How to Buy a House in 10 Easy Steps
Randyl M. Walters
- December 13, 2019
- 7:46 pm
- No Comments
Home ownership is at an all-time high right now.
According to the 2018 census, 64.4% of people own a home.
Are you ready to start looking for your very first home and join the ranks?
Maybe you already own a home and you’ve outgrown the one you’re in, or, conversely, you want something smaller with less maintenance as your needs change over the years.
Whatever your circumstance, buying a house is a big deal and we’re here to help with step by step instructions.
Are you ready to start looking for your very first home and join the ranks?
Maybe you already own a home and you’ve outgrown the one you’re in, or, conversely, you want something smaller with less maintenance as your needs change over the years.
Whatever your circumstance, buying a house is a big deal and we’re here to help with step by step instructions.
FIRST STOP, DECISION TOWN
If your decision to buy a new house is driven by a need for more space or if it is necessitated by a new job, you might be able to skip this step.
Sometimes we have no choice but to find a new home, but for others, there are many things to think about before you start the process.
The first thing to consider is whether or not you really want to move.
I know what you’re thinking – you wouldn’t be reading this article if you were not ready, but hear me out. There is more to home ownership than you probably think.
Are you ready to be responsible for all of the maintenance, inside and out? That includes mowing the grass, servicing the mechanicals, replacing the appliances when necessary and so much more.
Are you ready to commit to one place and give up the ability to move quickly?
Do you currently enjoy clubhouse amenities like a common park area or a pool?
Make a list of all the things you love about renting or your current home and all the things you don’t, then do the same for a new home. Most times, the simple act of writing it down will make the answer clear.
I know what you’re thinking – you wouldn’t be reading this article if you were not ready, but hear me out. There is more to home ownership than you probably think.
Are you ready to be responsible for all of the maintenance, inside and out? That includes mowing the grass, servicing the mechanicals, replacing the appliances when necessary and so much more.
Are you ready to commit to one place and give up the ability to move quickly?
Do you currently enjoy clubhouse amenities like a common park area or a pool?
Make a list of all the things you love about renting or your current home and all the things you don’t, then do the same for a new home. Most times, the simple act of writing it down will make the answer clear.
pre-qualification, financial review
Now that you’ve made up your mind, take a look at your finances to see whether or not you can afford to make the move.
Use our handy mortgage calculator to see how much house you can afford to see if the move is right for you. You may be surprised.
Talk to a reputable mortgage lender to find out how much home you are pre-approved to purchase as well as how much money you will need for a down payment and closing costs.
There are many different kinds of mortgages and not all of them require a large down payment. Check out this article on the different types of Buyer Financing available.
Find the one that is best for you and tour circumstances before you start looking at houses. Ask them for a pre-qualification letter so you are ready to go.
Use our handy mortgage calculator to see how much house you can afford to see if the move is right for you. You may be surprised.
Talk to a reputable mortgage lender to find out how much home you are pre-approved to purchase as well as how much money you will need for a down payment and closing costs.
There are many different kinds of mortgages and not all of them require a large down payment. Check out this article on the different types of Buyer Financing available.
Find the one that is best for you and tour circumstances before you start looking at houses. Ask them for a pre-qualification letter so you are ready to go.
hire a real estate agent
You can contact an agent at any time, but it is at this point that you really need to find a great agent who can help walk you through the home buying process.
Did you know that the seller traditionally pays commissions?
That means it typically costs you nothing to work with an agent who represents you and your best interests.
Did you know that the agent listed on the sign represents the seller?
The agent listed on the sign is the seller’s agent. They represent the seller and while it is perfectly legal for them to help you fill out the paperwork and close the deal, they will not represent you in the same way a buyer’s agent can. They can’t help with price or negotiations of any sort.
Choosing an agent is so important I’ve written an entire article on this topic. If you aren’t convinced you need one, click here to read more. Think about it like this – if you need to hire an attorney, would you stand outside the courthouse and hire the first person who walks out? Didn’t think so.
Hiring a real estate agent should be treated with the same amount of care because the transaction is complicated and a contract is legally binding. And remember, you are the customer. If you are not happy with the service you are getting, let your agent know or find someone with whom you have a better rapport.
