Home Buying Process in Detail

Buying a home is typically the largest, most complicated, and often most emotional financial transaction of one's life. There is a lot at stake, not just money but also issues such as security, happiness and everything else wrapped up in the concept of "home." One of the main reasons why it can be so stressful is that some agents never explain to their clients how the process actually works step by step, what the decision points will be and the options one has at each step. When one understands the process and has a sense of control over how it will proceed, much of the stress is alleviated. 

Below is a simple graphic that outlines how one thing leads to another, followed by a more detailed step by step description. It's relatively self-explanatory, but I can walk you through the process to answer any questions. Remember that you are the sole decision-maker throughout the process: a good agent renders honest, experienced counsel and helps manage and coordinate everything that needs to happen, always with an eye to protecting your interests, but never presumes to make decisions for his or her client. 

The Home-Buying Process – In Detail

Finding the New Home 

• Agent & Buyer determine Buyer needs, wants, timeframe and financial options

• Agent reviews the search and buying process, current market conditions and trends, Buyer costs, and real estate Agency

• Paragon disclosure package reviewed with Buyer

• Agent works with Buyer to secure loan pre-approval, which is necessary for two reasons: 1) the buyer needs to know their financial options and financing costs, and 2) once the right home is identified, it is critical to have the lender pre-approval letter to provide to the seller at the time of offer submittal

• Agent sets up automatic alert system for new listings that match Buyer’s parameters

• Agent identifies and previews properties through MLS and brokers’ tours

• Agent provides resources for neighborhood and community information. It is often the case that there are additional neighborhood options which buyer is not aware of

• Agent and Buyer tour properties: showings by appointment, broker tours, open houses

• Agent and Buyer review benefits, drawbacks and values of specific properties

• Buyer identifies new home to purchase

• As appropriate, Buyer checks the online Megan’s Law database, seismic hazard map, and local crime statistics with neighborhood police

Writing & Presenting the Offer

• Agent reviews with Buyer the mortgage, closing and ongoing ownership costs pertinent to selected property

• Agent and Buyer review property disclosure package from Listing Agent

• Agent queries Listing Agent further on property issues, Seller situation and preferences, past offers, existence of other current offers and offer presentation guidelines

• A comparative market analysis is prepared and reviewed to determine offer price

• Financing pre-approval letter procured from loan agent

• Agent and Buyer review offer and negotiation strategies, including offer price, due diligence contingencies, fixtures and personal property included, and close of escrow

• Offer contract is written at Buyer’s direction

• If very short contingency periods are being offered for inspections and/or financing, Agent to coordinate scheduling of tentative inspection and appraisal appointments

• Agent prepares offer for presentation to Seller and/or Listing Agent: agency disclosure, offer letter, loan pre-approval letter, copies of Buyer-signed disclosures, etc.

• Agent negotiates offer and counter-offers on Buyer’s behalf and at Buyer’s instruction to achieve the best possible price and terms

• Agent receives back from Listing Agent the fully executed purchase contract, carefully reviews it for completeness, and provides copy to Buyer

Due Diligence, Contingencies of Sale & Close of Escrow

• Escrow is opened, Preliminary Title Report ordered, Buyer’s initial deposit delivered to escrow company

• Agents provides escrow information and copy of accepted contract to Loan Agent

• Agent prepares a Timeline for the Removal of Contingencies and Close of Escrow

• Appraisal appointment coordinated with Lender and Listing Agent

• Buyer confirms homeowner’s hazard insurance for new home; Buyer’s Insurance Agent contacts Escrow Officer with required policy information

• Agent coordinates Buyer-specified inspections—structural pest control, contractor, structural engineer, soils, roof, fireplace, etc. (see Buyer’s Inspection Advisory)

• Agent monitors the timely receipt of property disclosures, reports and other documents, as statutorily or contractually required, for Buyer’s review and approval

• Preliminary Title Report is carefully reviewed by Agent, Buyer, Lender and, as necessary, Buyer’s attorney

• Agent attends all inspections with Buyer; Agent completes Selling Agent portion of Real Estate Transfer Disclosure Statement after careful walk-through of the property

• Agent and Buyer carefully review inspection reports for Buyer’s approval, further clarification or objection

• Agent and Buyer review county/city, natural and environmental hazard and other required reports for Buyer’s approval, further clarification or objection

• Agent facilitates collection of additional information—further inspections, contractor quotes, legal advice, etc.—necessary for Buyer to understand/quantify issues pertinent to the property’s condition or circumstances

• Agent verifies property’s statutory compliance with energy/water conservation compliance, smoke detector installation, water heater strapping, etc.

• Agent verifies loan commitment and funding details with Lender and Escrow Agent

• As applicable, contingencies of sale—financing, investigation, title, etc.—are removed, or Agent re-negotiates the terms of the purchase at Buyer’s instruction. Agent prepares appropriate addenda or contingency removal documents

• Property repairs or remediation, if any, are completed by Seller

• Buyer final walk-through of property

• Buyer consults with Buyer’s accountant or attorney to determine method of holding title

• Agent reviews Home Warranty option with Buyer

• Agent provides final instructions to escrow

• Agent and Buyer review the Estimated Closing Statement, and, if Buyer desires, complete loan and closing documents for Buyer’s review prior to signing appointment

• Agent and Buyer meet Escrow Agent for signing of closing documents (Buyer brings legal identification as documents will require to be notarized)

• Buyer makes arrangements for final funds—balance of cash deposit and closing costs—to be delivered to escrow by wire or cashier’s check

• Buyer makes moving arrangements, schedules change of utilities and alerts any Homeowner’s Association of pending change of ownership

• Agent confirms with Escrow Agent everything is set for scheduled close of escrow

• Buyer loan funds; transfer of title is recorded

• CLOSE OF ESCROW

After Close of Escrow

• Agent procures and delivers keys, alarm codes, garage genies to Buyer

• Agents follows up to check in, offer help, provide resources, and solve any problems that might have arisen

The quality of the agent working on your behalf, his or her competence, integrity, work ethic and commitment to your interests can make an enormous difference in the outcome of your home purchase.