Real Estate Blog - STEPS TO BUYING A HOME - IT'S A PARTNERSHIP BETWEEN YOU AND YOUR BUYER'S AGENT.

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STEPS TO BUYING A HOME - IT'S A PARTNERSHIP BETWEEN YOU AND YOUR BUYER'S AGENT.

BUYING A HOME CAN BE A JOYFUL EXPERIENCE, WITH A LITTLE HELP FROM AN EXPERIENCED BUYER'S AGENT.

STEP #1
LET'S GET TO KNOW EACH OTHER and LEAVE THE DRIVING TO US.
Many experienced buyer's agents like to start the home buying adventure with a tour of homes. You get homefinders.com to know us and we get to know you. We'll take you on a tour of a home or two to show you how working with a dedicated buyer's agent will show you how to preview a home. Some folks walk through a home. An experienced buyer's agent looks deep in to the soul of the home. You can select the home or homes to tour from your local listing database of active listings on the Internet. Most MLSs in the US offer a similar on line resource for prospective home buyers to search the real estate market in your area. That way, you, the home buyer, can get a feel for what your money will buy. Or, your buyer's agent will select a home or homes to show you based on your stated criteria of price range and location of homes.

buyers agents Once you decide to work with a buyer's agent you'll have an agent who will not only show you homes, they will tell you everything they know about a home. Your buyer's agent will explain the importance of the property disclosures, the type of disclosure that sellers are required by law to make and how these disclosures help you to understand the condition of the home you visited. In many states, the agent will require a written Buyers Agency Agreement. This provides you with the services of a fiduciary in many states.

STEP #2
TIME TO GET PRE-QUALIFIED or PRE-APPROVED
You have an agent. That means you have a person experienced in real estate brokerage who will help you every step of the way from home search to settlement. So, depending on how quickly you wish to buy, we need to be prepared. If you have a preferred lender, contact them and tell them that you're ready to buy a home in and wish to have a written pre-qualifying or pre-approval letter. If you do not have a preferred lender, your buyer's agent can recommend lenders to you that are experienced with loans for the type home your are planning to buy. You'll need to get the pertinent information to the lender and have a credit report review and a letter prepred. Now you are really ready to buy a home.

YOU SET THE PACE
At no time during the above initial steps in your home search will you be pressured to buy anything. Most buyer's agents understand that some buyers who call on a specific home may be ready to buy NOW. We also understand that some buyers, particularly first time home buyers need time to learn the market and the home buying process. You're buyer's agent's job is to help you reach your goal of buying a home, not just sell you a house.

STEP #3
YOU ARE READY TO SELECT A HOME
Now is the time to really look at the home you have to selected to write an offer to buy. Your buyer's agent will provide you with the DISCLOSURE/DISCLAIMER STATEMENT or comparable Property Condition Disclosure for your market, information about other sales in the area with which to compare the list price, lead based paint disclosures (if the home was constructed prior to 1978), other disclosures as appropriate. Time permitting, we'll tour the home again and look in every nook and cranny of every room of every floor, inside and out, to make sure you know as much as possible about the home BEFORE you write an offer.

STEP #4
WRITE THE OFFER
Your buyer's agent will explain the RESIDENTIAL CONTRACT OF SALE to you in detail. You can decide if you wish to have a home inspection, Radon inspection (highly recommended for homes in some areas), how the Home Warranty works, what all of the addenda mean and help you structure your offer considering price, settlement date, inspections, and every aspect of the written offer. Offers are in writing and are very serious. At this time, you must have. at the least, a pre-qualifying letter to accompany your offer.

STEP #5
OFFER, COUNTER OFFER
Once you make a written offer, it must be presented to the seller, often through the listing agent, with all addenda and often along with other buyers' offers competing for the same property. Your buyer's agent will stay on top of the negotiating process to make sure that your interests are promoted depending on what is important to you. Often the settlement date is as important to the buyer or seller as the price.

STEP #6
YOU HAVE A CONTRACT, WHAT NOW?
At this point, your Earnest Money Deposit will be deposited in an Escrow Account with an escrow company, title company or with a broker's trust account. Your buyer's agent will schedule any inspections(s) quickly because they are a contingent on the contract and are date sensitive. If the home inspector finds serious defects in the home you will have the option of declaring the contract void (many areas) or giving the seller an opportunity to make repairs or crediting you with cash at settlement to compensate for the defects. Some types of financing will limit the credit you can receive from the seller. Your buyer's agent will explain all of the options to you.