Find one who listens.
Did you know that the seller traditionally pays commissions?
That means it typically costs you nothing to work with an agent who represents you and your best interests.
Did you know that the agent listed on the sign represents the seller?
The agent listed on the sign is the seller’s agent. They represent the seller and while it is perfectly legal for them to help you fill out the paperwork and close the deal, they will not represent you in the same way a buyer’s agent can. They can’t help with price or negotiations of any sort.
Choosing an agent is so important I’ve written an entire article on this topic. If you aren’t convinced you need one, click here to read more. Think about it like this – if you need to hire an attorney, would you stand outside the courthouse and hire the first person who walks out? Didn’t think so.
Hiring a real estate agent should be treated with the same amount of care because the transaction is complicated and a contract is legally binding. And remember, you are the customer. If you are not happy with the service you are getting, let your agent know or find someone with whom you have a better rapport.
Find one who listens.
decide what you want in a new home
Ooh, this part is so exciting!
You decided that buying a house is the right move, you talked to a lender and have a pre-approval letter in hand and you found a great agent that you absolutely love.
Uh, now what?
You go to see houses, right?
Sure…this is the fun part, but which ones should you look at?
At any given time there are probably thousands to choose from.
At this point, your super awesome real estate agent has probably already asked you a lot of questions regarding what you are looking for.
They know exactly how to narrow the search and they will always be your best resource, but here are some things to think about in advance so you are ready to answer those questions:
You decided that buying a house is the right move, you talked to a lender and have a pre-approval letter in hand and you found a great agent that you absolutely love.
Uh, now what?
You go to see houses, right?
Sure…this is the fun part, but which ones should you look at?
At any given time there are probably thousands to choose from.
At this point, your super awesome real estate agent has probably already asked you a lot of questions regarding what you are looking for.
They know exactly how to narrow the search and they will always be your best resource, but here are some things to think about in advance so you are ready to answer those questions:
If you can concisely answer those questions, you are on your way to finding the right home, but there are so many other things you can look for and you absolutely should talk to your agent about all of them.
You might really need a barn or garage space for a workshop, or you really want a house with a pool or maybe a fenced in yard.
Maybe you even want something more obscure, like a separate in-law apartment. That’s all good information and believe it or not, an agent can help you find only homes that meet that criteria.
Think about which of the items on your list are “must haves” and which are “like to haves”.
This will come in handy later when you need to make a decision.
It may be impossible to find one house that has everything on your list, so be mentally prepared to know where you are comfortable compromising and what features you cannot live without.
If you are buying a house by yourself, congratulations, you are all done with this section.
If you are part of the 65%-70% of people who buy with a partner, take the time to talk about your individual wish lists to come up with a unified list of what you want and need together.
So many people think this it is a given that they will agree until they find themselves standing in a home that one of them absolutely loves and the other absolutely hates.
You might really need a barn or garage space for a workshop, or you really want a house with a pool or maybe a fenced in yard.
Maybe you even want something more obscure, like a separate in-law apartment. That’s all good information and believe it or not, an agent can help you find only homes that meet that criteria.
Think about which of the items on your list are “must haves” and which are “like to haves”.
This will come in handy later when you need to make a decision.
It may be impossible to find one house that has everything on your list, so be mentally prepared to know where you are comfortable compromising and what features you cannot live without.
If you are buying a house by yourself, congratulations, you are all done with this section.
If you are part of the 65%-70% of people who buy with a partner, take the time to talk about your individual wish lists to come up with a unified list of what you want and need together.
So many people think this it is a given that they will agree until they find themselves standing in a home that one of them absolutely loves and the other absolutely hates.
shop 'til you drop (or your agent does)
Finally, the fun part!
You’ve talked to your agent and she’s sent you a list of available homes that meet your criteria.
Take a good look at the information and choose the ones you most want to see.
I highly encourage doing a “drive by” before you schedule an appointment.
There is nothing worse than making an appointment and realizing you hate the location before you’ve even gone inside.
As you visit properties, take some notes while the visit is still fresh in your mind.
