So, you've moved passed Steps 1 and 2 - you've picked your lender and found the Realtor® that is going to help you find that perfect home....... What? You missed Steps 1 and 2? No worries - you can catch up at "The 5 Steps to Buying a House". Go ahead, catch up, I'll wait! (hint: click the link)
The next 3 Steps in Buying a House are very time sensitive and will take careful coordination. ** It is important to note that Steps 3 - 5 may differ from state to state and what I am outlining here is specific to North Carolina.
Step 3: The Offer To Purchase
Congratulations! You have found "the" home and are ready for the next step - Making an Offer. Don't be scared! The lender and Realtor® that you chose in Steps 1 and 2 are there to help guide your through this process. Your Realtor® will prepare a CMA (Comparative Market Analysis) that will "show the story" of the homes that have recently sold in the neighborhood you are interested in as well as other homes that are currently for sale in the neighborhood. This CMA will assist you in making an informed, fair and solid offer. Keep in mind, YOU want to get the best deal possible in your new home AND the seller wants to get the best offer possible for their home which may result in counter offers.
Your initial offer will set forth the terms that you are willing to abide by for the purchase of the home. They include (but are not limited to):
- Purchase Price
- Due Diligence Fee and Due Diligence Timeframe
- Earnest Money
- Closing Date
- Any personal items or fixtures that you are requesting
- Any other terms such as requesting closing costs, a home warranty, etc
You're Realtor® will walk you through the contract. It's 10 pages in North Carolina and can be a bit overwhelming but take your time, have your Realtor® explain point by point what you are getting ready to sign. As I mentioned, there may be a counter offer from the seller. If there is, it is important to review their terms before accepting. You can also counter their counter! Once the offer has been accepted by both parties and executed (meaning both parties have signed) you are on your way......
Step 4: Due Diligence Period
The Due Diligence period is the time that you get to do any and all inspections of the property such as:
- Physical Property Inspection by a licensed inspector
- Pest Inspection (Wood Destroying Insects)
- Septic and Well Inspections (if applicable)
The Due Diligence Period is also the time when you will need to:
- Review of Documents such as the HOA Restrictive Covenants, the NC Residential Disclosure (hint: click the link)
- Procure Homeowners Insurance
- Repair Negotiations (if any)
It is CRITICAL that all of this be done DURING your Due Diligence period.
Step 5 - Settlement and Closing
North Carolina is an Attorney State. What does that mean? I'm glad you asked! Real Estate Closings in North Carolina are handled by a Real Estate Attorney. In many states they are not.
Wait..... I thought settlement and closing were the same thing? They are not.
Settlement: The settlement is when all of the documents necessary to complete the transaction are signed such as deed, settlement statement, deed of trust (if applicable) and the closing attorney's receipt of funds to complete the transaction.
Closing: The closing is when the Settlement (above) has been completed, there has been satisfactory title update to the property, the attorney's receipt of funds and authorization to disburse funds AND recordation in the appropriate county register of deeds and deed of trust (if applicable).
Let's say you have your settlement scheduled for late afternoon on a Friday (after 2pm). There is a high probability that the Closing Attorney may not record the deed until Monday which means technically you still do not "own" the home. By law, you are not to receive the keys to the home until that deed has been recorded.
Thought to ponder: You "settle" late on a Friday afternoon and you get the keys to the home. The deed will NOT be recorded with the Register of Deeds until Monday (Closing). You do NOT own that home over the weekend in between and by law you should have signed a "Buyer Possession Before Closing" Agreement.
So, to recap....
Step 1 - Find a Lender
Step 2 - Find a Realtor®
Step 3 - The Offer To Purchase
Step 4 - Due Diligence
Step 5 - Settlement and Closing
I hope that I have shown you a valuable overview of the home buying process and that you'll feel a bit more comfortable in starting the process. Just keep in mind, your Realtor® is there for you as is your entire Home Buying Team - rely on them! (Hint: click the link)
If you are thinking that now is the time for you to purchase your 1st home or 5th - give me a call! I would love to help you through the process.