There are so many misconceptions about buying real estate. It’s easy to get intimidated by the process or the cost and hold off on really trying to understand it all. It’s not something we learn about in school, yet all of the world’s wealthiest people and corporations have real estate assets. So it’s clearly important, right? As with anything in life the more you do it the better you get at it. You really can’t “practice” buying real estate so you need to be able to rely on a trusted professional.
The foundation for a successful home purchase is set by having a clear understanding of the transaction process. Here are some of the most important things you need to know:
Step 1: Financing
Start with the hard part first! Before you start seriously looking at properties (late night Zillow binges and the occasional open house visits don’t count) take the time to research your financing options and get pre-approvals. Yes, plural. Get more than one! I typically advise my clients to get three pre-approvals from different institutions. This allows you to better understand the differences between financing with a credit union, mortgage broker or national bank.
Step 2: Searching
Collaborate with your realtor and make the time to have regular conversations about what you’re looking for. It’s our job to give you a ground level expertise on what’s out there. We can tell you things like what architectural styles you’re likely to pay a premium for, whether a neighborhood is truly up and coming or what part of “Silver Lake adjacent” could mean bad news. Searching online is quick and easy but once you’re getting serious, you need an expert to help you understand what isn’t explicitly stated on the listing.
Step 3: Making an Offer
When you find a home you want, it’s important to move quickly. Waiting to make an offer because you’re still working on financing or otherwise can lead to huge heartbreak. By the time you start seriously searching, make sure you’ve prepared yourself for action so you can be ready to strike immediately.
You’ve strategized with your agent and submitted an offer. Now what? The waiting game. Rarely ever will your offer be accepted without some changes. Expect to receive a counter offer within the next few days asking to make some adjustments. Nothing during this phase is committal - you’re free to reject your counter offer or even walk away altogether upon offer acceptance because you’ve simply changed your mind.
Step 4: Escrow
Congrats! Your offer was accepted. You came to terms with the seller and now it’s time to investigate the property in detail. This is the time where you will hire inspectors to check all systems of the home, check local records for permits and make sure you have a clear understanding of everything related to the purchase of this home such as a flight path overhead, or an oil rights lease on the land.
In most states, you have three major contingencies: inspection, appraisal and loan. Each one is released at a different point in the transaction and protects you as the buyer should one of the main components of the sale go wrong. Your realtor will work alongside you very closely to help keep the inspectors, lender, escrow and appraiser on track. It’s our job during the transaction to make sure everything is coordinated and all parties have a clear understanding of all moving parts - which requires tons of clear and intelligent communication.
Step 5: Closing
All parties are in agreement, and all paperwork has been completed. You’ve met with the notary and the county has recorded the new deed. You’re officially a homeowner! The party has really only just begun. Make sure your home warranty and homeowners insurance is activated. Save all receipts and invoices from any repairs you do forever (you never know when or why you’ll need these) and enjoy the freedom of owning your home!
Want to hear more from the author? Stevie is participating in a special International Women's Day panel in Staples' Spotlight Space in Costa Mesa, CA along with 3 other dynamic women in the southern California business community, Balancing Your Time as a Business Owner and Professional. Click the link to learn more and reserve your spot.