I receive many phone calls from young couples who tell me they would like to purchase their first home, but they have no idea how the process works. If you or a loved one are considering purchasing a first home, this information is for you.
According to the Pennsylvania Association of Realtors (PAR), we are currently in the healthiest housing market of the last 15 years. That is exciting news for anyone with any type of involvement or prospective involvement in the real estate market.
Typically, the process starts with the consumers doing their own online shopping. Between Realtor.com, Redfin.com, zillow.com and other large agency websites, consumers now have access to so much of the real estate market. However, errors or discrepancies on these sites do exist from time to time; they are good resources, but talking directly to a licensed agent is always the best way to receive information.
The following are the typical steps in the home buying process.
Step One: Contact a real estate agent. You may already have a friend or relative in the business; the most important thing is having an agent that is open, honest and will work hard for you.
Step Two: Get pre-approved. The agent will ask you early in conversation if you have been pre-qualified for a mortgage yet. Usually the answer is no. Your real estate agent most likely can provide you with the name and phone number of a lender for you to call. You may also contact your local bank or other financial institution and ask to speak to a lender about getting pre-approved for a mortgage. A lender will ask you specific questions about your income, credit history and finances to determine how much money they will lend you toward the purchase of your first home. This is an extremely important first step; you want to know that you are house shopping in the correct price point. It also shows real estate agents and home sellers that you are serious about making a purchase. According to PAR, in the third quarter of 2015, the average home price was $179,000. The same report also states that while interest rates are still low, they are expected to rise soon.
Step Three: Meet with your agent and schedule showings. Many agents will ask for your mortgage pre-approval before they will show you any homes. Once your pre-approval is complete, you will probably schedule a meeting with your agent. Law requires that at initial contact, a real estate agent must have you sign an initial disclosure that explains the various types of agencies that exist in the real estate business. An agent may also at this time ask you to sign a buyer agency agreement. This agreement is between you, the buyer and the real estate agent; it is a contract designed to protect both the agent and consumer. It should be thoroughly explained by the agent and agreed upon by both parties. At this meeting, you and your agent will also discuss a particular area you may want to shop in and the homes in your price range, as well as answering all the questions that you have. From this point, you and your agent will work together to find homes that you are interested in seeing. The agent will work with you to schedule times for you to see the homes that appeal to you or let you know if a home in your criteria is holding an open house for you to tour. According to Trulia.com, the average home buyer will tour eight to 10 homes before making an offer to purchase one.
Step Four: Make an offer. Your agent takes you to a home that you love, the price is right, the location is right and it just feels right. You are ready to make an offer! Your agent will complete the paperwork with you. Make sure to have a discussion on the specific home inspections you may want to have or that your lender may require. Always ask to see the seller disclosure on a property before an offer is submitted; this document includes specific details about the home being sold that the owner, by law, is required to tell you about. Because of the complexity this part of the process may or may not involve, and the limited space to write this article, I will not go into great detail on this. Your agent will present your offer to the sellers or the sellers’ agent. They should stick with you through any negotiations between you and the seller, as well as keep you informed through any inspections or bank appraisals that usually occur.
Step Five: Settlement. This is the final meeting where countless papers will be signed, and at the end, you should be leaving with the keys to your new home. As no two homes are alike, no two home purchases can be exactly alike. Your agent will continue to guide you through this final step of completion. It usually takes a few weeks from the time an offer is accepted by both parties involved until the agreement is completed at settlement. Your agent should stick by you through the entire process, answering your questions, keeping you informed and explaining what happens next.
As you go through the real estate process, there are times when you may feel frustration, suspense or stress. Try to take a deep breath through these moments; they will pass. There is also a huge element to this process that can be fun and exciting. It is the gateway to a whole new chapter in your life!
If you have further questions about this article, or if you are interested in purchasing a home, give me a call. I would love to hear from you! Call 717-715-2134 or e-mail rachel.gsre@gmail.com.