Every homebuyer has a unique homebuying experience. Having said that, the process is fairly similar from one situation to the next. Understanding this high-level view of the process can provide you with some much-needed clarity.
Understanding Each Phase of the Process
Every homebuyer has a slightly unique process when searching for a house, but the overall path from start to finish looks relatively similar. Here are the eight major phases of the process:
- Pre-Approval
The home buying process begins with applying for a home loan. During this process, you’ll be required to provide a number of documents, proof of identification, and simple income statements. The lender will then tell you how much money they pre-approve you for. (Eventually, after you have an offer accepted on a house, they’ll begin the full approval process.)
- Find an Agent
Finding the right agent is one of the more critically important phases of the process. A good agent – meaning someone who is experienced in the local market and skilled at negotiating – can speed up the process and save you thousands of dollars in the process.
A good agent should pass the eye test. Drive around town and look for for-sale signs. What names do you see on the signage? If there are one or two names that keep popping up, there’s probably a pretty good reason for it. Consider contacting these agents to learn more.
- Search
With pre-approval and an agent in tote, you’re ready to begin the fun part: Searching for your next home. During this process, you and your agent will work together to zero in on the right properties, schedule showings, and consider your options. Once you find a property that fits your needs, it’s time to put in an offer!
- Offers
The offer process is one that has to be handled with great care. You want to put in an offer that’s competitive, but you also want to leave room for negotiation. Your agent can help you make a decision on how competitive to be with the offer. If you know there are already multiple offers on the table, you won’t have much room. You may even need to offer above listing price. (This is why it’s so helpful to have an experienced agent who understands how to negotiate.)
- Negotiate
Negotiations can go back and forth. It’s possible/likely that the seller will come back and present you with a counteroffer. You can then accept or present additional concessions. Remember: Everything is on the table. From closing dates and costs to the home price, repairs, and warranties, you always have options at your disposal.
- Due Diligence
Once an offer is accepted, you enter into what is known as a due diligence period. This is where you’re able to order inspections, run a title search, get your financing finalized, etc. Use this time to your advantage and get everything squared away. If any significant items come back on the inspection, you may need to re-negotiate with the sellers to get certain items covered.
- Closing
With the due diligence period over, it’s time to wait for the closing date. Rather than sitting still and twiddling your thumbs, use this time to continue stockpiling as much cash as possible. (Closing costs will set you back and it’s helpful to have as much cash in the bank so that you’re prepared for any new expenses that come with moving, repairs, etc.)
- Move-In
Finally, it’s move-in day! Assuming you used the time leading up to closing wisely, you should have already lined up movers, packed up the majority of your belongings, and set aside a little extra cash to offset the expenses you expect to incur on this day.
The important thing to remember is that you don’t have to be fully moved in within one day. Yes, you’ll probably need to unload all of your belongings, but you can take your time to decorate and unpack. Enjoy the process and make plenty of memories!
Adding it All Up
The home buying process can take a few days or a few months – it all depends on the market, inventory, finances, and your level of specificity. But if you understand the overarching process and the various phases involved, you can make proactive decisions that benefit you in the long run.
