The market is different today, but the basics remain the same.
Here are the seven basic steps to take on the way to buying your home. Whether you’re a first timer or have done it before, following these steps will help you understand the home buying process in today’s changing market.
1. Get Fired Up: Your Motivation
Why are you buying? Get a clear picture of your immediate needs and long-term plans. Is it time to stop renting and buy a home? Mortgage rates have never been lower. Are you growing a family and need more room? Look at your 5-10 year plan, schools, commute and lifestyle. Perhaps you’re downsizing and looking to simplify. Or perhaps an attached in-law or rental unit makes sense. Whatever your story, this is Step One in making a successful plan.
2. Get Funded: Choose a Lender
The sooner you speak with a lender, the better. Get referrals and interview several who have lots of local experience. The financing landscape has changed, so figure out what you are comfortable spending and how much you want to borrow. Ask which loan products meet your needs and are best for you. Once you have gotten pre-approved and established a price range, you’re ready to start shopping.
3. Get Cracking: Online Search
As everyone knows, the internet is a magical way to see listings, learn the neighborhoods and discover what’s happening around town. It’s easy to find Homes for Sale on the MLS and check out Cities and Neighborhoods of interest. You can even save your searches and sign up to receive customized emails that match your criteria. This is a great way to begin your search.
4. Get Out There: Personal Visits
Make regular trips to open homes and neighborhoods that interest you. It’s still the best way to get a true feel for what’s important to you: size, location, architecture, garden, condition, light, etc. Cruise the various communities, talk with locals and examine all the styles, layouts and price ranges. You will get an even better sense of current home values—and likely find options you hadn’t considered. A private showing arranged by your realtor is ideal for getting a long, thorough look at a property, without the usual distractions.
5. Get Help: Your Realtor
Choose a realtor with local market expertise who communicates well. Someone you trust to protect your interests and negotiate strongly for you. A pro-active realtor, who is in the market every day, will help focus your search on properties that meet your needs, saving you time and energy. Often the best value is found in a home that has been under-exposed or overlooked, in a great neighborhood that’s new to you. Or maybe it’s being shown a gem that hasn’t hit the market yet. Put your realtor’s local knowledge to work for you.
6. Get Down to Business: Writing an Offer
Here’s where good realtors shine—judging the market, analyzing the “comps” (recent sales and current listings), assessing the competition (from other buyers) and focusing on your needs. To figure the “true cost” of a prospective purchase, study the property disclosures, inspection reports, contractor bids and local city ordinances. A strong offer, with the right price and attractive terms, should also factor in the short- and long-term costs of any repairs and remodeling.
After the seller accepts your offer, the contract provides an Inspection Contingency period. You then have time to hire professional contractors to inspect the property and make a final evaluation (and possibly re-negotiate) before going ahead with the deal. There is also a Loan and Appraisal Contingency, which provides your lender time to make sure all the financing requirements are met. When your contingencies have been removed, and you are fully satisfied with the property, it’s time to pack!
7. Get Moving: Escrow and Closing
The title company, usually chosen by the buyer, provides an escrow officer who is a neutral third party representing both buyer and seller. The buyer’s deposit is held here, pending confirmation of a clear transferable title to the property, terms and financing conditions being met, and both parties’ agreement to transfer the deed and close escrow. Lawyers are not needed for this in California. Realtors often accompany buyers when the loan and escrow documents are signed at the title company. Signing usually happens during the week before closing. Possession of the property takes place once the sale has recorded (closed) with the county. Congratulations!