Did you know that, according to studies by Trulia, homeownership is 44% cheaper, on average, than renting? The investment in real estate is beneficial in multiple ways but the thought of buying, or selling, can be very intimidating. This article is part one in a series of two that will explain how partnering with a REALTOR® really makes the home buying or, in part two, home selling process much easier. So let’s first tackle how you go about purchasing your dream home– and how your REALTOR® can help every step of the way.
AN OVERVIEW OF THE HOME BUYING PROCESS
Step One: Finding a Realtor
Buying a home is a huge investment– and can be overwhelming regardless of experience. Once you’ve decided to explore purchasing a property, your first move is to find a REALTOR – a member of the National Association of Realtors – as they are highly trained and have the knowledge and expertise to help guide you through this intricate process.
Buying a home is one of the biggest financial decisions anyone will make in their life. You shouldn’t try to navigate this process on your own. This agent will have an initial meeting with you to discuss your wants, needs and time frames and to review the steps in the buying process.
They should go over the paperwork involved and answer any questions you might have. You will walk away from the meeting with a much clearer picture and a good start on what should be a very valuable relationship with your agent.
Step Two: How Much Can You Afford?
Now that you’ve decided to purchase a home, you want to make sure that you first set an appropriate budget. Knowing what you can qualify for in a loan, and where your comfort zone is as far as payment, are two key elements in your search.
In addition, checking your credit history will determine interest rates, type of financing and whether you would qualify now or later for a mortgage loan. There are many types of financing out there – down payment assistance, government-backed, portfolio, first-time homebuyer to name a few. Finding the right lender to help you figure this out is just as important as your REALTOR!
In fact, your agent should be able to give you several names of reputable lenders to begin the process of “pre-approval”. This simply means that the lender has looked at your credit history and work/income status and given you an idea of what you can buy based on those factors. This is important to have when beginning to look at homes. It will become a key factor at time of contract and something your REALTOR will need when it is time to start looking at homes.
Step Three: Beginning Your Search
Armed with the information from your initial meeting and also from your lender, you and your agent should have a pretty good idea of what you may be looking for as well as what areas fit your criteria. Your agent will begin by setting up online searches in these locations, and any others that may meet your specifications.
This should be a collaborative process – one with your participation and feedback as well. Most apps and company websites are designed to help you communicate with your agent regarding specific properties and areas of interest. They should have access to all the listings available through their membership in the area Multiple Listing Service and should update you in “real time” of anything new on the market meeting your criteria.
By viewing these properties with your REALTOR and giving feedback on what you liked, and didn’t like, you are helping to clarify exactly what it is you are looking for in your new home. Your REALTOR will be able to provide you with area sales statistics as well as comparable properties, characteristics and the specific sales history on any home you are interested in exploring further.
HOW TO MAKE AN OFFER ON A HOME
Step Four: Making an offer
This is an exciting, and scary, step! When you’ve decided on the home of your dreams, your next move will be to make the seller an offer. Your REALTOR® should help you every step of the way in putting this together and to negotiate the winning bid. Your agent knows the current market conditions and what it takes to successfully write an offer that will be seriously considered by the seller.
Your offer will take into account those market statistics your agent has provided and your agent will guide you through completing a strong and competitive offer. There will be several documents to complete, along with the contract. Each area is different, and each contract is different, so your agent should again review the details of every aspect of the documents you are completing – and give you time to review and understand what it is you are completing.
Once the offer is presented to the seller, one of three things will happen – the seller will accept, reject or counter your offer. Your REALTOR, a skilled negotiator, should keep you informed and present you with your choices, allowing you to decide what you will accept, and what you will not. Sometimes an offer can be countered a number of times…sometimes accepted right away! It depends on the seller and the strength of your offer.
Step Five: The Transaction Process
Once the seller accepts your offer, the home is considered to be “in contract” and the timelines in the transaction process begin. This includes formal loan application with your lender, attorney review, home inspections and remedies, property appraisal and more. Each has a specific number of days or a date to meet throughout the transaction. Your REALTOR should provide you with copies of everything you have signed and help you stay on track for what needs accomplished and when. There can be consequences for time frames that are not met or actions that are missed.
Ask your REALTOR for a list of those days and dates and keep them in your calendar for reference. Think of each one as a bridge to cross on the way to your final destination! Your REALTOR will be the master coordinator of the process, ensuring that all contingencies are met in a timely fashion. The preparation you make with your REALTOR in steps one through four will make this part of the process go more smoothly and help ensure a successful closing!
THE CLOSING PROCESS
Step Six: Closing
Once all the terms of your contract are met, and you receive your “clear to close” from your lender, if you have one, it is time to close! There are many different customs and several types of ways to close a property but most involve a title company. The title company pulls all the elements together, prepares the deed, records all necessary document, handles pay-offs, orders surveys, collects funds and pays all applicable entities and provides clear or transferable title to the home.
They also provide title insurance, which covers any ownership title issues that may arise during the time you own the home. You may have a round-table closing, where all parties meet to sign documents, or escrow closing, where all necessary documents are gathered and obtained and funds dispersed behind the scenes. Once each is complete, the property transfers. Congratulations! You own a home!
Why Having a REALTOR® is Helpful
Is a REALTOR really necessary to buy a home? The resounding answer is YES – if you want to have a worry-free transaction that provides you with the very best home for your needs and your budget. One that you will enjoy for all the years you own the home. And your REALTOR is a fantastic personal advisory source. Their level of expertise is unmatched. If you’re looking to buy your dream home, make sure you contact HER REALTORS® who will be with you every step of the way!