Write down things you liked, things you didn’t. Share that info with your agent so she can update your preferences.
You’ve talked to your agent and she’s sent you a list of available homes that meet your criteria.
Take a good look at the information and choose the ones you most want to see.
I highly encourage doing a “drive by” before you schedule an appointment.
There is nothing worse than making an appointment and realizing you hate the location before you’ve even gone inside.
As you visit properties, take some notes while the visit is still fresh in your mind.
Write down things you liked, things you didn’t. Share that info with your agent so she can update your preferences.
At some point, you may find yourself standing in a house that meets almost all the criteria on your list but for some reason, you’re still not sure.
How can you know when you’ve found “the one”?
There is no one right answer for this question, but it is important to remember that there are a lot of things that can cloud your view of the perfect home. Some can be overcome and some should never be overlooked.
Cosmetics can fall into either of these categories, and no, we’re not talking eyeshadow or blush. These are things like wallpaper, paint, carpets, even flooring or cabinets.
Sometimes the right house is just downright ugly. Take a good hard look and try to imagine what it would look like without avocado green appliances and orange linoleum.
How can you know when you’ve found “the one”?
There is no one right answer for this question, but it is important to remember that there are a lot of things that can cloud your view of the perfect home. Some can be overcome and some should never be overlooked.
Cosmetics can fall into either of these categories, and no, we’re not talking eyeshadow or blush. These are things like wallpaper, paint, carpets, even flooring or cabinets.
Sometimes the right house is just downright ugly. Take a good hard look and try to imagine what it would look like without avocado green appliances and orange linoleum.
Next, evaluate your budget and honestly appraise your own level of skill.
I know those home improvement commercials lead you to believe you can install new floors and plumb a bathroom by yourself in one weekend, but you may want to rethink that, especially if you don’t even own a screwdriver.
I know those home improvement commercials lead you to believe you can install new floors and plumb a bathroom by yourself in one weekend, but you may want to rethink that, especially if you don’t even own a screwdriver.
If you have concerns, tell your agent about your reservations and talk it over with her. You may be able to compensate for the cost of cosmetic repairs in your offer.
On the flip side, try not to be too enamored by a house that is absolutely stunning. That 1 bedroom Cape Cod that you fell in love with is not going to work if you need a 4 bedroom ranch, no matter how much you like it.
Remember that the seller is going to take their furniture with them and much of what appeals to you may be gone before settlement.
Make a mental note of the things about the house you really like and see if you can replicate them later in a house that better fits your needs.
That is not to say that you can’t sometimes add a half bath or finish the basement to meet your needs, but many times the amount of work required is just too much.
If you find yourself considering a house that has everything you want but you are having a hard time committing because it has some potentially huge defect, then you may be right to walk away.
Sometimes the defect is obviously too much to overcome, but other times it makes sense to get a professional opinion.
If you decide to make an offer on a house that has some potentially concerning defects, always opt for a home inspection.
Again, this is a good time to talk to your agent.
She should know how to address your concerns contractually and should definitely make sure you are protected.
On the flip side, try not to be too enamored by a house that is absolutely stunning. That 1 bedroom Cape Cod that you fell in love with is not going to work if you need a 4 bedroom ranch, no matter how much you like it.
Remember that the seller is going to take their furniture with them and much of what appeals to you may be gone before settlement.
Make a mental note of the things about the house you really like and see if you can replicate them later in a house that better fits your needs.
That is not to say that you can’t sometimes add a half bath or finish the basement to meet your needs, but many times the amount of work required is just too much.
If you find yourself considering a house that has everything you want but you are having a hard time committing because it has some potentially huge defect, then you may be right to walk away.
Sometimes the defect is obviously too much to overcome, but other times it makes sense to get a professional opinion.
If you decide to make an offer on a house that has some potentially concerning defects, always opt for a home inspection.
Again, this is a good time to talk to your agent.
She should know how to address your concerns contractually and should definitely make sure you are protected.
you've found the one
Make an offer / contract acceptance
Congratulations, you found the house you want to buy and you’re ready to make an offer.
It may seem like the hard part is over, and if you followed our advice from step #3 and found that awesome agent, you’ve given yourself the best chance for a smooth transaction.
