Buying Real Estate Step-By-Step

Buying a home is exciting. Whether you're buying a starter home or finally making your dream home a reality, it can be a great adventure. Planning and preparation, loan pre-qualification, and selecting the right real estate agent are crucial to the process. Whether you’ve spent years saving and preparing to buy a home, or unsure if you can afford it, the questions surrounding a home purchase can feel endless.  The home-buying process is becoming more and more complex, and can also be very time-consuming and costly if you’re not familiar with all aspects of the process.

The O’Dea Group is committed to bringing you current information and resources to help you make an informed decision that's right for you.  If you are a Buyer, The O’Dea Group always represents you.

1. Work With A REALTOR® Who Provides Buyer Representation

Traditionally, Realtors® have represented only Sellers in a real estate transaction. During the1980s, states across the country directed that agents must disclose to the Buyers that they legally represent Sellers. Buyers began asking, "Who represents me?" The result was the birth and subsequent growth of a new service within the real estate industry called Buyer Agency.   When Buyers work with a real estate professional who is 100% loyal and completely committed to them, chances are that the entire home-buying process will go smoothly, with more buyer satisfaction.

• A Buyer Agent works solely for you and has no legal or other responsibilities to the Seller. 
• When working with a Buyer Agent, you have the advantage of personal representation, independent counseling, loyalty, confidentiality, due diligence, disclosure, and trust.  On the other hand, while helping you present an offer, negotiate, and close a transaction, a general real estate agent has certain fiduciary responsibilities to the Seller and agent of any property you choose.
• A Buyer Agent can show you every home listed in the Realtor’s Multiple Listing Service, plus Real Estate Owned (REO), and For Sale By Owner (FSBO) properties.  Additionally, a Buyer Agent can show you brand new and unlisted homes. 
• A Buyer Agent will disclose more information to you as a Buyer because their fiduciary responsibility is to YOU, and the Buyer Agent can be more forthcoming with any negative aspects about properties that you’re investigating for purchase.
• As your personal ally, advocating your best interests, a Buyer Agent is obligated to provide you with maximum information about buying a home, each step of the way.  That means disclosing specifics about location, property values, offering price, negotiations, counter offers, contingencies, financing, and the entire closing process.  Armed with such vital and detailed information, you will be thoroughly prepared to make decisions that are right for you and your family.
• A Buyer Agent is fully qualified and highly skilled in the back-and-forth negotiations and financing queries that precede the closing of mot real estate transactions.  Second, a Buyer Agent is also experienced and committed to helping protect your best interests in the purchase.  In representing and supporting you, that’s a powerful combination!
• Since a Buyer Agent is legally obligated to only you, The Buyer Agent can help you maintain absolute privacy with regard to financial and personal information.  That’s another important benefit of working closely with a qualified Buyer Agent.
• Your Buyer Agent will ask you to sign an Exclusive Buyer Agency Agreement.  This Agreement specifies the duties owed to you by your Buyer Agent and ensures buyer representation throughout the home-buying process.  Since buying a home is such an important decision, being misinformed about this topic can have a huge impact on how well your home purchase will go.  Here are some questions you can ask a Realtor®:

  - "Are you a Realtor®?" You'll probably have the best luck finding the right home if you work with a Realtor® not simply a real estate agent. Realtors® are members of the National Association of Realtors. They are generally full-time agents who have committed financially, educationally, and professionally to being an expert in the real estate industry.
  - "How often will you notify me of new listings?"  In some markets, homes enter the market and sell within the first hour. You need an agent who is serious about finding a home you'll love. Buyers should expect to hear from their agent whenever a home matching their description appears on the market.
  - "How often can I expect to hear from you?"  Just because your dream house isn't on the market yet doesn't mean you won't have questions. Be sure to work out an arrangement from the beginning.
  - "How quickly can I expect you to return phone calls?" You don't want to be ignored. If the agent doesn't have a callback policy ("You'll hear back from me within two hours/30 minutes/before the day ends"), you may not get the service you expect.
  - "Are you a full-time agent?"  "Hobby agents" aren't as capable of meeting your expectations because their attention is divided by other responsibilities. Limit your search to full-time real estate agents.
  - “Who will you represent in my transaction?"  Use an agent who can truly represent your interests without having to bow to another client. Consider hiring a Buyer’s Agent.
  - "Will you give me your honest feedback?" Avoid "yes-men." If you can't find your dream house because it simply doesn't exist at the price you've quoted, you need more options. When you find a strong agent, you get more out of each meeting.
  - "How long have you actively worked in the area?" While the answer to this question shouldn't necessarily be a deal-breaker, an agent who has worked in the area a long time may be more aware of properties that match your description.

