Buying a home can be one of the most exciting and rewarding things you ever do, or it can be one of the biggest nightmares you will ever go through. How you experience the home buying process depends entirely on how well prepared you are and how knowledgeable the people helping you are. The following report should clear up a lot of confusion you might have.

1. Selecting a Realtor

This is probably the most important step in the process. You will, for all intents and purposes, be in partnership with your agent/s. You will be confiding in them on a business level and often on a personal level. They will be the people dealing with any problems that crop up along the way. They are the key to your finding what you want in the area you want for the price you want. Be selective, look for someone you feel comfortable with and with whom you're experienced and knowledgeable. Working with a duo instead of an individual agent has its benefits, the most important being that time off for the agent does not become a problem for you. Don't be afraid to ask for references; most agents are used to this and will not object. Once you select someone you feel good about working with, sign them up as a buyers' agent. It is very important that the person you're working with is representing you exclusively.

2. Meeting with your agent for a home buyer's consultation

Also a very important step in the process, this is when you and your agent prepare each other for exactly what to expect along the way. The following points should be covered and fully understood during this meeting:

  • Exactly what your needs are (number of bedrooms, baths, etc.), in which areas you're looking, what price range you are comfortable with, and what your time line is. It takes generally takes 30 to 45 days from contract to settlement.
  • How often you are available to look and what you expect from your agent in terms of availability and communication (e-mail, phone updates either daily or weekly).
  • Your agent should explain financing options and give you references for lenders, usually three. They should explain the difference between the various loan programs available and anything else that you might be confused about.
  • Your agent should give you copies of all the paperwork you will be expected to sign throughout the process and briefly explain what each form is for.
  • Your agent should explain buyer brokerage vs. seller's representation, and you should sign a buyer broker agreement.

3. Selecting a lender

Most people, when selecting a lender, call various lending institutions to check on rates and generally go with the lender with the lowest rates. We strongly recommend that you go with a lender who has been referred to you either by your agent or by someone who has actually gone through the entire loan process with that lending institution and loan officer. The loan officer is just as important -- if not more important -- than the lending institution. Most lending institutions offer the same basic loan programs (conventional fixed rate, FHA and VA, etc.), but each will usually offer their special "niche" products. For example, some lenders specialize in low down payment loans, some specialize in loans for people with marginal credit, some specialize in loans for self-employed borrowers, etc. Your agent will know how to guide you in the right direction.

4. Meet with your lender

Usually this happens in conjunction with Step 2. You will want to meet with the loan officer as soon as possible in the process, to review and ensure that you understand every aspect of the loan process. One of the best strategies we can offer you is to obtain pre-approval. It is simple to do and can save you thousands in negotiation on a new home. Most lenders can get you approved for a loan even before you have selected a home.

Your loan will be approved "pending a property and appraisal." Pre-approval makes you, the buyer, much more comfortable knowing that you won't find your dream home only to have the loan turned down. The seller is also much more likely to deal with you on the sales price if he/she knows that you are a serious, qualified buyer and that nothing will fall through. You should leave the lender appointment with a clear understanding of what your complete monthly payments will be, a pretty good estimate of how much cash you will need (from beginning to end), and what supporting documentation you will need to furnish to the lender.

5. Look at homes

This is the fun part. It is important to limit the number of homes you're looking at in a day. If you look at too many homes, they begin to run together, and you can't remember one from another. It's a good idea to use a checklist form to help you track the properties you have seen. It is also helpful to actually begin to narrow down the properties after each visit. For example, if house #3 was better than house #2, immediately eliminate house #2. Remember, communication with your agent is crucial. It's important to let your agent know which houses you like and why, as well as which houses you don't like and why. Sometimes it takes going out and looking one time before you and your agent really have a good grip on exactly what you're looking for. Call your agent, and have him/her do the research on any advertised properties that look interesting to you. That's what agents get paid for. A lot of new-home sites won't let you return with representation if you visit the site the first time on your own, so wait for your agent before you look at new homes. If you should become interested in a for-sale-by- owner, ask your agent to contact the seller before you do, to see if he/she will cooperate (pay a commission) with a buyers' agent.

