What are the Steps to Buying a House?
For most people, finding the right home begins with a house-hunting strategy combining personal preferences, guidance from others (such as myself) and a mix of neighborhood exploring and online search.
For some, the search takes a while; others find what they want right away. In either case, your agent will be a resource of insight and guidance, working through issues or complications that arise along the way.
Here are the steps in buying a house:
- Start Your Home Search
- Make a Purchase Offer
- Seller Accepts the Offer
- Provide Earnest Money
- Open Escrow
- Apply for a Mortgage
- Title Search and Appraisal
- Home Inspection
- Remove Contingencies
- Closing the Transaction
Here’s a general outline of what to expect during a home purchase, from the buyer's perspective.
1. Start Your Home Search
Use your phone in searching for your next ideal home or even your PC, whatever you like, really. Use the most powerful tool we have today that you don’t even have to be at some place just to verify the things you need to know.
All the information you need is at your fingertips. So start searching the internet for your next ideal home. And make sure you spend enough time on your decision to avoid regrets later on. After all, you can change your mind; there is nothing to really worry about at this stage since you are still searching.
2. Make a Purchase Offer
This is it! You've found the home of your dreams, looked over disclosure documents, reviewed comparable sales data, talked it over with your agent, and submitted an offer. The sellers may accept your first offer, but more often will return a counteroffer. In fact, additional negotiations are common, and a real estate agent can help you through this generally stressful stage.
3. Seller Accepts the Offer
“Mutual Acceptance” happens at this stage when both the buyer and the seller have agreed to the amount, and a sale agreement is then signed. This signifies that the agreement is official, enforceable, and binding.
4. Provide Earnest Money
To solidify your intent to buy, you'll place a deposit, or “earnest money”, on the property. The amount varies, but is generally at least 1 percent of the purchase price. You'll write the check to the escrow company, not the seller. Note: This money counts toward your down payment later.
5. Open Escrow
The escrow company holds all funds and important documents until the transaction is finalized. They ensure that money is properly distributed at closing to relevant parties like the seller, lender, title company, and real estate agents.
6. Apply for a Mortgage
If you haven't already, you’ll now formally apply for your mortgage. Having preapproval in advance simplifies this step, providing confidence that financing will go through. Getting preapproved is one of the smart steps to buying a house.
7. Title Search and Appraisal
The lender needs key information about the property before granting a loan. This is when potential problems can come to light. For example, the appraisal could show a lower value than the purchase price, or the lender could have trouble finding comparable homes. Also, the title search could turn up liens or other problems.
8. Home Inspection
A professional home inspection is crucial to uncovering any issues that need repairs. Your agent can recommend qualified inspectors. If major concerns arise, you can negotiate repairs with the seller or, if necessary, withdraw from the deal. Understanding the role of inspections is an essential step in buying a house.
9. Remove Contingencies
Once inspections, appraisals, and financing are approved, you can remove any remaining contingencies. This step signals that you're ready to proceed to closing.
10. Closing the Transaction
During closing, all parties sign the required documents. The lender disburses the loan funds, and ownership is officially transferred. Congratulations! You’ll receive your keys and can begin moving into your new home.
Timeline
To guide you better with your home buying process, download these graphics so you won't have to come back to this blog every now and then:
Other Important Things to Keep in Mind
- Calculate your budget carefully, considering the mortgage, property taxes, insurance, and maintenance.
- A higher credit score often means better loan terms. The ideal number would be 620.
- Location is very important. Research schools, amenities, and commute times.
- Long term goals. Ensure the home suits your lifestyle and future plans.
Final Thoughts
Navigating the buying a house steps may seem complex, but with the right support and knowledge, it becomes a manageable and rewarding experience. Lean on your agent for guidance, stay informed, and take each step with confidence.
About the Author
Aaron Jones is an award-winning real estate professional, recognized in the RE/MAX Hall of Fame with a Lifetime Achievement Award. As an Accredited Buyer’s Representative (ABR) and Seller Representative Specialist (SRS), he is dedicated to helping clients navigate the home-buying process with confidence. Licensed in Iowa, Minnesota, and Nebraska, Aaron brings local expertise and a commitment to exceptional service.
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