• Choose someone aggressive, but who doesn't make you feel anxious or pressured.
• Experienced real estate professionals often earn designations that separate them from the pack. These designations are earned through training that helps the agent become a specialist in certain areas. Pay attention to agents who have designations listed after their names on business cards. Specifically ask the agent what each one means.
• Find an agent who is savvy about technology. Through the online tools available to agents these days, you can expect nearly immediate e-mails about new property listings and quick replies to your queries.

2. Understanding Your Credit

The second step in the home-buying process is understanding your credit.  When you apply for a mortgage, lenders will review your credit report. Your credit report is a history of how you have managed your finances; it's a record of money you have borrowed, and your history of paying it back.    Your credit will have a big influence on whether or not you can get a mortgage, the terms of that loan, and the interest rate.  

• What Is A Credit Score?
• Why is It Important To Have Good Credit?
• How Can I Check My Credit?
• How Is My Score Determined?
• What Can I Do to Improve My Credit?

3. Mortgage Pre-Approval – What Can I Afford?

If you are like most Buyers, a home is the mot expensive purchase you will ever make, and you will probably need some form of financing.   It’s very smart to meet with one or more lenders before beginning your home search so it will help you to know how much you can afford.  It’s important to know what price range you can afford in order to realistically narrow your search.  You want a home that will fit comfortably into your budget, taking into account your expanses and anything extra.

There are many lending institutions that offer a variety of mortgage products.  Financing options and rates can vary widely, so it’s important to do your research and shop around to ensure you get the mortgage that best meets your needs at the best place.

4. What Makes A House The “Right Home”?

Once you know how much you can afford, find out what you need in a home.  Your lifestyle will  help determine what your needs and wants are.  It’s important that your new home have everything you need before you get everything you want.  Deciding where you want to live can be a matter of your lifestyle, so you have to decide what your priorities area.  The community you choose should accommodate your lifestyle priorities.  How close do you need to be to your job?  Is it a commute that you can tolerate?  And, if you have children, how close are you to their school?  What schools would they attend?

Selecting the right home is a very exciting process, but what makes a house the “perfect home?”  Before you begin your search, ask yourself these questions:

• What Can I Afford?
• Where Do I Want To Live    
• What Are My Needs vs. Wants?

5. You Have Found the Home Of Your Dreams!

Once you have pinpointed your dream home, it’s time to get serious about the financial and contractual side of the purchase.  Following these steps will ensure a smooth transaction:

• The home Buyer will discuss the possible financing options for purchasing the chosen home and selects a financing program with the lender.
• The Buyer’s Agent formulates an offer by preparing a Contract of Sale for the Buyer’s signature.
• The Buyer’s Agent discusses the different types of inspections that are required to be performed and those the buyer might want to consider if potentially beneficial in purchasing  the selected home.
• The Buyer’s Agent estimates the closing costs for the Buyer, determining total funds required for purchase.
• The Buyer’s Agent suggests contingencies for finding your home of choice, financing, the settlement date, selling your current home, home owner warranty options, and seller-paid closing cost assistance that could be negotiated as part of the offer.
• The Buyer’s Agent provides documentation for the home buyer’s earnest money check.  The earnest money check usually ranges from $500.00 to $1,000.00 or more, depending upon the source and type of home. 

6. Negotiating The Offer

• Your Realtor will deliver the offer to purchase to the Seller’s real estate agent or the Seller in the case of a For Sale By Owner (FSBO), and coordinates the negotiation with and on behalf of the Buyer.
• The Seller will either accept, reject, or counter your offer.  However, the first reasonable offer made on a home will most likely get a good response, being either accepted or countered.  Make your offer one that will be seriously reviewed.  Your Buyer’s Agent will do a search for properties that have sold within the last six months that are good comparisons to the home that you have selected, to give you a good idea of the  home’s market value.  
• Counter-offers made by the Seller may be returned to you if your offer was not exactly what the Seller wanted.  Your Buyer’s Agent is skilled in negotiating offers.  If  you get a counter-offer, review the counter-offer and accept it, counter their counter-offer, or reject it and look for another home.  You may go back and forth a time or two before your offer is accepted or rejected.
• If your offer is accepted, your earnest money check will be deposited in the Broker’s escrow account and will be credited to you at settlement.  If your offer is rejected, your earnest money check will be returned to you.

