Buying your first house can be stressful. Working with a good local realtor and establishing regular communication with them can help make the home buying process easier. You don’t want to be playing phone tag with a realtor when trying to write an offer on your first house. Understanding some of the steps involved will also help. Every house purchase is unique, but there are some common steps in most real estate deals.
Before you start looking at real estate listings its a good idea to get preapproved for a mortgage. Your realtor may recommend some lenders or mortgage brokers they have worked with successfully in the past. A mortgage broker will tell you how much home you can afford. In a sellers market most listing agents won’t take an offer seriously unless it is accompanied by a preapproval letter. A mortgage broker will look at your income, as well as any student loans, car loans, credit card debts, and collections. Once you are pre-approved, you have a price range to search for houses in your area.
When you are preapproved for a mortgage, you can start looking at houses in your price range. Find a website you are comfortable with searching for realty on, whether its the local multiple listing service (RMLS in the SW Washington area), Zillow, Redfin, Realtor.com, or some other website. Once a house gets listed for sale on the local MLS, it usually shows up on all of the national websites within 24 hours. Once you find some listings you are interested in, text or email your realtor with questions about them. Your buyer’s agent can look the property up in their MLS and find more details about the listing. It’s possible the house needs a new roof, or has a crack in the foundation, or some other fault that doesn’t show up in your online search.
Based off of feedback from your realtor, figure out which homes you want to see and have your buyers agent arrange showings. Vacant houses are usually easy to see on short notice, but owner occupied homes involve scheduling showings around the owners schecule. This process can take a while. Try to take notes or record video or photos of the house and property on your phone. After you have looked at a few houses it can be hard to keep track of which listing goes with which house. Try to narrow down your likes and dislikes. Your realtor can help with some recommendations, based on the condition of the house vs what type of loan you are pre-approved for. Some homes need enough work that they won’t easily qualify for a certain type of loan. Let your buyers agent know what you liked and what you disliked about the properties. Repeat this process until you find a house you want to write an offer on.
Once you find a house you want to write an offer on, your realtor can help you determine how much to offer, as well as any addendums to include in the offer. One of the most common addendums is the inspection addendum. This allows you to hire a home inspector to find any issues that aren’t apparent when walking through the house during a showing. If your first offer is not accepted, keep searching until an offer is accepted. Once an offer is accepted, co-ordinate with the realtor to get a home inspector scheduled within the window allowed by the purchase and sale agreement.
The home inspector will look in the attic and crawl space, as well as looking at plumbing, electrical, roofing, flooring, drywall, windows, and more. Their job is to find any issues the house currently has, as well as find any issues you might have shortly after buying. A good home inspector can also recommend further inspection by a specialist if there is a chimney, roof, or other issue that requires a specialist. The inspection may turn up issues that allow you to negotiate for the seller to lower the price or fix some of the issues prior to closing. It’s also possible the inspector finds something like a cracked foundation, mold, or something else that makes you want to walk away from the deal. If you walk away from the deal you still have to pay the home inspector, but it is far better to pay for multiple inspections than to find a costly repair after buying your first house.
An inspection addendum allows you to hire a home inspector and write an inspection response based on the inspection. The default time window for Washington State home inspections is 10 days on the purchase and sale agreement, although that timeframe can be changed when writing a purchase and sale agreement. An inspection response might request the seller to lower the price to help cover some of the necessary repairs an inspection found. It might also request the home sellers to repair or rectify specific issues found by the inspection.
If the inspection response has been agreed upon and signed by both the sellers and buyers, the next step is usually the appraisal. Appraisers are used by the mortgage lender to verify the house value independently of the sale price. They look at recent house sales in the area to determine the value for the originator of the loan. If the house appraises for less than the sale price, not all hope is lost. The buyers can ask for the sellers to lower the purchase price to the appraised value, or the buyers can bring more money to the closing. It may be possible to have a family member gift the amount to the buyers, as long as it is documented properly.
At some point between your accepted offer and the title transferring to your name, its a good idea to notify the utility companies that you will be purchasing the property. Find out when their billing cycle is, and what their fees are. Learn what day the garbage pickup is on, when recycling gets picked up, and ensure the best first time home buyer experience.
Assuming the house has appraised at full value, or any response to a low appraisal has been signed by both the sellers and buyers, the next major step is scheduling signing with the title company. The title company has been working in the background so far, checking the status of the title, HOAs, CC&Rs, liens, taxes, and utilities associated with the real estate you are buying. The title company is involved with making sure all of the legal documents are signed by both buyers and sellers. They also make sure there are no mechanical (contractors) or tax liens against the house that would transfer with the purchase. You don’t want to be stuck with a lien against the house that you end up paying because the previous owners didn’t. The title company will make sure the legal documents are recorded with the county to transfer the title to your new home.
The title company will have a lot of paperwork for you to sign. It can take anywhere from 15 minutes to several hours, depending on how thoroughly you want to read through all of the documents they put in front of you. If you know you will be out of town the week leading up to closing, the title company can arrange for a mobile notary to meet you to legally sign the closing paperwork. The title for your new house should transfer on the day the purchase and sale agreement has set to record. Once the title has transferred your buyers agent can get the keys for you and either deliver them to you, or arrange for you to pick them up at a realty office.
Enjoy your new house! Consider replacing all of the locks on your new house. Double-check with the utility companies (water, sewer, electricity, garbage, recycling). Double-check with your local broadband and DSL companies. Relax, you no longer have to worry about having your rent raised.