How to Buy a House

Your Ultimate Home Buyers Guide

You can probably look up 10,000 websites to show you how to buy a house, and most of them will tell you the same thing. However, the market, the process, and the parties involved can change over time so what worked five years ago or even two years ago may not work today.

Buying a home can be a scary and exciting process. There is a lot that goes into purchasing a house but that doesn't mean you need to be apprehensive or nervous about the process. There are some simple steps and simply educating you on the process, the transaction, and those steps can make it much easier. Knowledge is definitely power when it comes to knowing how to buy and sell real estate and while you don't need to know all the ins and outs or legal jargon, it does help to know the process so that you feel confident throughout the entire transaction. Here is a simple 10-step process to buying a home.

#1. Understand your finances.

Okay, you made the decision to start looking for a house or maybe you're just in the beginning conversations of buying house. It's important to go through your finances to understand where your finances are, how much debt you have, how much income you have, and the realities of taking on a mortgage payment. If you currently own a house, you probably will need to sell that house before buying another. There are a lot more logistics that go into selling a house and buying so for the sake of this article, let's just talk about if you are renting and buying for the first time. At the end of this article will make some additional notes about selling and buying at the same time.

#2. Get a copy of your credit report.

This can still fall under the heading of understanding your finances, but if you haven't done so already, order a copy of your credit history. You can get one through one of the major credit reporting agencies, Experian, Trans Union, or Equifax, or sign up for credit karma or any of the other reputable credit scoring software companies. This will give you a good snapshot of where your credit is, what your credit score is, and if you need to correct anything on the report that you may not be aware of before finalizing the funding.

#3. Talk to a real estate agent.

When buying a house it's imperative to have your own real estate representative. This is not the time to simply blindly look at homes and allow the listing agent of the home you love to facilitate the transaction. Their major goal is to get that home sold, not necessarily find you the best house. It's important to have your own representation so make some calls, conduct some interviews, and find a buyers agent that you really love. And, it's okay to fire your agent and find another one if when you're working with but haven't made an offer with just isn't working out. Remember, it cost you nothing to use a buyers agent as they will get a commission from whichever home you choose. Their main goal is to find you the best house for your needs and budget.

#4. Make a list of what you really want in a house.

This might seem obvious, but you'll also be surprised once you start writing down things that you really want, things you can tolerate, and deal breakers. This will help your real estate agent find the best home for you. However, you might be surprised as to what they come up with. Don't turn down every home until you actually see it in person. Everything can change from the atmosphere to the neighborhood, the landscaping, layout, smells, commute routes, and every other tiny detail that goes along with owning a house. Drive by some of the homes that your agent picks out for you to see if it's worth getting a closer look.

#5. Make an offer.

Once you feel you have the right house, talk to your agent about making the right offer. Markets can change and we've seen an adjustment over the last couple of years. What worked a couple of weeks ago may not work now. Markets are shifting back into a balanced market between buyers and sellers and buyers may not have as much leverage as they did in 2021. Talk to your agent about the best way to submit the offer, how much earnest money and down payment is needed to make the offer attractive, and the terms that will work for both buyer and seller. Once the offer is submitted most sellers have three days to respond. They may come back with a full acceptance, full rejection, or a counteroffer altering some of the terms or price in the offer. Nothing is set in stone until mutual acceptance occurs. Once both buyer and seller agree on all the terms and price of the offer, only then can the property go under contract and move on.

#6. Home inspection.

A home inspection is a vital part of the home buying process. While it's not necessary or required, it is important to understand as much about the home as possible. Even if you've chosen to waive the home inspection or chosen to buy the home regardless of the home inspection report, conducting a home inspection means you'll understand more about the property that you are buying and any repairs or concerns that you might have for the future. This is also a good negotiation tool. If something is severely amiss or there's a hazardous situation, you can use this to your advantage by negotiating terms and price. Once the inspection is completed and the report is submitted, the buyer and seller must once again mutually accept all of the terms for the process to move on.

#7. Finalize financing.

If the home inspection has passed and the process moves on, buyers need to finalize financing. Lenders will be in communication with the agent, escrow, and the buyers to correct any mistakes, collect last-minute information, documents, proof of income, or other paperwork, and work up all of the final documents needed to close on the deal. This may be a quiet time for both buyer and seller as the sellers are now preparing to leave the home and the buyers are finalizing financing. Remember to answer your phone, be in good communication with your agent, and answer any questions from escrow or your lender.

#8. Final walk-through.

Even if you chose not to have the sellers conduct any repairs, a final walk-through is just a good piece of mine step so that you know the property is as it should be when you move in. Sellers cannot destroy the property, trash the property, or alter it in any way during this time so that the final walk-through, which is usually a couple of days before the signing, is a good way to verify that the property is as it should be before you close.

#9. Final signing and closing statement.

Once all the financing is completed the sellers will be called in first to sign all of the documents. They will finalize the sale, turn over the deed, and conduct all of their paperwork necessary to sell the house. The escrow or title company will then: the buyer for final signing on the buyers behalf. All documents will be signed and identification verified so be sure to bring your drivers license or some other form of identification to the final signing. This is also the time to bring any closing money or down payment. (If you are selling and using the funds to buy a new house, a lot of times escrow can simply transfer funds from one escrow company to another without the buyer having to bring in actual funds.)

#10. Closing and keys.

Once everything is signed all documents will be recorded with the county in which the property is located. Once the escrow company receives closing recording numbers, the keys can be handed over to the buyer. The house is now yours! Welcome home!

Buying and Selling Simultaneously

Additional: If you are buying a house and you need to sell the house in order to purchase and afford the next house, it's important to find agents either in the same area that can work together, or if you're buying and selling into different areas, especially two different states, that the agents understand the process from start to finish. Make sure everyone is on the same page, they all have contact information, and can get a hold of each other throughout the process with any questions or concerns. Buying and selling simultaneously can be extremely stressful but there are ways to alleviate some of that stress. A potential rent back, a bridge loan, or other options might be put in place between when you actually sell and when you close on the new house. Again, the biggest issue should be communication between all the agents involved in both transactions.