Get Informed – Do Your Research
- Research the real estate industry and legal services to
understand what’s available to you, including the entire
process and necessity for legal representation. - Achieve proficiency in federal and state fair housing
laws that protect your rights. You want to be sure that
you’re not being denied the opportunity to make an
offer on a home or secure financing based on your race,
religion, national origin, sex, disability, and/or family
status. - Research local and national down payment assistance
resources. These programs can help make your home
purchase more affordable. - Check your eligibility for down payment assistance
programs. - If you’re a Veteran, research home services and loan
programs available to you. - If you’re a Veteran, determine whether you qualify for
a zero-down VA home loan. Making a down payment is a
significant hurdle for many home buyers. Programs like
these can open the door to homeownership, for those who
know about them and qualify. - Learn about local home prices, inventory levels, and
market demand in your desired area. If you are in a hotter
market, high demand for homes may affect your buying
process and offer strategy. - Ensure that all personal and financial information
remains confidential to mitigate risk of identity theft.
Research the steps that you can take to protect your
identity when buying a home. - Throughout the process, know the risks of posting
home search details on social media to avoid being
targeted for fraud. - Do some research on what home features are
currently popular to help identify your preferences
and how this may affect the value of the home.
Set Homeownership
Goals and Budget - Obtain a copy of your credit report, including your
credit score, to assess where you stand, and ensure you
have time to dispute errors and improve your score.
The better your credit score, the more likely you are to be
approved for a mortgage and receive a better rate. - Consider all your homeownership wants and non-
negotiable needs. You may need a certain number of
bedrooms based on the size of your family, or a first-floor
bedroom and bathroom if you plan to age in place. - Set your budget and be mindful of the complete cost of
homeownership. Consider the purchase cost of the home
and any ongoing living and maintenance expenses. Those
ongoing expenses may include but are not limited to
real estate taxes, heating, AC, water, yard and appliance
maintenance, repairs, homeowners association fees, and
commuting costs. - Assess your financial ability to purchase a home.
The typical rule of thumb is that your total monthly
housing payment (mortgage, taxes, insurance, etc.)
shouldn’t be more than 30% of your gross monthly
household income, but individual situations may vary. - Assess your desired market’s compatibility with
your budget based on current income and other
considerations. - Professionally advocate for yourself throughout the
entire process. To do that, you should promote and defend
your interests while keeping emotions in check to ensure
you get your desired outcome.
Start Your Home Search - Establish and adhere to a schedule for house hunting,
mortgage approval, and closing to meet your desired
timeline. If you miss any milestone deadlines, you could be
at risk of losing your down payment or losing the home for
purchase. - Learn how local markets could affect your buying and
owning process. Fewer homes for sale, future development
plans, school ratings, access to transportation, and
community amenities are all elements that may affect
demand in a given market. - Scout listings and online marketplaces for suitable
properties. - Set up real-time alerts on home search marketplaces
to get notifications when matching homes hit the market,
and for open houses and price reductions. - Compare properties to your wants and needs list to
ensure they align with what you’re looking for. - Tap your personal network to uncover additional
properties of interest that are not yet publicly listed and
may become available for sale soon. - Contact homeowners in desired areas to see if they
are considering selling. - Gather information about any homes that might be
for sale but are not actively being marketed. - Virtually preview properties that you’re interested in.
