Buying a home can be stressful for both first-time and experienced homebuyers. Researching the market, filling out mortgage applications, and finding the right home all take time and effort. Here are six steps to follow when buying a home.
Steps to Follow When Buying a Home
#1 Find the Right Home
Finding the right home is the first step. When looking at homes to buy, most homebuyers want to know about access to amenities, the local job market, the neighborhood, and local schools.
It is helpful for homebuyers to search listings as well as visit open houses to get a sense of what is available and on the market. It is normal for homeowners to have a list of features they would like for their new home. Some of these might include a specific price range, square footage, location, number of rooms, lawn size, etc. Depending on the market and homebuyer’s budget, some flexibility may be required.
#2 Run the Numbers
Finding a dream home can be exciting; however, finding a dream home that fits a specific budget can be challenging. Homebuyers can determine monthly mortgage payments using a mortgage calculator. It is beneficial for homeowners to know interest rates, their income, and the size of the down payment they can afford for calculation purposes.
Other costs homebuyers need to factor into the monthly payment are:
- Homeowner’s insurance.
- Property taxes.
- Homeowners association fees (where applicable).
Before beginning their search, many homebuyers choose to get pre-approved for a loan, which is typically valid for 60 to 90 days. For most homebuyers, knowing the amount they are eligible to borrow helps create a more successful homebuying experience.
Related: Types of Mortgages
#3 Get Comparisons for Local Homes
Before making an offer, homebuyers should ask their Realtor to run comps for the local area. Using comparable sales for the area helps estimate a fair offer. While every home is different, having the price comparison of recently sold homes is very helpful.
Homebuyers who have viewed multiple homes will have a general idea of a reasonable asking price. Plus, the ability to compare homes in similar conditions with similar qualities such as lot size and square footage helps homebuyers decide on a fair asking price.
#4 Set A Price, Timeline, and Contingencies
Determining an offer price is essential, but in a competitive seller’s market, the timeline and contingencies are also huge factors.
Homebuyers often bid less than they are willing to pay to leave room to negotiate on price and seller concessions. Frequently, negotiations go back and forth between buyer and seller, guided by their Realtor.
Determining the contingencies on an offer is vital. Some of the most common contingencies on an offer are related to the:
#5 Submit the Offer and Negotiate
The price, timeline, and contingency information are submitted in the form of a Sales and Purchase Agreement (SPA), which stipulates the conditions of a property’s sale between a buyer and seller.
Once an offer is submitted, the seller has three options:
- Negotiate with a counteroffer.
If the seller accepts the offer, they will sign the SPA. If they decline, negotiations will end.
Additionally, a seller may choose to counter the bid, leaving the buyer to accept, decline, or negotiate. Counteroffers are common, with buyers and sellers often negotiating back and forth until reaching an agreement.
After the buyer and seller agree and the contract is signed, the home is considered “under contract” awaiting the fulfillment of the obligations of both parties.
#6 Closing on the Home
Closing is the final step of buying a home and the day you become the property’s legal owner.
At closing, you will sign several documents, in addition to paying any remaining closing costs as listed in the Closing Disclosure. When everything is done, you’ll be the proud owner of a new home.
In many cases, you’ll be able to move into your home the same day of the closing unless the seller made a contractual arrangement with you to stay in the home for a specified period after closing.
Marimark Realty is a full-service real estate company in Tampa, Florida. Our focus is on providing a personalized experience for both buyers and sellers of residential and commercial properties, as well as investors.
To begin the journey of purchasing or selling your home, or purchasing commercial or investment properties, contact us at your earliest convenience.