STEP #7
ELVES AT WORK
While the lender is working on your loan commitment, your buyer's agent is preparing your purchase for settlement. Your Contract of Sale will be taken to a title company and the title company will begin the process of ordering a copy of your title and all of the transactions recorded in the county for that property. Once the title is searched, the report will be sent to the title termite inspections company and they will make sure that the title can be conveyed to you with no liens or encumbrances.

The title company will also order a survey of the property that you have under contract. You'll receive a copy of the survey at settlement. The lender will order an appraisal of the property. The purpose of the appraisal is to make sure that the property is equal in value or more than the purchase price of the home. While the appraisal protects the lender, it is also protection for you, the home buyer. Your buyer's agent will usually order the termite inspection. You'll be protected by contract in case of infestation or repairs due to wood destroying insects. If the property is on well and septic, the well water will be tested to make sure it meets county standards for safety. Inspection of septic systems is recommended and your agent will arrange these inspections for you. This is a matter of negotiation and often the seller will agree to have the septic system inspected. During this time, you should be available to your loan officer to provide any documentation requested.

STEP #8
HAZARD INSURANCE
It's time to order hazard insurance. This is a condition of your mortgage loan. You can select the insurance company of your choice. Often you'll get a discount if you also insure your automobile with that insurance company. Your buyer's agent will recommend an agent if you don't have one.

Title work is completed. Survey is completed. Appraisal is completed. All of the verifications for your accounts, employment are in. . . . . Your loan is approved, settlement can take place on the date agreed in the contract.

STEP #9
PRE-SETTLEMENT WALK THROUGH

Your buyer's agent will arrange for you to walk through the home you're buying sometime
before settlement, usually 1-3 days prior to the closing meeting. The purpose of the walk-through
is to (1) make sure any agreed upon repairs have been completed in a workmanlike manner,
(2) observe the house throughout to make sure it is in substantially the same condition as when
purchased and (3) retest all of the appliances, heating, cooling. This final test of the appliances
and systems is important in case a system or appliance fails while under a warranty period.
The walk-through report will be shared with the seller. If there are defects or failures, the repairs
should be made prior to settlement and the seller will provide you with a paid receipt for such
repairs for your records. Now, on to settlement.

STEP #10
LET'S GO TO SETTLEMENT
The lender will send the new Deed to the title company along with the Deed of Trust, Note and the money to fund your loan. You will bring a Cashiers Check for the down payment and closing costs according to the Good Faith Estimate provided by your lender when you made the loan application. The title officer or attorney will explain all of the documents prepared for your signature and collect your closing money. The seller will sign the Deed and give you the keys to your newly purchased home. Your buyer's agent will usually accompany you to settlement and make sure everything is in order.

Congratulations. You just purchased a home. Enjoy.

Courtesy, Lenn Harley, Broker, Homefinders.com, Serving home buyers in Maryland and Virginia.

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 06/22/2008 10:53 AM

Comments (48)

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48 Comments on STEPS TO BUYING A HOME - IT'S A PARTNERSHIP BETWEEN YOU AND YOUR BUYER'S AGENT.

JUN

2008

Lenn,

With some allowances for regional differences, a nice primer for the homebuying consumer!!! Thanks, Fran

Lenn, Every region is different. What you wrote about is very good for the buyers moving to your area. With all the different customs it is great to have a blog such as yours for a buyer to come to and get current info on how things should be done in your area.

A very good educational tool for the buyer. I see now why you are always on top.

Fran. I tried to make it as generic as possible without getting too technical. This guide is going to work for many areas.

Katerina. Sure and I edited it somewhat for MD and VA on a web page.

Robert. Thanks. Work it. Work it.

Hi Lenn- Nice summary of the home buying process. The one thing I would add, is the walk thru, just prior to closing. The homebuyers and their agent will visit the property and make sure that everything is as they purchased it and that any agreed to repairs have been done.

Marilyn. Thank you, thank you, thank you. Geez. I wouldn't think of closing without a walk-through.

Michael. That's funny. I always do a final walkthrough. If there were serious repairs, I go in 3-5 days prior to settlement as permitted in our contract. If there were no repairs or minor ones, we do it the morning of, or day before closing.

Lenn a lot of valuable information here. Glad to see that you put "Get Pre-Qualified or Pre-Approved" near the top.