It may seem like the hard part is over, and if you followed our advice from step #3 and found that awesome agent, you’ve given yourself the best chance for a smooth transaction.
But an offer is so much more than price.
It can include a myriad of contingencies and each contract will be unique because each property and situation is different, but most contracts will have a few main parts, such as:
It can include a myriad of contingencies and each contract will be unique because each property and situation is different, but most contracts will have a few main parts, such as:
- Price
- Earnest (Down) Money
- Contingencies (mortgage, Inspections, etc.)
- Closing Date
Each one of these is important in its own right and the weight each holds with the seller will differ from transaction to transaction.
Most people think price is king, but sometimes a quick closing or a contract without a mortgage contingency is more attractive to a seller.
A great agent is going to know how to make the most attractive offer based on your unique situation while insuring that you are always completely protected.
Because each situation is different, it is best to discuss the details of the offer with your agent and never be afraid to ask questions until you are comfortable with the contract you are about to sign.
Once you complete your offer, the seller’s agent will present your offer (and any others in a multiple offer situation) to the seller.
If they agree to your terms, they will accept your offer by signing it.
Sometimes they will choose another offer and other times they will want to negotiate some of the terms.
Remember that your agent should have your back here – she can explain any part of the process that you do not understand.
Most people think price is king, but sometimes a quick closing or a contract without a mortgage contingency is more attractive to a seller.
A great agent is going to know how to make the most attractive offer based on your unique situation while insuring that you are always completely protected.
Because each situation is different, it is best to discuss the details of the offer with your agent and never be afraid to ask questions until you are comfortable with the contract you are about to sign.
Once you complete your offer, the seller’s agent will present your offer (and any others in a multiple offer situation) to the seller.
If they agree to your terms, they will accept your offer by signing it.
Sometimes they will choose another offer and other times they will want to negotiate some of the terms.
Remember that your agent should have your back here – she can explain any part of the process that you do not understand.
meet deadlines, complete inspections
Now that you have a signed contract, the clock starts ticking.
You have a certain amount of time to perform tasks as outlined in the contract.
This timeline will be specific to your contract, but make a list of important dates up front and ask your agent how long she thinks you need to complete each task.
You have a certain amount of time to perform tasks as outlined in the contract.
This timeline will be specific to your contract, but make a list of important dates up front and ask your agent how long she thinks you need to complete each task.
You should know that while your agent may have some great recommendations for mortgage lenders, home inspectors, and title companies, you are never, ever locked in to using someone you don’t want, even if your agent offers services in house. In fact, some in house lenders or title companies charge more, so beware and shop around. Check out our article on what to expect for closing costs here.
You are in charge and you are not required to use a specific company for any of these services.
Here’s a list of the most common tasks you will need to accomplish before closing:
You are in charge and you are not required to use a specific company for any of these services.
Here’s a list of the most common tasks you will need to accomplish before closing:
hire a title company
A title company is also sometimes called a settlement agent.
While you won’t interact with the title company much until later in the process, you will often hire them in the beginning of the transaction. In Pennsylvania, there is a timeline in the contract which clearly states how long you have to hire a title company. Your agent can help you decide whether the standard length of time is acceptable or if you need more time.
A title company will generally double as the settlement agent in Pennsylvania and they will work with the buyer, the seller, the mortgage lenders and insurance companies to facilitate closing.
They will research the property and will insure that you have clear title.
They provide title insurance, which guarantees that there are no unforeseen liens against the property.
Lenders will require title insurance. The title agent will facilitate closing and will file and record paperwork. A little known fact is that cash buyers are not required to buy title insurance (though most agree it is a necessity).
You and your agent will work closely with this agency to make sure you have completed all the documentation as needed.
Just before the closing, the title agent will let you know exactly how much money you need to bring to the table.
Since the title agent coordinates the closing of the property and brings together title, real estate and lender, it is integral that you choose someone professional, competent and local.
An out of state title company can be a bad idea.
It’s your choice in the end, but an out of state title company may not know the local customs and may be less able to facilitate a smooth transaction.
