Steps to take when you find the house of your dreams
Once you’ve decided that a house is right for you, ask your realtor to find comparable properties that have sold in the last three to six months. Comparing the sale prices of similar houses to the asking price of the house you want to buy will help you decide what to offer.
In collaboration with your realtor, decide how much you want to offer.
Your realtor’s advice is invaluable here, so pay attention to what s/he
tells you.
You also need to decide if your offer is contingent upon any other occurrences. Do you have to sell your own house before you can buy a new one? Do you want certain repairs or alterations made to the house before you’re willing to buy it? All such contingencies should be written into your offer.
Be prepared to put up earnest money. Usually you will be asked to write a check for at least 2 percent of the offer and send it to the seller, to prove that you have the wherewithal to buy the house. Have this money where you can get to it easily when the time comes.
With all this preparatory work done, it’s time to write up your offer and have your realtor present it to the seller’s realtor. Set a deadline for the seller to accept your offer, reject it, or counter it. Circumstances may dictate differently, but generally speaking, you should set a deadline of about 24 hours from the time your offer is delivered until the seller has to respond. This will help to limit the possibility that the seller will be deluged with competing offers for the house, and also will give you an idea of when you will hear something, one way or the other.
If your offer is accepted, you will next have to get the house inspected. The seller should willingly give you reasonable access to the house for this. The inspector will write up a report of anything s/he finds wrong with the house, and you can use that information to either ask that the repairs be made before you proceed, or to modify the sale price of the house so you can make the repairs yourself. Usually you will also have to get a termite inspection, which is generally required by the prospective lender. If there is evidence of termite activity, the seller will have to have the house treated before the process can proceed.
The house also will have to be appraised by a licensed home real estate appraiser to make sure the sale price is appropriate. Usually the buyer pays for the appraisal. If the appraisal comes at or above the purchase price, then the loan process can go forward. If it is lower, then buyer and seller will have to negotiate to arrive at a sale price that is closer to the appraised value.
The buyer will have to make arrangements to buy home owner’s insurance to cover the value of the property. Lenders typically require that insurance be in place by the closing.
When all these steps have been completed, the lender will finish processing the loan and set up a time to sign the paperwork and transfer title of the property from the seller to you. Be sure to get a good-faith estimate of closing costs from your lender well in advance of the closing, and examine it carefully. Ask questions about any charges you don’t understand, and don’t be afraid to ask to have some charges waived if you think they are not warranted.
Come to the closing with your favorite pen, and be prepared to sign your name—a lot!