8 Steps to Buying a Home
Step 1: Decide to Buy
The decision to purchase your first home is one of the biggest and best decisions you could ever make. After all, a home is the largest (and most emotional) investment most people will ever make. So, how do you know if it’s the right time for you to buy your first home?
There is never a wrong time to buy the right home. The key is finding a good buy and taking the time to carefully evaluate your finances.
A home purchase is an important step in the path to long-term wealth. Purchasing your own home is a great investment that provides specific financial advantages, including equity buildup, value appreciation potential and tax benefits. It’s also an automatic savings plan that you cannot get from renting!
Here’s the most important rule for keeping your stress to a minimum: you don’t have to know everything. Your real estate agent is ready to help you through every step of the process.
Step 2: Hire Your Agent
When you’re looking for a real estate professional to help you, know that above all else, good agents put their clients first. This is your dream, and your agent is your advocate to help you make your dream come true.
A great real estate agent will:
Educate you about the current conditions of the market.
Analyze what you want and what you need in your next home.
Guide you to homes that fit your criteria.
Coordinate the work of other needed professionals throughout the process.
Negotiate with the seller on your behalf.
Check and double-check paperwork and deadlines.
Solve any problems that may arise.
Step 3: Secure Financing
Ultimately, your lender will pre-approve you for a certain amount, but YOU will decide what you’re comfortable paying every month. Remember, your lender only sees your finances on paper. It’s up to you to decide how much you’re willing to stretch your budget in order to get into your dream home.
Be sure to follow these six steps to financing your home:
Choose a loan officer.
Make a loan application and get pre-approved.
Determine what you want to pay and select a loan option.
Submit to the lender an accepted purchase offer contract.
Get an appraisal and title commitment.
Obtain funding at closing.
Step 4: Find Your Home
So you are pre-approved and ready to begin your search. But how or where do you begin? There are a lot of homes out there and diving in without a guide can become overwhelming and confusing. A great agent will help you more accurately pinpoint homes that fit your criteria. The right home will meet all your important needs, and as many of your additional wants as possible. Some questions you might ask yourself include:
What do I want my home to be close to?
How much space do I need and why?
Which is more critical: location or size?
Would I be interested in a fixer-upper?
How important is home value appreciation?
Is neighborhood stability a priority?
Would I be interested in a condo?
What features and amenities do I want? Which do I really need?
You’ll learn as you look at homes, your priorities will probably adjust along the way.
Step 5: Make an Offer
Once you’ve found a home you love, the next step is making a compelling offer. While emotions are probably in high gear once you’ve found a home you love, it’s important to remember that a home is an investment. Your agent will research similar properties in the neighborhood to help you determine the market value, and fair price, for your home. Look to your agent to explain and guide you through the offer process.
The three basic components of your purchase offer are price, terms and contingencies.
Price is the dollar amount you are approved for, willing and able to pay.
Terms cover the other financial and timing factors that will be included in the offer.
Contingencies are clauses that let you out of the deal if the house has a problem that didn’t exist or which you weren’t aware of when you went under contract. They specify any event that will need to take place in order for you to fulfill the contract.
Step 6: Perform Due Diligence
Just because you love a particular property doesn’t mean that it’s perfect. In fact, this is where reason has to trump emotion. You’ll need to have a property inspection (which we highly recommend you attend) that will expose hidden issues. This way you’ll know what you are getting into before you sign closing papers.
Your main concern is the possibility of structural damage. This can come from water damage, shifting ground, or poor construction when the house was built.
Don’t sweat the small stuff. It’s the inspector’s job to mark everything discovered no matter how large or small. The inspectors report may be long; but things that are easily fixed can be overlooked for the time being.
If you have a big problem show up in your inspection report, you should bring in a specialist and if the worst-case scenario turns out to be true, you might want to walk away from the purchase.
Even if your home passes inspection, you’ll still need to buy a homeowner’s insurance policy that protects you against loss or damage to the property itself and against liability in case someone sustains an injury while on your property.
Step 7: Close
Once you’ve made your offer and have completed the inspection process, you’re in the “home” stretch! But, in order to ensure that you don’t put your closing date, or your mortgage at risk, you have a few pre-closing responsibilities that you’ll need to be mindful of. These include:
Staying in control of your credit and finances. If you are tempted to make any large purchases during this time, it’s best to talk to your lender first.
Keeping in touch with your agent and lender, returning all phone calls and completing paperwork promptly.
Communicating with your agent at least once or twice a week, and verifying with your lender that all mortgage funding steps are completed.
Conducting a final walk-through of the home with your agent.