- Select homes for viewing that align with your specific
needs. - Schedule multiple in-person home viewings by
contacting each home’s listing agent. Schedule separate
appointments at times that suit the listing agent but may
not always suit you. - Periodically reevaluate your needs and refocus your
property search, as necessary. - Explore all available resources to learn more about
prospective neighborhoods. Be sure to speak to local
experts who understand the neighborhood and will give
you honest feedback. - Tour the amenities, schools, and points of interest, and
test commute times in your chosen search area. - Cross-reference local crime registries for the
neighborhoods you are searching. - Educate yourself on what to look for in property
disclosures of home listings while you search to make
informed decisions. Required property disclosures vary
by state and may include, but are not limited to rights of
way, upcoming special assessments, whether the home is
in a flood zone, past termite damage, and the presence of
lead paint. - Stay current with the listing months of market
inventory. As with days on the market, this indicates how
competitive a given market is and should inform your
offer. - Consider measures of home value beyond price
per square foot. These include neighborhood, proximity
to work and community amenities, and community
development plans. Be sure to consult with a local expert
to get the most comprehensive information. - Research municipal services and other relevant
neighborhood information. - Be informed about potential neighborhood negatives
such as noise levels, venues, or operations that could
impact your property value. - Check applicable zoning and building restrictions if
you plan to rent out your home or add a unit to generate
short-term or monthly rental income. - Understand public property and tax information for
potential homes. It’s important to be informed about
the possibility of future tax increases and property
assessments, which will affect the property taxes you owe
from year to year. - Gather and consider important data on utility
availability and costs. For example, you’ll want to confirm
if the home has good high-speed internet access. - Research any environmental factors and risks that
could affect your home, such as flooding, wildfire, heat,
air quality, and noise. Some of these factors will affect the
cost of ownership. For example, if the home you purchase
is in a flood zone, you will need to obtain flood insurance. - Narrow down your top home choices for a closer look
before considering making any offer.
Prepare Financing - Analyze your finances to determine the total down
payment and closing costs you can afford. - Gather and assess quality lender resources.
Ask friends and family for recommendations. - Consider at least three mortgage lenders during
the pre-approval process. Mortgage rates, terms, and
eligibility may vary from lender to lender. - Familiarize yourself with the mortgage pre-approval
process. Pre-approval means that a lender has verified
your income, credit background, and other factors and
has provided a conditional commitment for an approved
mortgage amount. With pre-approval, your offer will be
considered far more seriously. - Prepare and collect personal financial information
like pay stubs, credit card statements, and other existing
loans/debt, and share that information with the lenders
you’re considering. - Collect and compare multiple financing options.
Beyond traditional mortgages, look into lesser-known
alternative options like seller financing or rent-to-own
programs. - Explore various financing options to find the best fit
for your needs. Many people use a conventional, fixed-rate
30-year mortgage, but mortgages with other terms (e.g.,
15- and 10-year fixed rate, adjustable rate, and assumable)
might also be options. - Coordinate with your lender to discuss discount
points, which you can pay to lower the interest rate on
your loan. - Analyze loan estimates. Loan duration, size of your
down payment, fees, and other loan terms can affect your
overall mortgage costs. - Obtain a pre-approval letter from your lender, which is
more comprehensive than pre-qualification. Pre-approval
is a written commitment from a lender that stipulates the
amount they will lend you for a home purchase. - Carefully review the pre-approval letter from your
lender to understand its contents and ask necessary
questions.
Making Your Offer - Review statistics to see what percentage of the list
price sellers in your area are currently receiving. This will
help you decide whether to offer the asking price, or adjust
your offer below or above the asking price, to make your
bid more competitive. - Consider the current, local average days on
the market to gauge property pricing and market
competitiveness. Fewer days on market indicates greater
demand, which means you may need to raise your offer
or offer additional incentives to make your offer more
competitive. - Pay for a professional comparative market analysis
(CMA) before making an offer to ensure it’s competitive.
A CMA is a report that details recent home sales, local
market activity, and sales prices to help you craft a
successful offer. - Research independent home valuation information
from online resources like Realtor.com to assess an offer
price that considers the sale of similar homes in the area.
It’s important to make an offer that’s in line with local
market conditions. You don’t want to overpay for a home,
or make an offer that’s so low it won’t even be considered,
so it’s good to talk to an independent adviser who has
local market knowledge. - Consider hiring a real estate lawyer for legal
representation as you build your offer and for legal due
diligence as you review contractual documentation. - Review a sample sales contract to prepare to make
an offer. This document outlines every facet of the
transaction, but it may not include everything you want
in the transaction or from the seller, so don’t assume
everything is there. - Understand common contract contingencies and the
importance of including protective clauses in your offer.
