The Buying Process
So, you've decided to buy a house!That's great! If this is your first time, that process can seem a little daunting! One of the things that I love the most about being a Realtor is walking people through that process. Along the way, we all learn something, but for a first time buyer, it is easy to feel like, "I don't even know what I don't know, so how can I ask the right questions?"
There is no way for me to tell you all of the things that you are likely to face in your transaction because every transaction is different and something new will always come up. I try to spend a lot of time with veteran Realtors and the one thing that I hear consistently from all of them is that even after 30, 40, 50 - or more years, they are still coming across things they have never seen before.
So, number 1 in this Buying Process guide is "At some point, you will be surprised by something"! And that is okay. If you have a good Realtor and a good lender and you are willing to adjust your expectations, you will be okay! In spite of all that, there are some common factors that come up in most transactions that will likely apply to you. I hope you find this guide helpful - and please feel free to comment or email me with any specific questions you have. Your questions may help shape the next guide!
Without any further ado, please enjoy:
Jon Biron's Guide to the Home Buying Process in Spokane, WA
- Borrowing money:
- Unless you are bringing a suitcase full of cash to the process - and in my experience, most first time buyers are not - you will need to borrow money. Unless you have a wealthy friend or family member that you can borrow from, you need to deal with a lender - or bank. In order to make your transaction as smooth as possible, getting connected with a lender first is crucial. Check out my post "Get A Lender" for details about this step.
- After finding a lender that you feel comfortable with and getting them the necessary documents, you should end up with a pre-approval letter. This is what you'll want to have when you start working with your Realtor. If you don't already have a Realtor, your lender will likely have one that he/she prefers to work with. If your lender likes them, they are probably pretty good at communication and keeping a transaction moving! Conversely, if you have a Realtor, there is a good chance that they can point you to a lender that they like working with! If you have neither, give me a call and I'll help you get started!
- Finding a home:
- This can be a very fun part of the process or a very stressful part of the process. Depending on what you want and how much you can afford - as well as what kind of market we are in - there may be lots of great options or almost no options at all! Even when there are lots of great options, it can be stressful and even when there are almost no options at all, you can still have fun. Find a Realtor that you enjoy being with and that is focused on you and your goals and work with them - they are there to help you!
- Finding a home is a matter of elimination - not necessarily selection. First, you should already have an idea from your lender of how much you can afford. You also may have an idea of what area you want to live it - and what area you don't want to live in. Then you can eliminate houses that don't have enough bedrooms or bathrooms for your needs. We can also eliminate certain styles, yard sizes, etc.
- Once you narrow your results, you can come up with a handful of houses you want to go look at. With my clients, I like to look at 5 or 6 at the most - in one outing - because I find that after that it easy to get overwhelmed by options (Cereal Aisle Syndrome) and the trip is less productive.
- In the current market (Time of this writing is late June of 2016) we sometimes narrow things down to just one listing and it's not that great! In this situation, we set an alert and wait for a good option to pop up and try to get out there to look at it before anyone else!
- There are many more details here, but this phase can be long or very short depending on your needs and what is available. I've gotten buyer's under contract the first day we started looking and others that have looked for months before finding the right one. Understanding your needs and matching the house hunting process accordingly is important to me. This is your investment, I'm just here to help you!
- Getting a home under contract:
- Once you find a house you would like to buy, you have to come to an agreement with the seller regarding the terms of your purchase. We call this agreement a contract to buy - or a Purchase and Sale Agreement. There are many steps here and I'll try to keep it brief for now and go more in depth elsewhere.
- First you - the buyer - will make an offer to the Seller. Depending on the market you are in and how the house is priced, you may offer below asking price, at asking price or above asking price. Your Realtor should help you navigate this process. There are many nuances to this and some of them depend on the loan you have and many other variables. I won't address them all here, but your offer will include not just the purchase price, but all of the terms that you would like the Seller to agree to.
- Once your Realtor has sent the offer to the "other side" - usually this would be delivered to the Seller's agent (who has an obligation to show it to their Seller) - they will have several options:
- They can accept your offer exactly the way that it is. If they do this, they will sign off on everything in it and send it back. As soon as your Realtor receives it from them (Delivery) the deal is considered "Signed Around" - also known as Mutual Acceptance.
- They may Counter-Offer. A Counter-Offer is a new offer - from the Seller to you, the Buyer - that could be as minor as requesting a different closing officer or as major as excluding all the appliances and changing the purchase price.