Confirming with your agent, home insurance professional, and lender that you have the settlement statement, certified funds, and evidence of insurance lined up prior to closing.
Step 8: Protect Your Investment
Congratulations, and welcome home! The home-buying process is complete, but just like any big process, there’s a maintenance plan! It’s now your responsibility, and in your best financial interest, to protect your investment for years to come. Performing routine maintenance on your home’s systems is always more affordable than having to fix big problems later. Be sure to watch for signs of leaks, damage, and wear. And remember, just because the sale is complete, your relationship with your agent doesn’t need to end! After closing, your agent can still help you – providing information for your tax returns, finding contractors and repair services, and even tracking your home’s current market value.
Steps to Selling Your Home
As an alternative to working with a real estate agent, you might consider selling your home yourself. If you choose this option, be prepared for a lot of work! It can and has been done; but it takes a tremendous amount of time, energy and “know how”. It involves knowledge, skills, preparation, marketing, negotiation, paperwork and a host of other items that can become overwhelming to someone without prior experience in selling real estate. Because of this fact most people choose an experienced real estate agent to sell their home. Statistics show that people who hire a real estate agent consistently get higher prices for their homes and have their homes on the market for less time. Whether you choose to have a real estate agent to represent you or not, there are a myriad of steps you will need to complete prior to closing. The following is a checklist to help walk you through the process:
1. Know your property. Become familiar with such facts about your property as property taxes, zoning, lot size, square footage, etc. Also, it is always a good idea to look at the terms of your existing loan.
2. Do the COMPS. Research the current market and property laws in your area. How much are properties similar to yours selling for? What are the terms of the sales? Familiarize yourself with the current property disclosure laws that you will need to take into consideration.
3. Pick the price. Once you know the specifics about your home and have checked out what similar properties in your area are selling for, set a realistic price. Statistics show that overpricing your home, often leads to more time on the market and usually a lower price in the end.
4. Research financing alternatives. Contact several lenders in your area to determine what the options might be for your prospective buyer. It is a good idea to be informed before they ask, or your lack of knowledge may turn them off from dealing with you.
5. Do a “walk-through” of your property. Look at the property from the perspective of both the inspector and the prospective buyer. Make a list of all items that need to be repaired or replaced. Keep in mind that repairing or replacing items on your own is often cheaper than a credit the buyer may ask for.
Here are some improvement considerations you may want to think about:
- How is the “Curb Appeal? Is the house appealing as you approach it from the street?
- Perhaps it could use a new coat of paint? Cracked, faded, or unusual choice in color might very well turn off prospective buyers. A new coat of paint can go a long way to changing the entire look of a property.
- Is the lawn and landscaping manicured and attractive to the eye?
- Is the entrance to the home dressed up and appealing?
- Are the windows and doors in good condition?
- Is the roof in good condition?
- Are the hedges trimmed? Is the grass cut? Are the leaves swept up? Are the toys and tools put away?
- How is the interior paint? Is it in good condition (recently updated), or does it need to be spruced up? This is one area where you can get a big bang for your buck.
- Do the appliances work or could they use some updating?
- Are the plumbing and electrical systems in decent condition and functional?
- What is the condition of the carpets or other floor coverings? Well-kept or new floor coverings go a long way to the overall look of the property. Like new paint floors can make a huge difference in the appeal and impression of a property.
- Are the sink, shower, tub and windows in good condition?
- Are all light fixtures working properly? Make sure there is good lighting in each room so that prospective buyers won’t think you’re hiding something.
6. Make all repairs noted in your inspection that you think will make a difference.
7. Be knowledgeable about your neighborhood. Many prospective buyers inquire about the local schools, shopping, parks, transportation, etc. It is important that you can knowledgeably answer their questions.
8. Create a marketing budget. Calculate how much are you willing to spend to sell your home? Here are some considerations:
- Real estate commissions if you use a broker
- Advertising costs, signs, other fees if you plan to sell yourself.
- Attorney, closing agent and other professional fees.
- Excise/Transfer tax for the sale.
- Prorated costs for your share of annual expenses, such as property taxes and home owner association (HOA) fees.
- Any additional fees normally paid by sellers in your area (title insurance, retrofit, termite, home warranty, surveys, etc.).
- Keep in mind that real estate agents can often give their clients very close estimates of closing costs due to the fact that they conduct transactions on a regular basis. This can be very helpful so there are no surprises in the end.
9. Look into the real estate sections of your local newspapers and other publications. What publications will expose your property to the most people and get you the most “bang for your buck?” Many publications offer reasonable photo box ads that allow one to post a photo and basic information about the property that is sufficient to stir up interest for the right buyer.
