The Route to Buying Your First Home
1. Get Pre-approved – Once you’re serious about buying a home, you will want to find a lender. I suggest that you shop around to see the best terms you can get. You will need your W-2s, bank statements, pay stubs, and more to get preapproved for a loan. This step is not only figuring out what you can afford but also determining what you are comfortable paying on a mortgage each month.
2. Meet with a Real Estate Broker- The first big step after getting pre-approved is to talk with a Real Estate Agent. In this first meeting, you will discuss things like your timeline, the area you are looking, price range, and get a grasp on the process. Did you know that as a home buyer, you will pay your agent nothing to represent you in buying a home? That’s right. The seller pays the listing agent and the buyer’s agent.
3. The Home Search- This my favorite part of my job-helping you to find your PERFECT home! As your agent, I don’t want you to settle on a home, I work diligently to find you the property that you love. First, I will set up a search for you so that all listings will come straight to you and me with the parameters you tell me. Once you find a home(s) you are interested in taking a closer look at, I will schedule showings for you to tour the home. During the tours, we will look at the listing in more detail, disclosures, and tax documents so that you can get a full picture of the home.
*Of course, based on the current situation with COVID-19, this can also be done virtually as well! I have the tools to virtually show the home to you from the comfort of your own couch.
4. Make an Offer– Once we have looked at homes, and you find the home that you fall in love with/can see yourself or your family in… you make an offer! I will provide you with information about what similar homes have sold for to help you decide the price you would like to offer. This is a negotiation process. When writing the offer, it is not only about the purchase price (although that is obviously very important). You also decide other items to include: what closing date you would like, would you like the seller to help with closing costs, what is included (fixtures, personal items…), do you want a home buyers warranty, how long do you want to give the seller to respond to your offer and more. Together, we will discuss and get your offer ready. Once you are ready, I will submit the offer to the listing agent.
5. Negotiate- Just because you make an offer, does not mean that you WILL get the home. I will do my best to help you submit a STRONG offer, but oftentimes we will negotiate back and forth before you go under contract. There are many multiple offer situations throughout Central Indiana, so sometimes the seller may ask for highest and best. We will work together and negotiate with the sellers to get you your home!
6. Go Under Contract- You are under contract when you have an accepted offer on a home! Once you are under contract you will have a timeline to get some items complete to include submitting earnest money, obtaining financing, having an inspection, and so on. As your agent, I will help you through these steps and inform you about your responsibilities in regard to the contract.
7. Home in Escrow- The home being “in escrow” basically means that it is held for you. Now that you and the seller have agreed to the terms of the purchase agreement, you submit your Earnest Money, and the home is held for you until closing. Earnest money is typically 1% of the purchase price and goes toward the purchase of your home.
8. Inspection- The inspection is a whole other negotiation in the home buying process unless you are purchasing the home “As Is”. This negotiation is separate from the offer/purchase agreement. Having an inspection is when you hire a home inspector to inspect the physical condition of the home. Once you have an inspection, the inspector creates a report for you and sends it to you and your real estate agent. As your agent, I offer to go through the inspection with you once the report is delivered to us. Then, you identify how you would like to respond to the inspection and what items you would like to be fixed prior to purchasing the home. Using the items, you give me, I will compose an inspection response that you sign and I send it to the listing agent. Now, the seller has the chance to accept, reject, or counter your inspection response. Like mentioned, this is another negotiation that is after and separate from the original offer.
9. Appraisal- If your home is being financed, your lender will order an appraisal. The appraisal assesses/estimates the value of the home compared to other homes in the area and with similar specs. If the home appraises at the price you are purchasing it or above, then we are good to continue with the process. If the home appraises below the purchase price, then something has to change for the bank to lend you the money. If the home does not appraise for the agreed-upon purchase price, there are a few options. First off, if it does not appraise, you have the right to get your earnest money back and walk away. Other options can be that the seller could allow that the purchase price comes down to what it appraised at, or you are bringing more money to closing. The appraisal is the last big hurdle to jump before closing day!
10. Closing- Wahoo! Closing Day is the big day! Now that all other steps have been successfully completed, you will become the owner of your new home! This is the day that funds and title are transferred! Closing is conducted at a title company and they help facilitate the closing. On Closing Day, typically the buyer, seller, listing agent, and buyer’s agent come together to officially get all the documents completed!
As always, it would be my pleasure to guide you through the home buying process. If you are thinking about buying your first home, please contact me at 317.691.1875 or melissa@smithfamilyrealtyindy.com
Happy House Hunting!
Melissa Smith