Lenn,

On Marilyn's walk thru comment...this is one of the major reasons closings are delayed! I certainly recommend walk thrus, but they should either be done the day before or in a more timely manner!!! JMHO, Thanks, Fran

Very detailed and great process you outlined! I took out buyers today (first time) 10 homes. They just arrived from Germany so very ready to go looking and start the transaction process. We ended up going back to Home #2....and then went to the office to write a contract and go through the contract and sign the contract and submit it to the seller's agent. Now it's the waiting game. Thanks Lenn...you always do a wonderful job explaining important points for the buyer or seller.

Nice track of the events to settlement. Most buyers would not understand the process. Thanks

JUN

2008

George. Of course. I am steadfastly sticking to my belief that a home buyer should start their search for a home with the selection of a buyer's agent. But, it is important to get the lender's letter early on in case they find a home they like and want to write. We have to be prepared. I don't need a loan officer to qualify a buyer, but we need the credit approval or review letter to write an offer.

Fran. Our contract permits walk-throughs to be done up to 5 days prior to closing. When I recommend doint it depends on what was involved in the home inspection. If there were major repairs and the seller agreed to making them, we want to see them a few days prior to settlement to make sure the repairs were done correctly. If the repairs were none or minor, we do the walk-through the morning of settlement. If the seller never responded to our home inspection NOTICE, we do them 4-5 days before because it's going to be a shock to them that they have to pay for the repairs that the agreed to by not responding to our NOTICE timely. In those cases, the agent may pay for the repairs because it's their negligence to let the seller ignore the home inspection NOTICE. Some times it's fun.

However, I don't believe that settlement has ever been delayed because of a walk-through. We've had some interesting adventures, but we've always settled. My favorite is when the seller has ignored the home inspection notice, moved their furniture out, ready to travel to their new home and they can't get their money until they compensate my buyers for the trash they left, the hole in the wall, the washer/dryer that was switched, the window that is broker, etc.

The bottom line for buyers is, we can get what they are entitled to under the contract but they have to be willing to walk.

Sally. Wonderful news. I love relocating home buyers. Good luck.

Terry. Thanks. Buyers don't have to understand. They just need to listen to their experienced agent.

Lenn- I never had a doubt that you do walk-throughs. I assumed you just overlooked including it, in your summary.

In your response, to Fran - I've never done a walk-through 5 days prior, but I can understand your reasoning, when major repairs were agreed to. I have been at closings, where money was put in escrow, until some issue was cleared, but never have had a closing delayed

It's interesting to see how things are diffferent in different areas. Much the same, but a few regional differences.

Lenn, what a great summary of the buying process...for any region. I try to start with a tour of the area as well so we can get acquainted and my buyers can get a better feel for the area before we start looking at houses. Thanks for this!

Lenn:

This is a terrific, thorough, and easy to understand overview of the buying process for any buyer, especially those going at it for the first time. It really clarifies not only the process and what to expect but also the advantages of working with a buyer agent. This would make a great handout.

Jeff

Lenn, What a great explanation for new buyers. It is easy to follow and should take some of the stress off them. I agree with Jeff that it would be a great handout.

Jeff. Thanks. Simple and Sweet.

Diane. I like to start with a tour too. I've done that since about 1992 when Buyer's Agency hit the area.

Bob and Carolin. Definately different processes for other areas. I tried to keep this general. Most things that are different are escrow, inspections, etc. This is purposefully general.

Marilyn. The Maryland contract provides for the walk-through up to 5 days prior to closing. We have a fabulous home inspection contingency that I use in Maryland. It is completely self executing. We hav XX number of days to inspect and NOTICE of defects. The seller then has 3 days to respond. If they don't respond in 3 days, the selle is deemed to agree to repairs. You'd be surprised how many times we get to the pre-settlement walk-through and the repairs are not made. So, we just have the title company put the estimated cost for repairs on the seller's side as a credit to the buyer.

We do it a few days prior to settlement in order to give the listing agent time to get the HUD-1 with the repairs on the seller's side and time for the the agent to have a fainting spell and the seller to have a cow.

It's amazing how often we get a seller and/or listing agent who never reads the home inspection addendum.

Nicely done Lenn -- I have a similar power point presentation and have reduced this to 7 steps. It is my preference to have a counseling session with the buyer prior to showing any homes. This has proven to be most beneficial and I have buyers working under contract 99% of the time. I just isnished such an introductory session and they buyers were here for 1 1/2 hours and have signed a contract to work together.

