Buying a home, whether it's your first home or your tenth home purchase, can seem daunting or intimidating when you are faced with making such an expensive decision. There is a basic roadmap to homeownership, and I would like to break it down for you to easily understand. Here we go!
1. Selecting your Realtor®. It's important that you are represented by a realtor in a real estate transaction. We keep your best interests in mind and have certain fiduciary duties to our clients. That includes confidentiality, obedience, accounting, loyalty, and disclosure. Here in Arizona, realtors are also able to write real estate contracts. You need someone on your side during this transaction; the seller will be represented by their Listing Agent.
2. Loan Pre-Approval or Proof of Funds. Be sure to meet with a lender and get a loan pre-approval or a prequalified letter, this will let you know your borrowing power. You may also present Proof of Funds which is a statement from a financial institution that shows you have the funds available to purchase real estate. You do not want to fall in love with a home and find out later that you cannot afford to purchase it.
3. Search. It's time to set your search parameters. You should know your price range after meeting with a lender, now we need to know must haves, wants, and deal-breakers. What locations are most ideal? What are your minimums: Bedrooms, bathrooms, square footage? Then we can look at additional characteristics, such as a pool, fireplace, or no HOA in the neighborhood. As we look at homes together, we can narrow what you like and do not like by scheduling showings of homes or visiting open houses. Sometimes even driving by a listing can help eliminate or add it to the list of homes to check out.
4. Offer. You saw one (or more) property that fits your needs, so you are ready to make an offer. You will want to submit your pre-approval or proof of funds with your offer. That will help the seller see that you are qualified to purchase the home. The seller has three responses for an offer submitted. They may accept the offer, counter with their own offer, or reject the offer completely.
5. Earnest Money. Earnest money is an amount (traditionally 1% of the purchase price but is negotiable) that a buyer offers as a show of seriousness of offer. Once the contract is accepted, the earnest money must be deposited in an escrow account within 24 hours. That money is held in escrow until the transaction closes and is then used towards the purchase price of the property.
6. Inspections. After an offer is accepted, you will have 10 days to conduct inspections on the premises. There are many types of inspections that can be conducted, including: Home Inspection, Pest/Termite Inspection, HVAC Inspection, Sewer/Septic Line Scope, Roof Inspection, and Pool Inspection. These types of inspections allow you, the buyer, to see and understand the state of the home as it is. The findings from these inspections can be used for further negotiations for requests for repairs to be done or a credit towards the purchase price.
7. Appraisal. The lender will order an appraisal, which is a valuation of the property and determination if the property qualifies for the loan amount. Some types of financing will have stricter policies for appraisal vs loan amount.
8. Pre-Closing Walkthrough. Several days before closing, you want to have a final walkthrough of the property. The first reason is to ensure that any repairs agreed upon have been completed and approved. The second reason is to ensure the property (and appliances that convey) are in the same condition from the time the contract was accepted. The last thing you want to get all the way to closing and getting the keys to the home, but the dishwasher is gone. Once you close, it will be too late for corrections to be made.
9. Close of Escrow. Signing day. Time to go the Title company and sign all the paperwork. You will receive a closing statement from your lender that will have the total due at signing. That will include the down payment, title fees, etc. The signed documents will be sent for recording.
10. Recorded. Welcome Home! Once your Realtor® receives notification that the recording has been confirmed, you will receive the keys and remotes to your new home! Congratulations!
If you are ready to get started on your real estate journey, contact me today. A portion of the proceeds from closings are donated to Pima Animal Care Center to assist in the support, care and adoptions of animals in Pima County.