23 Jan Home Buying Process in Detail
Buying a home is typically the largest, most complicated, and often most emotional financial transaction of one’s life. There is a lot at stake, not just money but also issues such as security, happiness and everything else wrapped up in the concept of “home.” One of the main reasons why it can be so stressful is that one’s agent never explains how the process actually works step by step, what the decision points will be and the options one has at each step. When one understands the process and has a sense of control over how it will proceed, much of the stress is alleviated.
Below is a simple graphic that outlines how one thing leads to another, followed by a more detailed step by step description. It’s relatively self-explanatory, but will make even more sense when reviewed with your agent. Remember that you are the sole decision-maker throughout the process: a good agent renders honest, experienced counsel and helps manage and coordinate everything that needs to happen, always with an eye to protecting your interests, but never presumes to make decisions for his or her client.
The Home-Buying Process – In Detail
Finding the New Home
Agent & Buyer determine Buyer needs, wants, timeframe and financial options
Agent reviews the search and buying process, current market conditions and trends, Buyer costs, and real estate Agency
Paragon disclosure package reviewed with Buyer
Agent works with Buyer to secure loan pre-approval, which is necessary for two reasons: 1) the buyer needs to know their financial options and financing costs, and 2) once the right home is identified, it is critical to have the lender pre-approval letter to provide to the seller at the time of offer submittal
Agent sets up automatic alert system for new listings that match Buyer’s parameters
Agent identifies and previews properties through MLS and brokers’ tours
Agent provides resources for neighborhood and community information. It is often the case that there are additional neighborhood options which buyer is not aware of
Agent and Buyer tour properties: showings by appointment, broker tours, open houses
Agent and Buyer review benefits, drawbacks and values of specific properties
Buyer identifies new home to purchase
As appropriate, Buyer checks the online Megan’s Law database, seismic hazard map, and local crime statistics with neighborhood police
Writing & Presenting the Offer
Agent reviews with Buyer the mortgage, closing and ongoing ownership costs pertinent to selected property
Agent and Buyer review property disclosure package from Listing Agent
Agent queries Listing Agent further on property issues, Seller situation and preferences, past offers, existence of other current offers and offer presentation guidelines
A comparative market analysis is prepared and reviewed to determine offer price
Financing pre-approval letter procured from loan agent
Agent and Buyer review offer and negotiation strategies, including offer price, due diligence contingencies, fixtures and personal property included, and close of escrow
Offer contract is written at Buyer’s direction
If very short contingency periods are being offered for inspections and/or financing, Agent to coordinate scheduling of tentative inspection and appraisal appointments
Agent prepares offer for presentation to Seller and/or Listing Agent: agency disclosure, offer letter, loan pre-approval letter, copies of Buyer-signed disclosures, etc.
Agent negotiates offer and counter-offers on Buyer’s behalf and at Buyer’s instruction to achieve the best possible price and terms
Agent receives back from Listing Agent the fully executed purchase contract, carefully reviews it for completeness, and provides copy to Buyer
Due Diligence, Contingencies of Sale & Close of Escrow
Escrow is opened, Preliminary Title Report ordered, Buyer’s initial deposit delivered to escrow company
Agents provides escrow information and copy of accepted contract to Loan Agent
Agent prepares a Timeline for the Removal of Contingencies and Close of Escrow
Appraisal appointment coordinated with Lender and Listing Agent
Buyer confirms homeowner’s hazard insurance for new home; Buyer’s Insurance Agent contacts Escrow Officer with required policy information
Agent coordinates Buyer-specified inspections—structural pest control, contractor, structural engineer, soils, roof, fireplace, etc. (see Buyer’s Inspection Advisory)
Agent monitors the timely receipt of property disclosures, reports and other documents, as statutorily or contractually required, for Buyer’s review and approval
Preliminary Title Report is carefully reviewed by Agent, Buyer, Lender and, as necessary, Buyer’s attorney
Agent attends all inspections with Buyer; Agent completes Selling Agent portion of Real Estate Transfer Disclosure Statement after careful walk-through of the property
Agent and Buyer carefully review inspection reports for Buyer’s approval, further clarification or objection
Agent and Buyer review county/city, natural and environmental hazard and other required reports for Buyer’s approval, further clarification or objection
Agent facilitates collection of additional information—further inspections, contractor quotes, legal advice, etc.—necessary for Buyer to understand/quantify issues pertinent to the property’s condition or circumstances
Agent verifies property’s statutory compliance with energy/water conservation compliance, smoke detector installation, water heater strapping, etc.
Agent verifies loan commitment and funding details with Lender and Escrow Agent
As applicable, contingencies of sale—financing, investigation, title, etc.—are removed, or Agent re-negotiates the terms of the purchase at Buyer’s instruction. Agent prepares appropriate addenda or contingency removal documents
Property repairs or remediation, if any, are completed by Seller
Buyer final walk-through of property
Buyer consults with Buyer’s accountant or attorney to determine method of holding title
Agent reviews Home Warranty option with Buyer
Agent provides final instructions to escrow
Agent and Buyer review the Estimated Closing Statement, and, if Buyer desires, complete loan and closing documents for Buyer’s review prior to signing appointment
Agent and Buyer meet Escrow Agent for signing of closing documents (Buyer brings legal identification as documents will require to be notarized)
Buyer makes arrangements for final funds—balance of cash deposit and closing costs—to be delivered to escrow by wire or cashier’s check
Buyer makes moving arrangements, schedules change of utilities and alerts any Homeowner’s Association of pending change of ownership
Agent confirms with Escrow Agent everything is set for scheduled close of escrow
Buyer loan funds; transfer of title is recorded
CLOSE OF ESCROW
After Close of Escrow
Agent procures and delivers keys, alarm codes, garage genies to Buyer
Agents follows up to check in, offer help, provide resources, and solve any problems that might have arisen
The quality of the agent working on your behalf, his or her competence, integrity,
work ethic and commitment to your interests can make an enormous difference
in the outcome of your home purchase.
