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Home Buying Path A to Z

The Complete Home Buying Process

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The Home Buying Path Should Be Easy to Navigate

The home buying path should be easy to navigate.

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Every state requires slightly different steps to buying a home, although they are basically very similar. Since I am most familiar with the way California does it, here is the path to home ownership in California, broken down into simple steps:

1) Hire a Buyer's Agent

  • A buyer's agent will represent only you and have a fiduciary responsibility to look out for your best interests.
  • Buyer's agents may ask you to sign a buyer's broker agreement, but it is the seller who pays the commission.
  • Interview agents until you find an agent you trust and with whom you feel comfortable.
  • Once you have settled on an area, try to hire a neighborhood specialist.

2) Get PreQualified / Preapproved

  • Order a free credit report online and fix mistakes, if any.
  • Ask your agent for a referral to a mortgage broker, but also compare rates offered by your own bank and / or credit union.
  • Ask the lender to give you a loan preapproval letter, which means it will verify your income and pull a credit report.
  • Determine your maximum loan amount, but choose only a mortgage type that you understand and a payment level with which you feel comfortable, which may very well be less than the maximum for which you are approved.

3) Look at Homes for Sale

  • Ask your agent to look at homes for you before showing them to you.
  • Narrow your search to those homes that fit your exact parameters to find that perfect home.
  • Ask your agent to give you MLS print-outs of comparable sales in your targeted neighborhood.
  • Consider all homes on the market, including fixer-uppers, REOs, foreclosures, short sales and those overpriced homes with longer DOM.
  • Observe open house etiquette.
  • Tell your agent which online home listings you are interested in previewing and ask for additional input.

4) Write a Purchase Offer

  • Consider writing seller's market offers in sellers markets and buyer's market offers in buyer's markets.
  • Select a home offer price based on the amount you feel a seller will accept or counter.
  • If you are considering a lowball offer, ask your agent to substantiate this price for you.
  • Prepare for multiple offers if the home is considered desirable in a hot location.
  • If your offer is rejected, ask your agent to explain why and don't repeat that mistake with your next offer.

5) Negotiate and Write Counter Offers

  • Expect the seller to issue a counter offer.
  • If the seller counters at full price, continue to negotiate.
  • During offer negotiation, share personal information about your family to give the seller a reason to care about you.

6) Make an Earnest Money Deposit

  • When your offer is accepted, deposit your earnest money check with the appropriate party.
  • Do not ever make your check payable to the seller.
  • Your offer should contain contingencies that will return your earnest money deposit to you if you cancel the contract.

7) Open Escrow / Order Title

  • Your agent or transaction coordinator will open escrow and title, if the listing agent hasn't already done so.
  • Ask for the escrow officer's name, phone and escrow file number.
  • Give this information to your lender and your insurance agent.

8) Order Appraisal

  • Your lender will require an advance payment for the appraisal.
  • If you receive a low appraisal, discuss options with your agent.
  • Ask for a copy of the appraisal.

9) Comply With Lender Requirements

  • Lenders may ask for additional information.
  • Do not make home buying mistakes such as altering your financial situation while in escrow.
  • When the file is complete, the lender will submit it for final underwriter approval.

10) Approve Seller Disclosures

  • Read and question items you do not understand on the TDS, Seller Property Questionnaire, natural hazard report, pest inspection / completion and other documents such as a preliminary title policy.
  • Realize you have 10 days to cancel if lead paint is a health hazard.
  • Read every document in its entirety; ask questions about all seller disclosures.

11) Order Homeowner's Insurance Policy

  • Order your homeowner's insurance early.
  • Sometimes previous claims by a home owner can make it difficult to get insurance.
  • Get replacement coverage.

12) Conduct Home Inspection

13) Issue Request for Repair

  • If the home inspection turns up health and safety issues, issue a request for repair by asking the seller to address those issues or give you a credit for them.
  • Realize no home is perfect, and the inspector will find faults.
  • Be reasonable.

14) Remove Contingencies

  • By default, California C.A.R. contracts give you 17 days to remove contingencies.
  • Make sure your loan is firm and the appraisal is acceptable before removing your loan contingency.
  • If you do not remove contingencies, the seller can issue a request to perform and then cancel the contract, on top of demanding your deposit.

15) Do Final Walk-Through

  • Do not pass up doing a final walk-through.
  • Inspect the property to make sure it's in the same condition as when you agreed to buy it.
  • If you find a serious issue, address it now before you close.

16) Sign Loan / Escrow Documents

  • In southern California, you will sign escrow documents shortly after opening escrow.
  • In northern California, you will sign escrow documents along with your loan documents near closing.
  • Bring a valid picture ID.

17) Deposit Funds

  • Bring a certified check payable to escrow.
  • Expect escrow to pad the amount, so you will receive a refund after closing.
  • Consider asking your bank to wire the funds to escrow, saving you the hassle of waiting in line at the bank.

18) Close Escrow

  • Your property deed, seller's reconveyance and deed of trust will record in the public records.
  • Title will notify you and your agent when it records.
  • After recordation, unless your contract specifies otherwise, the property is yours -- change the locks immediately.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

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