- They might ignore your offer altogether. There is no requirement for them to respond to your offer. If your offer is substantially lower than they are asking - or if they have a large number of great offers, they might just ignore you completely. Your offer will have an expiration date on it. If there is no response by the expiration date, you are no longer bound to your offer.
- The Counter-Offer process can go on indefinitely. Eventually, you will either need to acknowledge that you and the Seller are not going to agree on terms and move on or you will get a deal signed around (mutually accepted). If you can't agree to terms, you need to go back to the house hunting process, if you get a deal signed around, the excitement starts!
- We have a deal!:
- Congratulations! You just made it past the first major hurdle! You found a house you like AND got the Seller to agree to a price and terms! Now things get really exciting!
- I won't go into all the details here - there are a lot of steps here and depending on your purchase and other factors, there are a lot of things that start happening, but once you have mutual acceptance, all of your timelines start ticking! You need to officially apply for your loan, your homeowners insurance and get your inspection scheduled for sure! Ask your Realtor what things you should be working on and stay in communication to make sure everything is on track.
- You will likely have a week or two of intense activity and then a substantial lull while the bank processes your loan. Check in with your Realtor and lender if you feel anxious, also spend this time planning the details for your move. Do you need to give your apartment notice that you are leaving? Do you need to schedule a moving truck and some friends to help move things? What about cable/internet or other subscriptions? Your home purchase will be on 'auto-pilot' to an extent, so try not to worry about it and work on the other things that need to get done!
- Be ready to provide further documentation. As the bank processes your loan, it will go through "underwriting". During this phase, they may request additional documents or information. If your lender contacts you and asks for something, try to get it back to them as soon as you possibly can! Sometimes the smallest thing can hold up the whole process. This is another good reason to check in with your lender occasionally. Sometimes a request for information gets missed. You are blissfully preparing for you move waiting for the deal to close and the bank is doing absolutely nothing with your loan while they wait for you to respond to their request for a new pay stub (or something else) and a quick phone call to check in can help remedy that!
- Similarly, you may find out that your lender is waiting for something from the Seller's side of things and your Realtor may be able to reach the Seller's agent and get the process going again. In most cases, the Seller really wants to sell and you, the Buyer, really want to buy, and any snags are just a matter of communication issues that can be cleared up with a few phone calls and emails! Remember that this is your purchase and you are the one that is most invested in it! If something seems "off", go after it! Your Realtor and/or lender (or someone else in the process - title company, insurance agent, etc) may be able to put your mind at ease and let you know that it is a normal part of a transaction - or they may confirm your concern and get the problem taken care of!
- You are a home owner!:
- Once all the hurdles are cleared - you are satisfied that the house you are buying is what you expected, the bank has approved the house and you, the title company has cleared title and the Seller has gotten paid, the deal can close.
- In Spokane, typically the Seller and Buyer will sign all of their closing documents once everything is lined up. Typically, signing will happen the day before closing (The Seller might sign a few days earlier, but the Buyer can't sign until the closer has all of the docs from the lender)
- Once you (the Buyer) have signed all the necessary documents, the lender can release the funds that they have promised.
- Once the closer has the funds from the lender and can distribute them where they need to go, they will get the clear to record it.
- Recording involves going to the courthouse and having the sale recorded. In Spokane, we try to avoid having a Friday closing because the courthouse closes at noon. If we don't get it recorded in the morning, we have to wait until Monday morning to record!
- Our contract language says that possession occurs at 9 pm on the day of closing. This means that technically, you can't get the keys to your new house until 9 pm on the day that the deal records! I always like to tell buyers to count on this timeline so that the moving truck doesn't show up in the morning - but you can't do anything until 9 pm!
- As a new home owner, you will discover that this is just the beginning! There are many things that you will want to start doing right away, but for the moment (and because this is just a "Buying Process" guide) just take a minute to relax and enjoy the fact that you made it through the whole process and that this is YOUR home now!
- This is a major step and you have worked very hard to get here! Enjoy the moment! If you aren't moving in until the next day, you can still do something fun! Bring the kids over and check out your new home together - exploring a completely empty house can be fun! Bring something over (like a picture) that you can put up or in the house as a symbolic "moving in" moment! Bring a tent and camp out in your new house. Be creative and just enjoy the moment! I love seeing the creativity of my clients on the day they take possession!