These may include but are not limited to your ability to
secure financing that covers the appraised home value,
inspections (home, radon, lead, etc.), closing date, date of
possession, and owner lease-back terms. - Learn about any purchasing incentives that you might
be eligible for. Home sellers may offer concessions like a
pre-paid homeowner warranty, closing costs, or allowance
for home improvements/repairs as indicated by a home
inspection. You will need to negotiate these as your own
representative. - Ensure your offer will stand out as the most attractive
in the current market. Be ready to compete—many homes
today are receiving multiple offers and bidding wars are
common. - Craft an offer that is well positioned to be accepted,
and submit it to the seller’s agent. An offer typically
includes how much you are willing to pay for the home,
how much earnest money you can provide, when you want
to close on the home, and the deadline for the seller to
respond.
Negotiations and
Offer Acceptance - Identify and prioritize your main goals for contract
negotiations. - Familiarize yourself with negotiation best practices.
Be mindful of how your body language and facial
expressions can influence a successful negotiation. - Develop a negotiating strategy to secure the best
terms. In addition to price, consider terms such as repairs,
closing costs, or the timeline for closing. - Negotiate the best price with the seller’s agent.
The seller’s agent will be negotiating on the homeowner’s
behalf. You will be negotiating with a professional who
likely has extensive experience in this area, and you may
be at a disadvantage. - Be prepared for multiple-offer situations. Don’t get
discouraged, and have your negotiation strategies ready. - Consider using offer strategies like an escalation
clause, which raises the price you’re offering by a certain
amount over the price that another buyer is offering;
offering flexibility on move-in/possession date; or waiving
various contingencies. - Explore optional contingencies, and understand their
advantages and disadvantages. If you agree to waive the
inspection contingency, for example, you are accepting
the risk of purchasing a home that may have myriad
defects or require additional funds to repair or bring up
to code. - Be aware that all known material defects should
always be disclosed to you. Know what questions to ask,
and ensure you receive and comprehend all required
disclosure forms by state and federal laws. These forms
vary by state. - Agree to final terms with the seller, and sign the
contract. In some states an attorney may be required. - Verify the final offer is signed by all parties.
- Prepare your lender for listing agent calls. The agent
representing the home seller will contact your lender
to confirm pre-approval and arrange other settlement
details. These details will likely favor the home seller, since
that agent is representing their interests, so you may want
to participate in those calls to negotiate on your behalf.
Facilitate Closing - Coordinate communications effectively among all
parties, including your lender, the seller’s agent, the
closing attorney, and any additional third parties. - Seek additional guidance for transactions involving
short sales, foreclosures, or bank-owned properties. These
transactions often involve additional title, ownership, and
financing considerations, and they may be as-is
—meaning, the properties may be damaged or require
costs for repairs that the buyer is accepting as a condition
of purchase. - Estimate the gross out-of-pocket cost of completing
the transaction. This may include, but is not limited to,
closing costs, a title search, financing points (to “pay
down” the mortgage interest rate), and transfer taxes. - Acquaint yourself with flood insurance. If the home
you purchase is in a FEMA-identified flood zone, you must
obtain flood insurance as a condition of ownership. You
may also consider adding flood insurance to your regular
home insurance policy, because most regular policies do
not cover damage from flooding. - Learn about title insurance, and consult a qualified
insurance broker. Title insurance covers any pre-existing
title problems that you may discover after you’ve
purchased the home (e.g., tax liens, unpaid/outstanding
mortgages, previous ownership claims). - Fully investigate your options for a home inspector,
title company, appraiser, and other services. Forgoing
a home inspection is not advised as these professional
inspectors will provide a comprehensive assessment
of a home’s current condition and risks. - Create a list of required and optional home
inspections, including environmental, roofing, and
mold. This will help you determine what inspection
contingencies to include in your purchase offer. - Ensure that necessary property surveys are ordered.
