Step 1. Pre-Approval
Pre-approved buyers are considered more serious and therefore get favored in negotiations. This can be done by scheduling an appointment with either your preferred bank, or a mortgage broker. Being approved ahead of time also saves you the disappointment of finding your ideal home, only to find out later you are not able to get the proper financing to close. A pre-approval is the compass that allows you to begin mapping out your life in terms of home-ownership.
Step 2. Meet with your Agent
This is where you prepare each other for what to expect along the way. Communication is critical to a successful relationship. You and your agent need to know exactly what each others expectations are. Here are just a few topics that must be discussed:
-Your needs (number of bedrooms/bathrooms etc.) vs. your wants (10 acres in the city) areas you prefer, the price range you’re comfortable in, and your timeline. (Generally speaking, it takes anywhere from 30-45 days from purchase to close.)
-Your agent needs to know your availability for showings/app.’s etc. (Every day? Weekends only? Anytime after 4pm?)
-Your agent needs to know your expectations of them in terms of availability and preferred communication. (Email or phone? Every day or once a week?)
-Your agent should give you blank copies of any forms you will be expected to sign. They should briefly explain what each are for, and this gives you time to read them over should you have any questions. If you fully understand what you are signing, you won’t feel pressured or stressed come time to make an offer.
Step 3. Looking for a Home
This is where it gets fun, however it’s important you limit yourself daily when looking at homes. If you choose to view too many, they all start running together. To help keep track of homes you like and which you don’t, instantly eliminate them. (For example: If home 1 is better than home 2, throw out home 2 right away. If home 3 is better than home 1, throw out home 1 right away.)
Remember, communication is critical. Not all agents are Miss Cleo. If you begin eliminating homes that fit your initial criteria, tell your agent what you didn’t like and why. Sometimes it takes viewing a couple homes to really nail down what it is you’re looking for. Should you come across a For Sale by Owner give your agent a call first. This will give them an opportunity to ask the owner if they are working with Buyer agents.
Step 4. Picking your Home!
So you’ve come to the crossroads now and found a couple homes you really like. Your agent should give you as much information as they can to help you make a final decision. Once you’ve made that decision, your agent should prepare a CMA (Comparative Market Evaluation) on the home for you. This will help show you what “fair market value” of the home is, and help you determine an offer price.
Step 5. The Offer and Negotiations
You now have an idea of what fair market value is but you should decide before the offer how much you are willing to pay, and on what terms. Making an offer is only the first step.
It’s important to know what terms you absolutely can not negotiate, and be able to give a little on the others. Once your offer has been presented one of three things will happen. Regardless of the outcome of your initial offer, never take it personally. Here’s what you can expect:
1) The Seller will accept your offer.
2) The Seller will reject your offer.
3) The Seller will counter your offer.
If the Seller accepts, great! Now you can begin the process of removing any conditions. If the Seller rejects your offer, you have the choice of making another offer, or walking away. Be aware, some times the counter process can seem never ending, it’s extremely important to remain calm and focus on your goals.
Step 6. Removing Conditions
Most offers (but not always in certain circumstances) have what are called conditions, and a time frame for which you have to remove them. Conditions may be along the lines of arranging financing, getting an inspection, and insurance approval. There are many others as well, such as a condition upon the sale of your current home, if such is the case.
Removing conditions has to be done in writing and before the deadline. This is done by either declaring the condition fulfilled or by waiving it. Should you choose to waive a condition, your agent should explain the potential risks involved prior to doing so.
Step 7. Choosing a Lawyer/Notary and Closing
If you do not already have a lawyer or notary who has experience in real estate transactions, your agent can help you find one. As tempting as it may be, it is not recommended to choose an expert based on rates.
Closing day is the day you’ll be signing all the mortgage documents. There’s no need to feel pressured, so don’t sign until you understand. Your lawyer/notary should be able to explain all documents to you in a satisfactory manner. If you do not understand something, ask. If you want, you may request blank copies and review them prior to signing. As well, today you present the funds for closing costs and any down-payment.
Step 8. Possession Day
Here are a few suggestions to help make moving day less stressful:
1) If you’re hiring professional movers, call at least two to get competitive quotes.
2) Change your address with your bank, post office, etc. one month in advance. Call and verify the address change has been received if necessary.
3) Call to order your utility hook-ups 1-2 weeks in advance. You wouldn’t want to spend your first night in a sleeping bag. Camping is fun.. But that would be one expensive tent.
Congratulations! You are officially a new home-owner.