6. Select a home

Once you've narrowed your search down to one or two homes that you really like, your agent will do whatever research necessary to help you make your decision, but the decision will ultimately be yours. And surprisingly enough, it's going to be a pretty easy decision to make. School reports are generally available and can give you lots of good information. Buyers are welcome to call the local chambers of commerce for any statistics in which they might be interested. Local zoning and planning offices are a good source for future road plans, etc. Once you've selected one home to focus on, your agents will do a comparative market analysis on that property. This involves determining "fair market value" by looking at what other buyers were willing to pay for properties similar to yours in the same neighborhood or area.

7. Making an offer and negotiation

When making an offer on a property, it is important to decide ahead of time how much you are willing to pay at what terms for the house. You already know what fair market value is. Now you have to decide what price you will offer; how much earnest money deposit you will offer; what personal property you wish to have convey (everything is negotiable); how much you are asking the seller to pay toward your closing costs; when you plan to settle; and what inspections you plan to have conducted.

When negotiating with any seller, it's best to remember not to take anything personally. Also, try to put yourself in the seller's shoes. Figure out what's not negotiable to you, and be willing to give a little on the things that are negotiable. A good agent should be able to give you tons of advice about how to structure your offer. Once your offer has been presented, the seller will either accept your offer outright, reject your offer outright, or counter your offer. The counter process can go back and forth many times. It's important for all parties to keep their cool and focus on the goal.

8. Get inspections & remove contingencies

If, as part of your offer, you asked for time to be allowed to have inspections conducted on the property, you should have written what is called a contingent offer. Offers can be contingent upon loan approval, inspections, the receipt of acceptable homeowners or condo association disclosure packets, the sale of property, and many other conditions. It is important that all deadlines be met and that all contingencies are removed exactly the way the contract describes. Your agents are responsible for making sure this is done correctly.

9. Select an attorney

The sales contract will dictate who gets to chose an attorney to represent the transaction. Usually, it's the buyer's decision. If you don't know an attorney or a title company, your agent can recommend someone. The attorney will take care of ordering a survey, title insurance, title search, and drawing up all the documentation. They will also conduct a settlement. Most people don't know that the attorney or title company doesn't actually represent the buyer; they represent the sales contract. Their job is to make sure that all the terms that have been previously agreed to are met. If any problems that require representation were to arise, each party would need to hire its own attorney.

10. Walk-through

Most sales contracts will give the buyer the right to one presettlement inspection. This is your last chance to find any problems and have the seller correct them. Read the contract carefully, but most contracts read that all electrical systems, plumbing, appliances, heating, and air conditioning need to be in working order at the time of settlement. These are the items you checking for at walk-through.

You are also checking for any other items the seller previously agreed to fix or replace. If anything is found to be defective or missing, you have several options: The seller can remedy the problem prior to settlement; the seller can credit you the amount of money it would take to hire someone to remedy the problem; or the seller can promise to correct the problem and place into escrow with the attorney the amount of money you will need to pay someone else if the seller does not perform as promised.

On new-home purchases, the process is a little different. The builder will generally do a walk-through with you approximately one to two weeks prior to settlement, resulting in a "punch-out list." Hopefully, they will get everything on the punch-out list completed prior to settlement. If not, most new-home contracts allow the builder to complete whatever minor items have been noted in a "reasonable" period of time, generally three months.

11. Closing on your home

This is the day you "sign your life away," as most clients say. Not really. You will be signing all of the loan documentation, which can seem never-ending. The person conducting the settlement should be able to explain every document to you in a satisfactory manner. Do not ever feel intimidated. If you don't understand, don't sign. Your agent will help your understand everything. If you like, you can request blank copies of the documents you will be signing in advance so that you can carefully review them. You will decide at the settlement whether your want owner's title coverage or just lender's. You will have to present whatever down payment and closing-cost funds you were expected to pay. This check must be certified; personal check usually are not accepted.

12. Moving day

This is the last and probably the hardest step in the home-buying process. A little bit of planning and forethought, though, will make for a much smoother move. You will want to make arrangements with a moving company as soon as you can. Call at least two in order to get competitive quotes. They will usually ask to come to your home to get an idea of how much they will be moving and the distance they will need to travel. Be sure to change your address with the post office, your banks, and any creditors at least 30 days in advance. To avoid late payments, it's a good idea to actually call and verify receipt of the address change whenever possible. Call to order your utility hook-ups approximately 10 days prior to your move. Be aware that some utility companies will keep you on the phone for a long time.