A property survey will help you understand where your
property begins and ends, and determine any potential
issues—such as easements or encroachments—before
you take ownership of the property. - Discuss any concerns arising from the home
inspection. Use any negative findings from your home
inspection report as leverage for repairs or credits. - Track and meet all contract deadlines. Depending
on the terms of your offer, these may include deadlines
for inspections, final financing/loan, down payment and
earnest money deposits into escrow, title searches, and
settlement date. - Order the appraisal. Confirm whether your lender will
accept an independent appraiser or require an appraisal
management company to conduct the appraisal. - Question the appraisal report if it affects your
financing. Check for errors like square footage,
inadequate home comparisons, or incorrect descriptions
of the home or neighborhood. - Order the title search. A clean property title means
the buyer and lender agree there are no claims on the
property that could become an issue after ownership
is transferred. - Regularly contact your lender to ensure the loan
process is on track to meet the closing requirements. - Ensure any necessary funds, like earnest money or
down payments, are received by the stated deadlines
to avoid any risk of the seller terminating your contract. - Ensure all parties have all forms and information
needed to close the sale. Missing or late paperwork can
cause delays. - Check addendums and alterations for agreed-upon
terms. - Take note of the location and details of your closing
meeting. - Confirm and communicate the closing date and time
to the seller’s agent, noting any changes. - Schedule and conduct a final property walk-through.
Create a comprehensive checklist of your concerns
regarding the home, and then confirm that any agreed-
upon repairs were addressed or fixed by the seller. - Confirm the clear-to-close status, indicating all
documents and conditions to approve your loan have
been met, with your lender. - Review your closing statement. It explains the terms
of the mortgage, the projected monthly payments, and
how much your fees and closing costs will be. - Double-check all taxes, dues, and prorations related
to your purchase. - Request the final closing figures from the closing
agent. This is the total amount of money that you will have
to bring to the closing table. - Review your title insurance commitment carefully
to ensure all information is accurate. - Be aware of wire fraud risks, and verbally verify
all wiring instructions with the seller’s agent before
transferring funds. Get the detailed instructions from
your closing company, and be leery of any messages you
receive that request changes to the original instructions. - Provide receipt of escrow deposit to the seller’s
agent/broker to verify this financial step has been
completed. - Gather all required forms and documents for closing.
Typically, you’ll need a photo ID and a cashier’s or certified
check (or receipt of a wire transfer). - Perform any remaining closing activities to complete
the transaction. - Review all closing documents with the closing agent
or attorney. Be prepared to sign a ton of paperwork. - Distribute final documents to all involved parties for
their records. You’ll want to keep this important paperwork
safe. - Verify receipt of all keys, access codes, garage door
openers, and manuals for all equipment and appliances.
Post-Closing Activities - Prior to moving, consider rekeying your locks and
changing access codes as an extra precaution to
safeguard your home from anyone who may have had
access prior to your ownership. - Remember to transfer all utilities and services to your
new residence so you do not incur costs on your former
residence. This ensures everything is up and running in
preparation for your move-in date. - Turn your home inspection report into a maintenance
to-do list. - File claims with your homeowner’s warranty company
as needed. A home warranty is a policy that covers the
cost of major repairs or appliances. - Stay engaged and proactively follow up on any
pending items or concerns post-closing. Keep a running
checklist handy to ensure you stay on top of any potential
warranties, including their expiration dates. - Arrange for the move-in day in your new home by
contacting movers. Buy yourself a bottle of champagne.
Congratulations, you’re a new homeowner now.
*Actual services or to-dos will depend on the needs of the buyer and the transaction – not all 111 things will need to be done in every transaction.
**Based on a 2023 proprietary survey among recent home buyers and sellers.
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