Buying a home can be stressful (like the market we have been experiencing in 2021 and 2022) but it can also be exciting! But there are steps you need to take in order to make sure your home buying transaction is successfully completed! So below are the 12 steps you will be taking on your home buying journey!
Step 1 - Find A Realtor!
This step is a pretty important first step - after all, you will be spending a fair amount of time with this person and you are trusting them to help you with what is probably going to be the biggest financial investment you will be making. So it is important for you to make sure that the person is someone who is experienced and knowledgeable, but is also someone you click with. At last count, it is my understanding, that in the Richmond area there are over 7,000 Realtors here! So how do you choose the right one for you? Of course, you can look on Zillow or Realtor.com for a recommendation, but keep in mind that the Realtors you see on these sites have to pay to be on them, so they are not being vetted by trusted sources. You can definitely ask family and friends for a referral. Or you can drive through the neighborhood, looking at Realtor signs. You can visit open houses to talk to Realtors! Or you can call me and I would be happy to talk to you. However, you choose the Realtor you may want to work with, interview them! Ask them questions about how long they have been a Realtor, if they are full time or part time, if they are part of a team, what areas do they work, do they practice dual agency and what differentiates them from other Realtors! And if you are a first time homebuyer, ask them how they help first time homebuyers with their home search!
Step 2 - Get Pre Approved For The Mortgage!
After you have found the Realtor you want to work with, the next step is to get pre approved for your mortgage. Not all lenders are the same and not all lenders offer the same products. You may find 2 lenders who both offer the same note interest rate (which determines how much you pay each month for your mortgage) but one may have some higher closing costs than the other! You can ask your Realtor for some recommendations. And if you are a first time home buyer, you should ask for lenders who are able to offer financing and grant money for first time home buyers! In today's real estate market, it is important that you not only are pre approved for your mortgage, but that the lender letter is a very strong one! That may mean having underwriting approval even before you begin looking for a home! The lender should be able to not only tell you what your monthly mortgage payment will be, but how much money you will need for closing and be able to answer any questions you may have.
Step 3 - Looking At Homes!
This may feel like the fun part, but in a seller's market, like we are having in 2022, it may feel very stressful. Many homes are coming on the market on Wednesday or Thursday, with showings starting on Friday and offers being reviewed on Monday, but with the seller having the right to accept any offer prior to that time. Many showing slots are filled up right away and sometimes you may have as little as 15 minutes to look at a house and make a decision about it! So it is important to use your time wisely. Looking at homes online first, perhaps driving through the neighborhoods of homes that look good on paper and even looking at what homes in the neighborhood have sold for in the recent past can help you use your time to look at those houses that seem to have the best fit for you and your family!
Step 4 - Making An Offer!
Once you have found the house that you want to buy it is time to make an offer! In our current 2022 real estate market, you may have to make an exceedingly quick decision on a house. And it is possible that you will be competing against many other offers. So it is important to know, prior to even looking at houses, what you may be willing to compromise on and what you aren't willing to compromise on! These are the things that you and your Realtor will be able to discuss so that you are able to make an educated decision about the offer you are about to make! If you make an offer and it is not accepted by the seller - don't despair - you may have to make offers on more than one house before you have an offer accepted!
Step 5 - Your Offer Has Been Accepted!
Once your offer has been accepted, the work begins. Your Realtor will forward the contract to the attorney and to the lender, who will begin working on your loan and on the title search (to make sure that there are no liens on the property that should not be there). Next steps will be the inspection as well as the appraisal! You will also need to wire in the earnest money deposit to the Realtor, who will hold it in their trust account until closing!
Step 6 - Inspections!
If you did not waive the inspection contingency in the contract, then you will have a certain amount of time to schedule all of your inspections on the house. Inspections can include: general whole house inspection, roof inspection, HVAC inspection, radon inspection, chimney/fireplace inspection, mold inspection, termite inspection and well and septic inspections. Your Realtor should be able to go over with you the type of inspections you are responsible for and the ones that the seller is responsible for, how long you have to complete the inspections, recommend inspectors to use for the inspections and the time frame that they must be completed and an addendum requesting repairs by the seller (if your contract allows for that) to be done!
Step 7 - HOA Document Review!
If you are buying a house in a neighborhood that has a Homeowners Association (condo, townhome or single family neighborhood), Virginia law provides that you must get a copy of the HOA documents for you to review. You will have 3 calendar days from the day of receipt and you have a statutory right to rescind your contract if you are unhappy with these documents. Your Realtor should review these documents as soon as you receive them and go over them with you so you understand just what they say so you can decide if you are good with living in the neighborhood!
Step 8 - The Appraisal!
If you are getting a loan to purchase the house, the lender will most likely require an appraisal to be completed on the house. The appraisal is an independent third party that the lender contracts with to value the property. Some buyers in the 2022 real estate market are agreeing to make up some or all of the difference between the purchase price and the appraised value, if the appraisal comes in under the agreed to purchase price. Before you start looking at homes, you need to talk with your Realtor to determine how comfortable you are this strategy.
Step 9 - Schedule Your Closing!
Assuming that all contingencies have been satisfied (inspection, HOA document review, financing, appraisal and any others in your contract), then you will be ready to go to closing. About a week or so before your closing date in the contract, you should contact the attorney's office to schedule the closing time. Let your Realtor know so that the walk through can also be scheduled by the Realtor with the sellers!
Step 10 - Set Up Utilities & Schedule The Movers!
Now that you know when you will be closing on your house, you need to make sure you have utilities! About a week or so before closing, call the utility companies and set up to have the utilities transferred into your name on the day of closing. And while you are at it, you should also call the moving companies to schedule your move!
Step 11 - Walk Through!
Just before closing, you will want to do a walk through of the house you are buying! You will want to make sure that the house is in broom clean condition (it does not mean that the sellers had to bring in a professional cleaning service to clean) - this means that there should be no trash in the house, that the sellers personal property has been removed and that the floors have been swept. You will want to make sure that any repairs that were agreed to be done by the seller have been completed. You will want to make sure that they did not do any damage to the house as they were moving out! And you will want to make sure that any appliances and items that were to stay with the house are still there! If there are any issues, the time to let the attorney know is before you close and not after!
Step 12 - Closing!
Congratulations! You are now closing on the house. Closing is a very ministerial process here in Virginia - generally the closing will only take about 30 to 45 minutes - you will sign some papers that the attorney will explain to you what they are! If you are to bring money to closing and did not wire it into the attorney's trust account before closing, then you will need to bring a cashier's check to closing. The attorney will also review the settlement statement with you, showing just how your cash to close was calculated - this should be very close to what the lender told you when you made loan application! Once you have signed all paperwork, you will receive the keys to your new home and you will now be the new homeowner!
As you can see, there are a number of steps you will be taking on your home buying journey! Your Realtor will be there to guide you along each of these steps!
And, if you are thinking of buying a house, and you have questions or would like to sit down and talk about buying a home in today's real estate market, don't hesitate to get in touch and I would be happy to help!