• Sarah Lipkowitz

What To Expect When Buying A House

Updated: Dec 30, 2019

Buying a home is likely the biggest investment you will make in your life and, as such, you will likely find the process a bit stressful. Whether you are gearing up to buy your first home or you haven’t bought a home in some time, allow me to take some of the mystery out of the process.

Finances. Before you start looking for a house, you should speak to a lender. If you don’t know where to start, ask your Realtor. It is important to have a conversation with a lender and get pre-approval so you know more concretely what you can afford. This also gives you the ability to move quickly when you find a home you like. If you are looking at luxury properties and plan on paying cash, be prepared to show proof of adequate finances. In the luxury market, many sellers will require proof you can afford the property before allowing you to view it.

The Search. Don’t expect to love every aspect of a home and be careful not to look at too many homes. Of course you need to find a great home, but if you look hard enough there will always be something you don’t like about a property. Try not to second-guess too much. Consider functionality first. Does it have enough bedrooms? Is the commute reasonable? Then you can start to think about the changes you’d like to make and the cost involved.

Title Company. Customarily, the buyer chooses the title company. Once you are under contract, your agent will send a copy of the contract to the title company so they can be sure there are no issues with the transfer of title. Generally, the title company will also hold the earnest money deposit in escrow. This is where closing will be held so pay attention to location.

Contracts. Contracts are often dozens of pages long. If you don’t have a signed buyer’s agreement, then the agent you thought was on your side actually represents the seller—not you. You will want an agent to go to bat for you and act as a buffer if negotiations get heated. Dealing directly with an owner or listing agent can be a minefield. Expect some back and forth while the contract is negotiated.

If there are competing offers, which often happens in the competitive spring market, be prepared to get outbid. Depending on the market, it may not be unusual to get outbid on more than one home. This is a frustrating and sometimes heartbreaking experience for excited homebuyers, but be careful not to get trigger-happy and make bad financial decisions. There are ways to make an offer more attractive without breaking the bank. You can write in an escalation clause to bid up to a certain amount, forego certain contingencies, close faster, cover your own closing costs, etc. Even in a super competitive market, you will get one eventually (not the most reassuring thing, I know).

Appraisal. If you are financing the purchase, the lender will order an appraisal soon after they receive a ratified contract. The cost is typically included in closing costs. If the home doesn’t appraise (it is valued at less than the offer price), then be prepared to either renegotiate or cover the difference in cost yourself by increasing your down payment. Your lender will not finance the amount above the appraisal value and for good reason.

Predatory loans were the underlying cause of the 2007-2008 financial crisis. Lenders were steering both consumers and appraisers. FYI: The resulting legislation, the 2010 Dodd-Frank Wall Street Reform And Consumer Protection Act, was rolled back in May 2018.

Inspections. Once you have a ratified contract, your will go about scheduling whatever inspections were agreed upon. Remember: a good home inspector will find something. If the home is older, expect a longer list of mostly minor repairs. Try not to get overwhelmed by the report. You may need to request repairs or seller credits. The seller can respond to your requests by accepting, rejecting, or agreeing to some of the terms. This part can be a bit contentious and has been known to blow up a sale or two. If your original contract allows, you can walk away if the seller doesn’t offer a satisfactory response. Ultimately, everyone wants to get across the finish line. This is why you have an agent. Cooler heads prevail.

Closing. You will have already set the date in your contract. Pay attention to dates so you aren’t scheduling your closing on a weekend day or a holiday. I try to avoid Mondays and last day of the month closings as well. Bring an ID and a certified/cashier’s check. Whew—you made it!

Buying a home can be tough. You may end up getting outbid on more than one home or you may decide to walk away from a sale, but don’t worry—a good agent will help you find the perfect home for you!

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