size of the house and the scope of the inspection. The inspector will inspect all areas of the house and point out concerns with the systems and structures. The expense of a home inspection is money well spent and will help you to avoid long term issues that will cost more money long-term. This is one of the most important parts of the process of buying a house. The inspector will provide you with a report and your agent will provide a notice to the listing agent requesting repairs to be performed prior to closing. The seller will review this notice and provide a response to the buyer about repairs they are willing to complete.

Step 8: Appraisal and Underwriting

Next in the process of buying a home, your bank will order a home appraisal. The appraiser is an independent third party. They will visit the home and provide the bank with an opinion on the value of the home. Once the bank has the appraisal report, the lending officer will send your loan application to the underwriting department. In this step to buying a house, the underwriter may ask for additional documentation necessary to approve your loan.

Step 9: Closing

When the steps to buying a house are complete, you are ready to close escrow and take ownership of the house. Several days before closing, the bank will have you complete final tasks and provide you with a settlement statement outlining the final costs for your home loan. The escrow officer will use this information to calculate prorations of taxes and HOA dues that have been paid by the seller in advance. Once the bank provides final approval, the escrow officer will schedule a closing date and time. You will meet the escrow officer to sign the necessary paperwork, including the deed of trust, promissory note, and title paperwork. The officer will provide you with an amount to wire transfer for the down payment and closing costs. Once everything is signed and the wire transfer is received, the officer will record the deed, and you will be an official homeowner.

Summary

Choosing the right real estate agent to advise and guide you through the steps to buying a house will alleviate the stress of purchasing a home. At Modern Living Arizona, we have mastered the process and take pride in making our clients feel at ease when buying their next home. Contact Paul Hansen at (602) 793-0807 or PH@PaulSellsAZ.com to get the process of buying a home started.