10. Take advantage of the Internet! Over 90% of buyers these days go on-line to look at properties prior to actually going out and seeing them in person. Most agents have their own website, which includes their clients’ listings as well as the entire MLS search. This will certainly work to your advantage as your home will most likely be placed on their web site and on the MLS (Multiple Listing Service) as part of the services offered to you. Keep in mind that these days many newspaper publications also offer Internet advertising tied in to their traditional print ads. Again, this will work to expose your property to an even broader audience.
11. Create a marketing plan. Review the advertising alternatives and associated costs and formulate a plan on how to best reach prospective buyers on both a local and national level. Because many people relocate, be sure to include Internet advertising in your plan. Investigate your local newspaper as they might have a national edition that you may want to place your ad in.
12. Create and design your ad. At a minimum, you will need at least a few sentences that will run as a classified ad or a photo box ad. As an alternative, you may want to run a larger, custom-designed ad in the newspaper. You could then use this ad as a flyer to hand out at open houses or anywhere else you might meet prospective buyers. Keep in mind that a professional, well-crafted ad can attract buyers while a poorly designed one can turn buyers off to your property.
13. Make time in your schedule for appointments and open houses to show the property to prospective buyers. If you have hired an agent, he or she will take care of showings and open houses on your behalf. Keep in mind it is often best to allow your agent to show your home on their own. This is advisable so that the prospective buyer does not feel uncomfortable or pressured and can speak openly about the property. If the seller is home, the buyer may mask his or her true feelings. Buyer comments can sometimes be interpreted the wrong way from a seller’s point of view and feelings can get hurt. One does not want a transaction to get started on the wrong foot.
14. Install a “for sale” sign. The sign should be attractive, weatherproof and well designed. It should be placed where it is clearly visible from the street. Many prospective buyers drive around the areas they are considering buying in and neighbors often know friends that are looking into buying in the area. A sign is very important. If you have hired an agent to represent you, he or she will most likely provide the sign to you.
15. Prepare an information sheet to accompany the flyers you have prepared. This single sheet description of your property should list the important features and benefits that will draw in prospective buyers. If the property has been remodeled, the sellers have an opportunity here to list all of the upgrades that are significant. Again, if you have hired an agent, he or she will most likely do this on your behalf.
16. Buy “open house” signs. They should include a place to write the address of your property and the date and time of the open house. Keep in mind, it is not only good to place one in the front yard, but it is smart to place several in high-traffic locations around the neighborhood, such as main streets leading to your home. Most of these signs have directional arrows on them that can point prospective buyers to your home even if they don’t know the area. Make sure that you take these signs down as soon as the open house is over; otherwise, buyers could show up on your doorstep at all hours of the day and night. Also, be aware that some cities have laws restricting sign sizes and where they can be placed. If you have hired an agent, he or she should know the permitted uses in your neighborhood.
17. Prepare a schedule of open houses. While most are held on the weekend for the general public, this is not always convenient for all buyers. It is also important to have an open house for brokers and agents as well as just the general public. A broker open house can be as important or even more important than a public open house. Most buyers are represented by agents and exposing the property to the agents when they normally see properties can go a long way to getting your property sold. Different areas have different days that the agents make their “rounds”. Make sure to investigate the days and times for your areas. In addition, make sure that you coordinate your print advertising to include information about your next open house.
18. Keep a list of all prospective buyers. As people come through during open houses, or as they call from reading your ads or seeing the sign out front, keep a list with their names and phone numbers. Concentrate your attention on those who seem serious about your property, as opposed to those who are just checking out the neighborhood. Follow up with a telephone call to all those who seem seriously interested in your property.
19. Once you have an offer, it is time to start negotiating. Do not let your emotions get the best of you when you enter negotiations. Although selling your home is more often than not an emotional experience for anyone, it is important not to get angry or give away the fact that you’re overly eager. Emotions can get in the way and “kill” deals before they get off the ground. It is important to keep one’s eye on the ultimate goal of selling the house.
20. Get all of your necessary forms in order. A great number of forms are required for the legal sale of your property. In addition to the purchase contract and any counter offers, there are many other forms that the seller is required to provide to the buyer. Many of these forms are in the form of disclosures about the condition of the property itself or disclosures about the area the property is located in. It is necessary to review the contract carefully to determine when these forms and documents are due and what the buyer’s rights are once they receive these documents. The form and content of many of these documents are prescribed by state or federal law and must be adhered to in their entirety. The proper forms may be obtained from your local Board of Realtors or from your real estate agent who you have hired to represent you.