Karen. Any agent can do the same thing and make it more specific to their area. I've always had these flyers to put in a new buyer's folder. I know there is lots of stuff on the Internet, but it is not always accurate for my market.

Joan. I know thats how many agents work. I prefer to show them a home or two and get a handle on what they like and don't like and how we communicate. I never to an interview because the buyers might think they're interviewing me and that's never going to happen. Even when I worked from offices, I prefer to hit the road. I do provide the statutory notices, but I love to look at homes and so do buyers. It's always worked for me.

Lenn, as usual excellent advice! You are articulate and to the point. i agree, get them out in the field and show them that you will work for them by pointing out potential issues and resale problems. It's the only way to make them realize that we're not trying to get them to buy something. We're helping them make the right decision!

Great step-by-step process you have...easy for a buyer to understand. :)

Lenn: Very well written, thought out article with a truck load of useful information for the buyers!

I'm tempted to copy and paste this to give to my buyers but am scared to. lol Very well done instruction sheet!

Lenn, yes we do things a little different too but the bottom line is that there is right and wrong. If we continue on the path you were leading us down we just can't miss. We really can make it easy and pleasurable for our buyers even if we are in a sauna or steam room full of challenges. I don't know that I have ever had one go totally smooth, that is, without some effort but I can say my buyers/and/or sellers didn't have a clue there was anything to worry about! It has, of course, taken years off my life, but it feels good to have them say, "wow, that was easy enough!"

And, I haven't been without the one that said, "man, I'll never do that again!" LOL. It was probably me.

Later in the rain~Deb

Always good for buyers to have a guide like this to help them understand the process from beginning to end!

Lenn,

I'm so grateful for coming across this blog. I literally just activated my R.E License last week. This is great info.

Very nicely done. It's great to explain the entire process for the clients. However, in Florida, 99% of all real estate brokerages require their agents to operate as Transaction Brokers. (The replacement for Dual Agency which was outlawed many years ago.) As a matter of fact, real estate buyers and sellers are to assume that any agent they contact is operating as a Transaction Broker, unless specified otherwise.

Lenn,
very nice steps ! :) I made 20 steps once, but this is great info too, keep that good work :) and congratz for your featured blog :P
Ray SAenz

JUN

2008

LENN- finally a 10 step program ANYONE can do!

Chris. This works very well for me. For the agents that insist on a written agency representation agreement before they'll put someone in their car, good for you. But, folks don't contact me to have a meeting with me. They contact me to see some homes and that's what I do, show them some homes. We usually get the agreement done before the day is over when scheduling the next tour, IF I want to take them on as buyer clients. I've got to talk for someone and see how they react to homes in their price range before I commit to the amount of work involved in a buyer representation.

Amy. Thanks. Step by step is easy.

Kat. Thanks. That's the idea.

Barbara. Print and hand out. Just don't copy and past on the Internet.

Deb. Thanks. What I've found is that if buyers are somewhat aware of the process, they will cooperate more easily.

Kelly. That's the idea.

Kristin. Welcome to the world of real estate practice. Wow! Takes a lot of gumption to get in this business at this time. If you would like some rental leads until you get more training and experinece, let me know.

Lisa. As a dedicated buyers broker, I have to say that Florida didn't do away with dual agency, they merely renamed it. Agency has got to be the most complicated subject in real estate practice. I, for one, won't be satisfied until we have two real estate licenses, one for buyers' reps and one for sellers; reps. Sure, like that's going to happen.

Ray. I was surprised this was featured, but I'll take them when I get them.

Allison. That's the idea.

Nice, simple, easy-to-follow steps. Great job, Lenn. For me, I like my buyers to have a sense of what they can afford before we start looking, so I always get them prequalified first. I've learned the hard way that once we go out to tour homes, there's a very high probability that they will find a home they want to write an offer on at that time. Without a prequal letter, we then end up scrambling to get one before the offer is submitted.

Also, soon as the buyer goes into contract, I remind them to contact their insurance agent. Too many escrows get delayed because the buyer either forgot to submit insurance information or too many claims showed up on the C.L.U.E. report, the latter which sometimes causes the insurance company to pass on a policy. Maybe you don't have that problem with insurers on the East Coast, but I run into this all the time in Sacramento.

