The following outline is based on purchasing real estate in Delaware. Meant to be a guide, you can use it to help you get an overview of the process.
The Buyer meets with a loan officer (can be done over the phone) to determine what kind of loan they'll qualify for, the maximum purchase price for which they can be approved, the closing costs, and how much money they'll personally need to bring to the table. The loan officer will present various types of financing and will help the Buyer determine which one is best for them. Once the maximum loan amount is determined, the Buyer will decide a comfort level for the purchase price and will get a good faith estimate of closing costs and the monthly housing payment.
Locate a Property
Knowing how much of a house they can afford, and how much help they might need from a Seller or a loan program, the Buyer begins to search for a property. Most Buyers begin the process on their own but soon thereafter, get the help of a REALTOR.
Make an Offer to Purchase
You've found the house you want. What next?
* Agreement of Sale. Preprinted form that should be completed with the assistance of a REALTOR. If you're not working with a REALTOR, then complete the Agreement with the assistance of a Real Estate Attorney.
* Good Faith Deposit. The earnest money or Good-Faith deposit that accompanies the offer is generally 1% - 5% of the purchase price. The Buyer's personal check is made payable to the listing broker (or to the closing attorney if purchasing a For Sale By Owner and no Realtor is involved in the transaction) who must deposit the check into an escrow account once the offer is accepted.
* Contingencies. Contingencies are provisions in a contract, i.e., if "x" happens, I'll do "y"
* Mortgage contingency. If the Buyer is going to obtain a loan in order to make the purchase, the terms of the loan must be specified in the offer. The Buyer must apply for a loan within a stated period of time, must be able to secure the loan, must get a mortgage commitment, and the house must meet the necessary requirements of the lending institution/product.
* Inspections - The Buyer specifies which inspections they intend to perform in order to assure themselves of the condition of the property. These inspections include the Home Inspection, the Wood Destroying Insect Inspection, the Radon Inspection, and can also include inspections of a pool, a well, a septic system, radon in the water, stucco, and any additional inspections determined necessary either by the Buyer or by the Buyer's inspectors. For example, a Home Inspection might lead to an inspection of the heating system, or a Wood Destroying Insect Inspection might lead to a structural inspection due to damage from insects.
* Contingent on the sale of a property. If the Buyer needs to sell a property in order to purchase a property, expect the Seller to want a clause that gives the Seller the right to sell the property to someone else who doesn't have that contingency after the Seller gives the Buyer a certain amount of time to remove the contingency.
* Customary Provisions. Anything that the Buyer gets to take advantage of that the Seller has already paid for, e.g., fuel in a fuel tank, the Buyer will reimburse the Seller for at Settlement. The Seller agrees to convey a clean title to the property. The Seller agrees to convey the property in the same condition at Settlement as it was when the Buyer made the offer to purchase it.
The Offer is Presented... and once signed by all parties... becomes a Contract.
Once the Buyer and the Seller agree to all terms in the offer, it's signed by all parties and becomes a Contract.
The Buyer completes the steps to purchase the property.
* The Buyer makes formal application for the mortgage. The mortgage company will proceed with the loan approval and will order the appraisal.
* The Buyer selects an attorney who will represent them and will conduct the Settlement.
* The Buyer conducts inspections according to the terms in the contract.
* The Buyer removes all contingencies possible by means of addendums.
* The Buyer makes preparations for Settlement including having utilities, phone, cable services transferred into the Buyer's name and obtaining Home Owner's Insurance. The Buyer completes all to-do lists furnished by the mortgage company.
* The Buyer conducts a pre-settlement walk through of the property.
The Buyer goes to Settlement, taking with them their photo id and certified funds for the amount of money needed for closing costs, escrows, and pre-paids.
At the end of Settlement, the Buyer owns the property. Congratulations!