What to Expect When Buying Property

Technology has changed the face of the buying process.  Here are the steps you need to take when buying a house, much of the same can be said for buying commercial property or vacant land:

1. Know Your Limits.  Be able to say why you wish to purchase and when you want to have the keys to the property.  If you are getting a loan, talk to a mortgage lender first.  Ask the lender exactly how much house you can afford and what the estimated monthly payments should be.  Know your credit score and how much down payment you will make.  Make the application.  A letter stating you are pre-approved or pre-qualified will give you more credibility when you eventually make an offer to purchase a home.  Let us know if you would like the recommendations of a few good lenders.
2. Research the Market.  Know what areas will be convenient to where you work or destinations that will be important to you.  Search the internet or drive areas so you can know the prices of homes in different locations.
3. Bring in the Professional.  Find an honest Realtor who knows both the area and the process very well.  He or she should be diligent and successful, as well as a good fit for your personality.  If you acquire this person through the internet, be sure and ask him or her a few questions before getting started, such as, "How long have you been an agent?  Are you full time?  What is important in your service to me?"  It's ok to work with a friend or relative, just make sure that they are trustworthy and everything is understood in writing ahead of time.  Working with a friend or relative that you know to be a trustworthy agent can often be the most enjoyable experience.
4. See the Inventory.  If you have specific properties you have found which are very interesting to you, tell your agent about them then.  They will make an appointment for you to see those properties and possibly a few others they recommend.  It's Ok if you have none in mind; the agent can have several properties for you to see if they have listed to you and understand your needs well.  (See the blog regarding the differences of Foreclosures, Short Sales, and normal properties for sale.  It is important to know these differences before you step foot in a house!) Your agent can show you houses listed by almost any agency... expect to see 7 or less properties per day.  It is entirely possible you may see the house which best fits your needs on the first day.
5. Make the offer.  If you see a house that does a great job of meeting your criteria, or if inventory is limited and you see a house that comes close to meeting your criteria, don't be afraid to make the offer right then.  Don't go home to sleep on it.  If you like the home, chances are good that someone else has seen homes that you also saw on the market and came to the same conclusion that this one is the best value.  Sometimes buyers choose to stall in making the offer, not because they need to wait for more information to make an informed decision, but to delay a decision which seems a bit scary to them.  To get a house you like, you will have to at some point take the risk and sign your name to the paperwork.  Knowing this doesn't make this any easier... it can be intimidating to commit to an large purchase.  Your agent will have the paperwork and can help you decide what a good offer for you will be.  (See the blog for good negotiation tips.)  Your agent can also recommend a good amount of Earnest Money Deposit and review for you all of the terms in the paperwork.
6. Wait for an Answer.  The seller will have 3 options on what they will do with your offer.  They can 1) accept the price and all of the terms you outlined in your offer with proper signatures and initials, or 2) reject your offer either verbally, in writing, or ignoring it.  3)  The seller can counter your offer.  If they counter, it means that they may agree to some of your price or terms, but not to others.  They will make changes to the offer and sent the offer back to you with changes.  If this occurs, their counteroffer is to you and theirs is the only one offer on the table. 
7. Make the Deal.  If the seller counteroffers, it means you now have the same 3 options that the seller had above.  Remember, a home will not be purchased until either the buyer or the seller agrees to the other's offer.  When that occurs and all terms are agreed upon with signatures and initials, that is called a contract.  The "Effective Date" is the date that the last person signs or initials the contract.
8. Prepare for Closing.  If you are obtaining the loan, make an application immediately if you didn't do it at the beginning of the process.  The lender will want many documents from you; be quick in gathering those documents and getting them back to them.  The lender will likely order an appraisal, survey, and termite inspection.  You should also immediately call for quotes for house insurance and get a professional home inspection.  The home inspection may reveal defects to the property which were not observable and may be covered in a seller's home warranty.  Your agent can recommend a good home inspection company or insurance company if you need them.  The time for all of these inspections and mortgage processing to finish often takes 3 to 6 weeks, depending on the type of loan.  If you re paying cash, you can close almost as quick as you want, just complete any inspections you wish.  With or without a loan, the closing will likely be conducted in a title company office.
9. Close.  In this area, the closing generally takes about 20 minutes for cash buyers and an hour or more for buyers using a loan.  The HUD is usually considered the most important document.  It outlines where the money is coming from (buyer, loan company, prior paid EMD, etc) and where it is going to (the seller, the seller's loan company, etc.)  It is also customary in this area for the buyer and seller to have separate appointments at the title company.  Expect to receive keys when you leave.

From start to close, the time may take from 45 days to 6 months.  Steps 1 through 4 can take from 7 days to 5 months, depending on how much dedicated time you spend on the steps and how much knowledge you want to make a decision.  Step 5 through 7 often takes 1 to 2 days, while step 8 can take from 3 to 6 weeks.