What to expect when buying a home
A couple of weeks ago I explored some of the intricacies of selling a home and the expectations along the way. Today I want to tackle the other side of the transaction…what to expect when buying a home.
Let me start out by saying that our market changes constantly depending on economic factors, but it seems to have settled into a nice little routine since the end of the recession in 2012. During the recession, from roughly 2008 through 2012, buying a home involved some dramatically different expectations and realities. At that time, it wasn’t unusual for offers to come in 10% or more below asking price, and the seller would just be happy to have gotten an offer. We were experiencing what would be referred to as a buyer’s market. That was then, this is now. In today’s market, now considered a seller’s market, two things might happen if you made a similar offer. One, you won’t receive a response at all from the seller (the more pleasant outcome). Two, you might get a response that would be inappropriate to describe here due to the nasty language involved.
Navigating the housing market as a buyer can be somewhat intimidating and frustrating, but it can also be rewarding in the end if you hire a good REALTOR to guide you along the way. Let’s talk about some of the more typical steps to owning a home.
STEPS INVOLVED IN PURCHASING A HOME
- Decide where it is you would like to live. Remember the three key aspects of value in real estate…location, location, location.
- Choose a competent professional REALTOR for guidance along the way.
- Choose a competent professional Mortgage Lending Consultant and get pre-approved for a mortgage.
- If you currently own a home, and you need to sell before you can purchase, that would be an important step to tackle prior to beginning your search. See “Choose a competent professional REALTOR for guidance” in step 2 above.
- Determine the price range with which you are comfortable. This should be established in conjunction with your lender. It is important to remember that a comfortable monthly house payment and one with which you are qualified can be completely different.
- Find that house!
- Make an offer based on a well informed market analysis of comparable homes that have sold.
- Unless you have enough available cash, you will need to provide proof of qualification with the offer in the form of a pre-approval letter from your lender.
- Decide what concessions you want to include in your offer.
- Negotiate the terms of the sale.
- Most offers will be contingent on finance, appraisal, and various inspections. The more uncommon contingency might be the sale of a home that is not currently under contract as well.
- Obtain home owner’s coverage from an insurance company of your choice.
- Choose a closing attorney to handle the settlement on the negotiated close date.
- Satisfy the inspection and appraisal contingencies.
- Listen to advice from your lender, especially the part about not making other expensive purchases that might affect your ability to close.
- Cruise to close! This step involves the final minor details such as setting up utilities to go into your name, scheduling the movers (please note that college buddies working for beer and pizza only apply to first time home buyers), getting the certified funds required for closing, and preparing for your first house warming party! (optional, but always fun)
Let’s delve a little deeper into a couple of these steps as it relates to today’s market. Finding possible homes of interest and making offers can sometimes be more difficult in a seller’s market. The inventory of new and existing homes is currently low, and many times homes can have multiple buyers making offers. This can lead to losing out on a house or two before you have success. It cannot be stressed enough to be prepared as a “ready buyer” prior to beginning your search. Talk with your lender and get pre-qualified. Do your best to save up so that you have the funds available for a down payment and/or closing costs. If you need to sell your current home in order to purchase, accomplish that part first. In today’s competitive market, most sellers are not going to consider the contingency of you having to sell your home first.
Some of the steps I listed above require the services of others such as inspections, closing attorneys, mortgage lenders, movers, contractors, and insurance agents. Knowing who to call that you can trust to give you the quality service can certainly ease some of the stress along the way. An experienced and competent agent can help by referring you to reliable professionals to contact in this regard.
Buying a home can be exciting and rewarding, but also a little frustrating. One can certainly increase the chances of ensuring a smooth and successful outcome by working with a licensed REALTOR to guide you in the process.
The National Association of REALTORS® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
Greater Greenville Association of REALTORS® represents over 2,900 members in all aspects of the real estate industry. Please visit the Greater Greenville Association of REALTORS® web site at www.ggar.com for real estate and consumer information.
“Every market is different, call a REALTOR® today.”