“A journey of a thousand miles begins with a single step.”
That’s how the saying goes, right? Also how buying a home goes, although hopefully the experience doesn’t feel like a thousand mile trek. If you are thinking about buying your first home, or if it’s been a long time since you’ve been through the process, the first step can be the hardest one to take. Knowing where you want to finish is the easy part: you can picture yourself walking up to your new front door, key in hand. Knowing where to start, and who to ask for help, though, isn’t always obvious.
It doesn’t matter if you are buying now, or two years from now. Here’s how you get started if you are looking to buy:
Step 1: Talk to a lender and get the scoop.
Yes, I know, you can’t help yourself and you’ve already started looking at listings online. That’s perfectly fine. But figure out what you can afford before you start walking through doors. Run the numbers with a lender that is honest with you; decide how much you are comfortable paying , and look at how that matches up with what purchase price you qualify for. Your credit scores and debt to income ratio play a huge role, as does the amount of money you have saved up for a down payment. I will let the lenders explain the details; that’s not my department. I highly recommend you talk to this guy: Scott Fournier. He will explain everything and help you plan for your purchase.
Step 2: Get a good buyer’s agent.
Having a buyer’s agent doesn’t cost you anything: the commission is paid from the sellers’ funds at closing, but your buyer’s agent will have a signed agreement to work for you, and will hold your information confidential. You will not get a better deal by working directly with the listing agent or the builder (in most cases). A good buyer’s agent will help you clarify what you are looking for, identify neighborhoods and properties that could suit, and answer your questions about the process and the area. It’s also perfectly fine to start working with a buyer’s agent NOW to track the market, even if you aren’t thinking of buying for a year or more. If you’re in Northern Virginia, how about you reach out to me and let me help?
Step 3: Monitor the market.
Your timeframe for buying will determine how long you spend monitoring the market. Have your buyer’s agent set you up to get daily email updates of homes that fit your criteria. Getting a regular update lets you see what homes in your target price range look like, what neighborhoods are popping up in your search, and helps you narrow your focus to exactly where you want to be. If you are on a shorter timeframe, you’ll watch those notifications like a hawk. If you are months away from buying, you’ll get a handle on market movement, pricing, inventory levels…and you’ll be an educated consumer when it comes time to start viewing homes.
Step 4: Opening doors.
By now, you’ve gotten pre-approved for your mortgage, found a buyer’s agent that you are comfortable with, and have a good idea of where and what you want to see for homes. This is the fun part. When you start viewing homes with your agent, know what you must have, what you can’t stand, and what you’d like to have in your new home. Don’t worry, those will change a little once you’ve walked through some homes…everything is a trade-off. Your agent will help you compare homes and neighborhoods. And yes, you will most likely have that angels singing, sun shining moment when you walk into THE HOME. I’ve seen it numerous times, and it’s glorious each time it happens.
Step 5: Offer and negotiation.
This is not the fun part. A good buyer’s agent will help you clarify your best case terms for the house you want to buy (purchase price, seller subsidy, closing date) and then help you structure an offer that will lead to the best outcome. Expect some back and forth, it goes with the territory. And keep in mind that the sellers don’t have it out for you personally, they are trying to get the best deal from their perspective. Know before you make the offer the maximum amount you are willing to pay for the home, so that you can keep your cool during the negotiations.
Step 6: Contingencies and Inspections.
Also known as the ‘hurry up and wait’ period. After you’ve ratified your contract, you have a time period to get your financing approved (including a satisfactory appraisal of the home’s value by the lender) and perform your inspections (home, radon, termite, well, and septic). I need to write a full blog post on the contract contingencies. In fact, I’ll work on that and link to it here when it’s finished. For now, just know that once you’ve removed all of those contingencies, you are locked in and ready to roll for closing.
Step 7: Settlement. And keys.
On the date of closing, you will do a final walkthrough at the house to make sure that it is in the same condition as when you wrote the offer: everything is in working order, items that were supposed to convey are still there, and any home inspection repairs are completed. After that, you proceed to the closing table and sign documents until your hands cramp. You’ll need to bring certified funds (or wire the money in) for the remainder of your down payment and closing costs; your lender will give you the amount ahead of time. Once all the documents are signed, you’ll be handed the keys to your new home. Congratulations!
This is just a simple roadmap, and there are many details involved for each step in the process. I’m happy to answer questions about any part of it…it’s what I’m here for, after all. Feel free to comment or ask me privately.