If you have an out of state lender and they lead you to believe you will get a discount by using their title company, you owe it to yourself to shop around before you commit.
Title insurance rates are set by law and many out of state companies charge additional fees that a local agency might not.
Plus, on the day of settlement, if any small changes need to be made, an out of state company will be hard pressed to make them whereas a local title agency can usually still get it done.
While you won’t interact with the title company much until later in the process, you will often hire them in the beginning of the transaction. In Pennsylvania, there is a timeline in the contract which clearly states how long you have to hire a title company. Your agent can help you decide whether the standard length of time is acceptable or if you need more time.
A title company will generally double as the settlement agent in Pennsylvania and they will work with the buyer, the seller, the mortgage lenders and insurance companies to facilitate closing.
They will research the property and will insure that you have clear title.
They provide title insurance, which guarantees that there are no unforeseen liens against the property.
Lenders will require title insurance. The title agent will facilitate closing and will file and record paperwork. A little known fact is that cash buyers are not required to buy title insurance (though most agree it is a necessity).
You and your agent will work closely with this agency to make sure you have completed all the documentation as needed.
Just before the closing, the title agent will let you know exactly how much money you need to bring to the table.
Since the title agent coordinates the closing of the property and brings together title, real estate and lender, it is integral that you choose someone professional, competent and local.
An out of state title company can be a bad idea.
It’s your choice in the end, but an out of state title company may not know the local customs and may be less able to facilitate a smooth transaction.
If you have an out of state lender and they lead you to believe you will get a discount by using their title company, you owe it to yourself to shop around before you commit.
Title insurance rates are set by law and many out of state companies charge additional fees that a local agency might not.
Plus, on the day of settlement, if any small changes need to be made, an out of state company will be hard pressed to make them whereas a local title agency can usually still get it done.
Get Ready to Move
Now that you’re past the inspections phase, it’s time to start packing.
You’ll want to hire a mover or any other contractors now to be sure they are available when you need them.
You’ll want to hire a mover or any other contractors now to be sure they are available when you need them.
Call the utility companies to make sure there is no break in service.
Let them know your move in date and set up your new accounts.
Submit a change of address at the post office or online.
Submit a change of address at the post office or online.
Day of settlement, final walkthrough
You finally made it!
The day of settlement has arrived and you are so close to getting the keys to your new abode. Take a deep breath and make sure you’ve got everything you need to close the deal.
Just before settlement, you’ll do a final walkthrough of the property with your agent. You want to make sure that nothing major has happened since you last saw the property.
Specifically, you will be looking for damage the seller may have caused when moving out, major defects that are revealed when personal property is removed that were not disclosed and any systems failures.
If the basement has filled with three feet of water, you kinda want to know that before you sign on the dotted line, right?
Most of the time, any issues you might discover will be small, such as moving damage or personal property left behind, and these can be handled before settlement without delaying the closing.
Your agent will be with you for the final walkthrough and can advise you on any questions you may have at this point.
Lastly, you want to make sure you have all the paperwork/documentation you need for settlement, here’s a standard list:
The day of settlement has arrived and you are so close to getting the keys to your new abode. Take a deep breath and make sure you’ve got everything you need to close the deal.
Just before settlement, you’ll do a final walkthrough of the property with your agent. You want to make sure that nothing major has happened since you last saw the property.
Specifically, you will be looking for damage the seller may have caused when moving out, major defects that are revealed when personal property is removed that were not disclosed and any systems failures.
If the basement has filled with three feet of water, you kinda want to know that before you sign on the dotted line, right?
Most of the time, any issues you might discover will be small, such as moving damage or personal property left behind, and these can be handled before settlement without delaying the closing.
Your agent will be with you for the final walkthrough and can advise you on any questions you may have at this point.
Lastly, you want to make sure you have all the paperwork/documentation you need for settlement, here’s a standard list:
- Government issued ID for each buyer
- Certified check (settlement agent will give you the number)
- Homeowner's Insurance Policy (invoice or paid receipt)
- Checkbook (for minor adjustments)
Be sure to get all the keys, alarm codes, and garage door openers for the property.
That’s it – enjoy your new home!
That’s it – enjoy your new home!