21. Negotiate the final terms of the sale. The Buyer will need to come to an agreement per the contract regarding each of the following:
- Inspection contingencies
- Financing terms
- Date of closing
- Date of possession
It is always recommended to have an attorney review any and all contracts before the deal is finalized. Attorneys are familiar with these contracts and can advise on terms and implications.
Have the buyer conduct a final walk-through of the property a few days prior to the closing. This is important in order to determine that the property being conveyed is in the same condition as it was when the buyer made his or her offer and it still meets the expectations of all parties involved. If issues arise, be sure to resolve any disputes before the transfer of title.
Your final step as a seller will be to find and make arrangements for the home you will be moving to. On many occasions the seller will need to be the “buyer” for a new property while simultaneously being the “seller” for their current one unless they have already bought or built their new residence. If possible try to schedule both transactions to close at the same time. If this is not possible then try to close your purchase shortly before closing your own sale. This is important because you will need to be moved out before the new owners take possession. If the two transactions are not coordinated properly you may have to find a short-term lease or stay in a hotel until you can take possession of your new property. Some buyers will allow the seller to leaseback the property they are selling for a short time so they can avoid this issue. If this is the case, be sure to work out the terms of the lease (price, length of time, security deposit, etc.) when negotiating the original contract.
Brentwood Appraisals – 310-826-2600 Brentwoodappraisal.com
Lipsey Appraisals – 310-207-4150
William Hefner – 323-931-1365 Williamhefner.com
Paul McClean – 714-505-0556 Mccleandesign.com
Wells Fargo – John Borkhus – 310-913-1212 Wfhm.com/john-borkhus
Eric Dobkin – 310-963-2701 DobkinConstruction.com
Rick Holz – 310-476-6761 RichardHolz.com
Dean Hallo – 310-433-0930 HalloConstruction.com
Craig Williams – 310-550-9250 CwilliamsConstruction.com
London Chimney Sweep – 310-478-1033
Certified Chimney Inspectors - Shane Imburgia - M: 818-378-5058 / O: 818-248-7300
Fiddler on the Roof - 818-884-8935 / 310-278-1606
Chimney Services – 310-828-1499 MyChimneyInspector.com
Boston Brick & Stone – 626-296-7700 BostonBrick.com
DeClutter Fly, Tracy McCubbin – 213-448-4778
DEEP CLEAN SERVICE:
Eagle Eye Janitorial, Rosa Rocha – 818-758-1620, 818-472-0981
Edgar Romero - 323-240-3106
Maid 4 Brilliance – 213-377-5722 Maid4Brilliance.com
Maid in America – 213-863-4453 RealtorCleaning.com
Property ID – 800-626-0106 PropertyID.com
Derrick Toole Construction – 818-703-6163
Schneider Construction, Larry Schneider – 310-375-1626 SchneiderConstructionInc.com
Paul McGrath – 818-989-7979 McgrathContracting.com
Michael T. Electric, Michael Silveira – 213-712-1441
Nettie Becker Escrow, Patricia Winston – 310-275-4042 NettieBeckerEscrow.com
MB Escrow, Mireya Roudenko – 310-273-7106 MBEscrow.com
Granite Escrow, John Song – 310-288-0110 GraniteEscrow.com
Floor Plan Visuals – 213-438-9640 FloorPlanVisuals.com
Gateway Architectural Solutions, Chris Gilberti – 310-478-3789 GatewayAS.com
Foundation Works – 877-265-8369 The FoundationWorks.com
Bolt -Tech – 323-663-4841
Tom Purkiss – 818-535-9671 TAPurkiss.com
Alpha Structural – 323-258-5482 AlphaStructural.com
Pennco Properties - Phillip Pennestri – 805-705-7324
Sound Construction, Inc. - Luis Rodriguez - Cell: 818-941-5745, Office: 866-378-5554
Steve Bailey – 310-470-1834
LA Build Corp – Ami Harari – 877-215-0065 LABuildCorp.com
Kaping Construction (Restoration Services) – 800-499-4006 KapingConstruction.com
Parmelee Geology, Larry Parmelee – 818-889-0762 ParmeleeGeology.com