Elizabeth. I qualify the buyer for price range before we tour. Not a difficult task. Then, if we decide to work together, I get them with a loan officer. Most of our buyers have already made contact with a lender earlier anyway.

As for the homeowner's insurance, I wait until the inspection matters are done and it looks like we are a go with HOA, etc. Then we get the insurance in place. C.L.U.E. gets a report if they just make an application and I don't want a lot of stuff on their credit report until I'm sure it's a go.

If I think a house may have had repairs made with insurance, I can get an insurance report quickly. This is something I work case by case.

Good comments. Thanks.

Thanks Lenn,

I thought it would be a perfect time to learn the nitty gritty about the business! I truly do have a passion for Real Estate, so I'm so very excited to get the ball rolling. I would LOVE some rental leads. I would never turn down leads! Thanks you so much.

Great information, clearly presented. Some tiny differences in the closing process in Canada, but anyone working with your description of a buyer's agent is going to be exceptionally well cared for.

thank you!

Li Read, RE/MAX Salt Spring, B.C., Canada

liread33@gmail.com

Thanks Li. I'm glad you enjoyed it.

Lenn,

Question, what safety precautions do you take before putting a client and/or customers in your car? I've heard of agents that have clients follow behind them. What do you think of this practice?

I have no problem driving buyer clients. I insist on it. With my buyers in my vehicle, I control the search, the conversation, the route, etc.

I don't really understand the question. Is it a safety matter?? I know who my people are. Safety is no a factor. I have good insurance.

I hate wagon trains. We get to know each other while driving around. I get to play tour guide, talk about the history of things in the area etc.

It's the only way I'll tour with folks.

Great information Lenn! The biggest mistake that I've seen buyers make over the years, is to buy a home and be unrepresented by not having an expereinced buyer's agent represent their interests. Without that assistance, buyers often over piad or purchased a proerty that I cannot help them resell in this lifetime! Their cost? Nothing other than loyalty to the experienced buyer's agent.

Lenn, great summary of the home purchase process. I have something similar that I send to clients via email and/or give to Buyers when we meet the first time. In addition to the many other duties we have as Real Estate agents, I find that "Educator" is one of the most important ones. The more consumers know, the better decisions they can make and the more valuable our services become. Thanks again for sharing!

I was thinking more about safety as far as driving around people I didn't necessarily know. Say if I'm doing floor duty and get some potential buyers that walk in or call over the phone and want to be shown properties. I know there have been some instances when agents have been hurt or killed while showing a property. So, I was just thinking about what safety measures that a new agent should take prior to putting somone in their car. Maybe like take a copy of Driver's license, etc...?? My branch manager recommended I have them come in for a listing appt first.

JUN

2008

Great tutorial for buyers. I agree with some one else that said minus a few regional differences this will work for any buyer that finds the post. Just a note to say how much I always enjoy your blog and your no nonsense approach to business and writing. Thank you.

JUN

2008

Diana. Thanks. I realize that there are regional differences. But, the process is basically the same.

LaShawn. Thanks. I send these flyers by e-mail when a First Time Buyer contacts me and they think that I walk on water.

Jim. I'll take buyer loyalty where I can find it because it's hard to find. We've got the whole world out there telling buyers how to spend $Hundreds of Thousands of Dollars, or $Millions without any help. It's downright scary when you think of it.

06/23/2008 08:52 PM

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First. I don't work in an office and I work with about 25 agents who do not work in an office. If agents are wary of showing homes, then perhaps they are in the wrong business. I'm sure your broker or manager is giving what they believe is good advice. However, some common sense has to prevail.

If a person refuses to give a nama or phone number that can be verified, of course your not going to meet them at a vacant house. Folks that I would meet show their name and phone number on Caller I.D. I've had calls from folks that I thought were "strange" and I didn't even offer to meet them anywhere. But, if you are obsessed with personal safety, this is not the business for you because this is going to come over and over and over.

Fact is, agents have been attacked and killed in homes for sale or model homes.

Folks are also attacked and killed in shopping center parking lots, driving in traffic, on jogging trails, hiking, camping, by their boyfriends or girlfriends in their bedrooms, by their spouses in their homes, by intruders in their own homes, at their job sites by co-workers, and on and on and on.

JUN

2008

Very informative article. Buying a house is a serious decision. It is the largest purchase one has ever made in his life.

JUL

2008

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