7. So, Your Offer Was Accepted  

• The Buyer’s Agent will deliver copies of the executed contract to the Buyer, the Buyer’s lender, and the title company that has been selected to conduct the settlement.
• The Buyer pays the lender for the appraisal and full mortgage credit report.  The Buyer’s Agent will schedule all of the appointments with the selected home inspector, pest inspection vendor, and any other inspectors desired by the Buyer.
• The Buyer’s Agent will meet the home Buyer at the property to conduct the inspections.  The inspections may include a home inspection, pest inspection, well and septic inspection,
• The Buyer will coordinate with the selected insurance agent to obtain a home owner’s insurance policy for coverage required by the lender no later than 10 days prior to settlement.

8. You’re Almost Home - Prepare for Settlement

Settlement is an exciting day! 

• Before Closing
• What to Bring
• At the Settlement Table
  
  

Before Closing

• Start looking for Homeowners Insurance – the home Buyer MUST have insurance on the home before settlement.  Talk to a number of insurance companies to get the best rate.
• Get a head start and plan your move – The Buyer should schedule time to get belongings sorted and packed for the move.  This can be a large project for some people.
• Each person on the loan must be present at Settlement – This means that if the Buyer has a co-signer, both parties must attend.  If for some reason one or all parties cannot be present at settlement, a person must be appointed the Power of Attorney to sign for the missing party.  If the Buyer or another party will be absent, be prepared to appoint a Power of Attorney before settlement.
• To appoint a Power of Attorney, a property-specific Power of Attorney document must be signed by all parties (Buyer, Buyer’s  spouse or co-signer, and person appointed) and notarized. This document must be submitted to the lender and title company prior to settlement, along with a copy of a valid government-issued photo identification card of the appointed person. The person who is appointed the original Power of Attorney must be present at closing and verified. The absent person(s) will be asked to verify over the phone that the person who has been appointed the original Power of Attorney is present and has approval to sign for them at closing.
• Your Realtor will get a list of the utility providers and coordinate with the Seller’s agent when to have the Seller transfer the utilities so that the Buyer can arrange to have them turned on and put in the Buyer’s name.
• The Buyer’s Agent will conduct a walk-through of the home within 5 days of the settlement date, ensuring that the home is in basically the same condition as when originally contracted.  Un-repaired damage in the home sustained in the moving process by the Seller or from other causes, can be an issue requiring further negotiation.  Ensure that all the appliances are still working and that everything is in order as expected.

What To Bring

• In addition to meeting all the pre-closing requirements, there are certain items that the Buyer will need to bring to settlement in order for a smooth closing. Without these items, the closing may be delayed.
• The Buyer should verify that all necessary deposits and all paperwork including mortgage, title, homeowners insurance, and any other paperwork required by local or state governments have been completed.
• The home Buyer needs to bring a valid photo ID, like a driver’s license or passport, to settlement. 
• The home Buyer will be required to obtain a check for certified funds or cashier’s check for the balance of funds required for settlement.  This check can be made payable to the home Buyer or the title company.  A personal check for any funds owed by the Buyer at settlement will not usually be accepted by the settlement agent.

At The Settlement Table

• The Buyer’s Agent, Buyer, Seller, and the Seller’s Realtor shall attend settlement.  This is the final step.  All fees are calculated, accounts adjusted, and credit/debits documented on the Housing and Urban Development Settlement Sheet, also known as the “HUD1.”  All invoices from different vendors, the lender, and title company are signed and officially executed.  The outstanding balance of funds as “cash due from Buyer” is to be paid by the home Buyer at settlement.  The title company shall refund any monies due the home Buyer, should the home Buyer provide an amount greater than that owed.
• When all the papers are signed, the home Buyer will be provided with a copy of everything for their records.  These should be kept in a safe place.
• At the conclusion of settlement, the Seller gives the home Buyer the keys to their new home.

9. Prepare for Life in Your New Home

Before rolling out the welcome mat, consider some moving basics:  arranging for an alarm company, turning on electricity, water, and gas, cleaning or replacing the carpet, and notifying your local post office of your new address.  The best time for renovations is often before the Buyer moves in.

Final Thought – Always remember that the Contract of Sale is a written document that expresses the “meeting of the minds” between the home Buyer and the Seller.  If you are not sure about any phase of the process, ask your Realtor.  Your Realtor is your guide, source of knowledge, and expertise, whose sole purpose is to make your home-buying experience as comfortable, knowledgeable, and enriching as possible as you progress through what should be a wonderful experience in your life.   GOOD LUCK!