Geo Systems, Vince Carnegie – 818-500-9533 GeoSys1.com
Harley Tucker – 818-703-0908
Wayne Schick – 818-905-8011 SchickGeoTechnicial.com
John Marshall – 310-344-1998
Martin Perez - 323-788-8858
310 Handyman - 310-617-7378 310Handyman.com
Jerry Demurs - 310-415-6569
West Coast Chief Repair – 323-782-3922 ChiefAppliance.com
Lazarus Services Heating & Air Conditioning – 818-389-9885
Nahai Insurance Services – Cameron Nahai – 310-282-0900 Nahai.com
Fidelity Home Warrranty – Mary Mendoza – 310-892-3461 HomeWarranty.com
American Home Shield – 888-247-4777 AHS.com
First American – 800-444-9030 HomeWarranty.FirstAM.com
Old Republic Home Protection – 800-282-7131 ORHP.com
Sean Sager – 310-200-7379 SeanSager.com
Susan Moses – 949-922-2070
Berchtold Harris – 310-722-2800, 310-926-8617 BerchtoldHarris.com
Courtney Applebaum – 310-666-7157 CourtneyApplebaumDesign.com
Nick Selvian – 818-723-1389
California Microbial, Rich Valdez – 310-968-4246
Mold Check Professionals – 818-951-9120 MoldCheckPros.com
Mold Technical Services – Jasson Walke – 310-541-1534 MoldTechnicalServices.com
Acme Clean Air, James Jackman – 310-954-9800 AcmeCleanAir.com
Allied Environmental Services, Joseph Meade – 818-432-3134 Allied-Environmental.com
Vault Mortgage – Eric Handler – 310-481-8990 VaultMtg.com
MO Financial – Jeff Donovan – 310-614-4063
RPM Mortgage – Brett Lightner – 310-406-3547 RPM-Mtg.com
Centek Capital – Gloria Shulman – 310-275-3202 Centek.com
Martin – 323-854-3674
Jodi’s M.O. (Moving & Organizing) – Jodi L. Snyder – 310-420-1120 Jodismo.com
123 Moving & Storage – 310-618-8120 – WeCome2UStorage.com
Dino’s Moving – 818-503-2999 or 818-355-1853 – John or Kevin
Russell's Moving & Storage - 310-275-8811
Zambrano Painting, Jose Zambrano – 310-628-6237
Alan Silverstein Painting – 310-871-8928
Nick James – 310-408-2554
The Permit Report – 800-607-0544 ThePermitReport.com
Boatwright Building Consultants, Inc – 310-390-8282 Boatwright-Online.com
Umberto Property Inspection Service – 818-355-5004
Jim Teteak – 323-822-7595 Teteakinspection.com
La Rocca Inspections – 818-951-1795 LaRoccaInspections.com
Pitman Plumbing – 310-276-6469 pitmanplumbing.com
Michael Shute Plumbing – 323-653-5085, 818-707-3500
Culver Pools, Bob Culver – 310-477-3061, 661-285-2251 CulverPools.com
LGS Retrofitters – 800-771-5971 LGSRetrofitters.com
Metro Retrofitters – 800-450-3660 GoMetroRetro.com
Compliance Alliance – 818-768-8000 ComplianceAllianceRetrofitting.com
T & G Roofing – 818-459-0702 TGRoofing.com
SCHOOL DISTRICT FINDER – LOS ANGELES:
Resident School Identifier – http://rsi.lausd.net/ResidentSchoolIdentifier
Sewerline Check Professionals – 818-951-7550 SewerlineCheck.com
John White Sewerline – 310-397-5076 SewerVideo.com
Williams Sewerline Inspections – Jeremy Williams – 818-491-6408
Meredith Baer & Associates – 310-204-5353 MeredithBaer.com
Marshall Design Group – 310-435-5293 MarshallDesignGroup.com
Dressed to Close – 213-687-0392 Figuringout40.com
Dressed Inc. – 310-556-0418 DressedDesign.com
Leslie Whitlock – 323-313-7593
Elite Home Staging - Samantha Senia - 805-795-5559 - www.elitehomestagingca.com
Home Staging LA – Sondra Wells – 310-804-8600
John Marshall – 310-344-1998
M&M Surveyors – 818-885-1100 MMSurveyors.com
Yamaguchi – 323-663-1161
Agents Choice Termite – Wayne Nordigan – 310-629-2785
Albert Tile Works – 714-599-1911
Julio – 213-804-2597
Pablo – 323-385-5133
Fidelity National Title – Brandon Miller – 310-985-5385 FNTIC.com
First American Title – Loren Goldman – 310-801-7030 FirstAM.com
Harper Tree Service – 310-472-4550
Your Way Tree Service – 818-882-2335 YourWayTreeServiceInc.com
Dave, The Window Washer – 310-829-3625 WindowWasher.com
Paul’s Professional – 818-249-7917 PaulsProWindow.com
Anthony's Window Washing - 818-523-5046
Swartz Glass – 310-829-3625 SwartzGlassVenice.com
Clearview Glass – 310-212-1253 ClearViewGlass.com
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