The Ten Step Buying Process for Homes
The home buying process begins when you first consider moving to the Asheville area. Start by finding a REALTOR® who can help locate the right neighborhood and home for you. At Keller Williams Professionals of Asheville, our agents use their expertise and knowledge to guide you through the buying process..
Step One – Define Requirements for Your New Home
Now that you’ve decided to purchase a new home, your first step is to analyze your needs. Your real estate agent works with you to determine your exact requirements for your new home, including the style, functions, and features.
First, write down why you are looking for a new home. Are you currently renting and would like to begin building equity? Did you recently marry and outgrow your current residence? Or, did you receive a promotion that requires you to move to a new city? These factors all impact how you approach your home search.
Second, establish a timeframe to buy your home. Your reasons for purchasing a new property and the current state of the market in the area will impact your timeline. Your real estate agent can help you establish a realistic guideline.
Finally, use the mental picture of your ideal, dream home to create two lists. First, describe your wish list for your dream home. Second, list features that are absolute must-haves. Your real estate agent works to help you find a home that meets as many of your criteria as possible. The two lists provide guidance for your priorities. The lists may shift as you get a clearer idea of what you want compared to what is available.
Step Two – Preapproval vs Prequalification
Now that you know what you want in a home, it’s time to determine what you can afford through either prequalification or preapproval. Your agent can provide a list of mortgage company options.
Prequalification is a simpler process than preapproval and can even be done online or over the phone. When you contact a mortgage company, they will ask for basic information about your finances, including income, debt load and more. They use this information to give a rough estimate of the loan amount you might qualify for.
Preapproval is a more in-depth process. The lender performs an extensive check of your finances, including your credit rating, whether you’re a first-time buyer, debt load, down payment amount and more. This figure is a more reliable estimate of what you can afford.
In most markets, preapproved buyers are preferred over prequalified buyers. Preapproval ensures the seller that you’ve gone through an extensive financial background check and limits unexpected obstacles for you to buy their home.
Step Three – Neighborhood Information
People don’t just buy a house; they buy the neighborhood. If you found the perfect house but didn’t like the neighborhood, would you make an offer? Probably not.
Before you begin your home search, make another list of the requirements for the neighborhood where you want your home to be located. Consider things like work commute time, rural or urban, accessibility to entertainment, restaurants and shopping, local schools and the demographics of the surrounding area. For the specific neighborhood, look at your desired amenities, including swimming pools, tennis courts, parking, fitness centers and more. Your neighborhood requirements help narrow in your home search.
Step Four – Home Search
At this point, you should have a good idea of what you can afford, your home requirements and the area where you want to live. Take that information into consideration as you embark on your home search. If you don’t know much about the city where you’re moving, start by finding areas that meet your criteria and then narrow your search to particular properties in those areas.
The most efficient way to find homes is to work with an experienced real estate agent. Your agent keeps you up to date on available properties that meet your criteria and screens them for you. When your agent presents a home that you’re interested in, he or she arranges for you to tour it at your convenience.
You can find available homes by reading local real estate publications, contacting local Neighborhood Associations, visiting the local Chamber of Commerce, looking on the Internet or driving through neighborhoods that meet your needs. Driving around a particular area to search for homes allows you to actually see the house. However, it can be very time consuming and hit or miss.
Step Five – Make an Offer
Now that you’ve found your dream home, it’s time to make an offer. Your real estate agent provides guidance on the offer price by reviewing recent sales of similar homes in the area. Your real estate agent also helps create an offer that has the best chance of being accepted.
Your agent develops a written contract with your offer to meet all the local and national legal requirements. This document details the actions both parties must execute for the transaction and the timeline. It should protect the interests of both parties and ensure your financial position as the buyer.
The contract should include, but is not limited to, the following:
- Legal description of the home
- Offer price
- Down payment
- Financial arrangements
- List of fees and responsible parties
- Amount of the deposit
- Inspection rights and possible repair allowances
- Appliances and furnishings that will stay with the property
- Settlement date
Remember the legalities of this phase are very important. If you have any questions or concerns, address them with your real estate agent right away.
Step Six – Negotiate to Buy
Once your offer is made, you may need to negotiate with the seller to reach an agreement. Keep in mind almost everything is negotiable when you’re buying a home. This can give you a great deal of leverage in the buying process if you have adequate information and use it in an appropriate manner.
Potential negotiable items:
- Closing costs
- Appliances and fixtures
- Occupancy time frame
Counter offers frequently happen. Remain in close contact with your real estate agent to quickly review any changes from the seller. Bargaining is not a winner-take-all deal. Instead, it’s a business process that involves compromise and mutual respect.
Step Seven – Service Provider Coordination
After your offer is accepted, your agent works with you to advocate and coordinate the activities of the service providers. Your agent ensures the vendors have access to the property to perform the procedures and oversees the execution of those procedures on your behalf.
A home inspection is advised when purchasing a property. An inspection of the property, including the foundation and the surrounding environment, ensures the property meets the standards set forth in your written agreement. If there are issues or inconsistencies brought to light during this time, it may delay or even nullify the contract.
Insurance is also required. Experts recommend you obtain title insurance equal to the full replacement value of the home. This kind of insurance is purchased at closing and protects the buyers in the unlikely event that the title to the property becomes invalid. Homeowner insurance protects against theft, fire and liabilities. It often also includes things such as bicycles, furniture and jewelry. Flood insurance is generally only necessary for flood-prone areas. The federal government issues this type of insurance.
In addition to the aforementioned types of insurance, you may want additional assurance for your new home. Home warranties provide protection after you buy. Warranties for new homes protect against plumbing, wiring and structural defects. Existing home warranties cover things like major appliances and structural problems.
Having these procedures done in a timely and professional manner is a must. Investigate each service provider to make sure they are reputable and have a clean operational history. Your agent’s experience in this area is invaluable.
Step Eight – Before You Close
As the closing date, also known as settlement or escrow, draws near, you need to be in contact with the escrow company or closing attorney and your lender to make sure all necessary documents are being prepared for delivery to the correct location on the appropriate date.
Find out what form of payment is required at the closing for any unpaid fees. Make your payment out to the appropriate party. These days, buyers and sellers don’t even have to be in the same room to close a deal. Thanks to computer automation, signed paperwork can be delivered overnight to both parties.
Step Nine – Closing on a Home
Closing is where ownership of the home is legally transferred from the seller to the buyer. It is a formal meeting that most parties involved in the process attend. Closing procedures are usually held at the title company’s or lawyer’s office. Your closing officer coordinates the document signing and the collection and disbursement of funds.
In order for the closing to go smoothly, each party involved must bring the necessary documentation and be prepared to pay any related fees or closing costs. Ask the closing officer which form of payment is required and to whom it should be paid.
Sellers sometimes pay for a portion or all of the closing costs based on local market conditions, terms of the purchase contract and the seller’s cash and timing considerations. Any such concessions should be acknowledged in writing. Most lenders allow a credit from the seller to the buyer for the non-recurring closing costs. However, they usually won’t allow a credit that reduces the amount of the buyer’s down payment or any of the buyer’s recurring costs, such as expenses for insurance premiums, private mortgage insurance (PMI) or property taxes.
Step Ten – Post Closing
Now that you have taken ownership of your new home, you’ll need to have your utilities set up, including electricity, water, and Internet. Also, be aware of typical homeowner expenses, like Neighborhood Association fees, landscaping costs, and annual taxes.
Congratulations on the purchase of your new home!
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