I frequently talk to clients interested in buying a home, but don’t know where to begin. Whether you’re looking to buy a home in Carmel, Noblesville, Fishers…etc, the home buying process is the same.
1. Talk to a mortgage broker to find out exactly how much you can afford to spend on a home. With the changes in the mortgage industry over the past few years nothing is certain & there is nothing worse for a client than touring $400K homes, only to find out after finding their dream home they can only get a loan for $300K. With a quick phone call, a good mortgage broker can put together a pre-approval letter for you – telling exactly how much you are approved to spend. You will also need to know if you can get a loan without selling your current home OR if you need to sell your current home first. Please ask if you are looking for a mortgage broker – I can refer you to a trusted mortgage broker. Please see a recent blog post from Patrick Bowers, Stonegate Mortgage, titled “Step One: Pre-Qualification” – which tells exactly what you need for a pre-approval/pre-qualification letter.
2. If you need to sell your current home first, it’s time to get it on the market!
3. It’s time to start thinking about your most important criteria. I encourage buyers to make a list of the most important characteristics in a new home – # of bedrooms, lot size, basement, school district…etc. For example: If buying a home in the Noblesville School District is a must for you – that should be first on your list. Most clients, unless you have an unlimited budget, will end compromising something on their wish list – which is why it’s important to determine ahead of time what the most important factors are to you.
4. Once you have determined your search criteria it’s time to get you set up for an automated search. I can plug your most important search criteria into our system which will send you an email whenever a new property hits the market! You receive an email instantly – which means you should never miss out on that dream house! You can also log into the system and search through homes that match your criteria, make notes about the property, mark them as favorites or check them off the list completely. You will also receive automated emails when any change is made to listings in your search criteria – For example: That dream home on Morse Lake you’ve had your eye on was just reduced $20K – you will receive instant notification! If you would like to be set up for an automated search please email me your criteria and email address: Andy.Sheets@Century21.com I promise not to call you unless you request!
5. Drive by! I always suggest to my clients to drive by the homes that are high on their list. Do you like the neighborhood? Do you like the location of the home in the neighborhood?
6. Let’s go search! Now that you have your pre-approval letter in hand & a list of homes that are high on your list to see – it’s time to start looking! Let me know what homes you would like to see & I will schedule times (that work with you of course!) to view the inside. It does not matter who the listing agent of the home is – all realtors have access (through keycards) to all homes listed on the MLS. Although at times it may be tempting to call the number listed on the sign outside the home to see it, I don’t recommend that. The realtor who is listed on the sign is representing the seller and is working in their best interest – not yours. This is most likely the largest financial transaction of your life – have a realtor that is working for YOU show you the home.
7. You’ve found a winner! Now that you’ve picked out that perfect home for you, it’s time to put together an offer. The first step in putting together an offer is to determine how much the home is really worth & how much you want to spend. A good realtor, who is working in your best interest, will perform a CMA (Comparative Market Analysis) for you. A CMA will compare the property with others in the neighborhood with similar sq. footage, bedrooms, bathrooms, etc. The data obtained from a CMA will give you a good idea of what is a reasonable offer & how much you should/should not pay for a home. Together we will determine the best price to offer.
8. Submitting the offer. Together we will write up an offer and determine what is most important to ask for – price, closing costs, closing date, items to include with the purchase, possession date etc… This offer is submitted to the sellers’ agent with an earnest money check from you (usually 1% of the purchase price) along with your pre-approval letter. Earnest money is a good faith deposit from the buyers to buy the home. Most sellers won’t accept an offer without a pre-approval letter from the buyer (which is why #1 is so important!)
9. Wait for the offer to be accepted, rejected or countered. Many times the seller will come back with a counter offer – which may involve adjustments to anything on your wish list – price, closing costs, closing date, etc… This is where having an experienced realtor is extremely important. I have extensive experience in negotiations & can help ensure you are getting the best deal possible.
10. Accepted! Now that you have agreed with the sellers on terms of the sale – it’s time to schedule a home inspection and finalize your home loan with your mortgage broker!
11. Home Inspection is extremely important and I never recommend passing on your opportunity to inspect the home. Hire a trusted, qualified home inspector to do a full inspection (I have many I would highly recommend). We will then have a window of time to respond to the sellers with an “Inspection Response”. An inspection response is your final opportunity to ask the sellers to fix, repair, replace or refund money for anything that might be wrong with the home. Almost every property will have some faults – together we can determine what is most important. A seller may or may not be willing to fix, replace, repair or give an allowance for things – time to put your realtor to work on negotiations.
12. Assuming you are going to finance the home with a home loan (and not pay cash) the home will be appraised by the bank issuing your home loan. This appraiser is determined by the bank (out of your control) and will give the bank his/her opinion on the value of the home. This is another reason why paying close attention to CMA’s are very important. A home may or may not appraise for the amount you are willing to pay – that is determined by the on site appraiser and their opinion of the value. For example: The Smith’s home is listed for $300K and you agree to purchase the home for $289K – you have a signed contract to purchase the home. Your loan for $289K must be approved by the bank – Does the bank believe the home is worth $289K?
13. Closing time! Now that you have come to an agreement with the sellers, have inspected the home and secured your home loan – it’s closing time! Although closing can seem very overwhelming to a buyer, with many different papers to sign, I will be there to explain each and every step and ensure closing is as smooth as possible.
14. Congrats – you’re now a homeowner!
To get started with your home search OR to be set up for an automated home search please call or email me – 317-373-3434 OR Andy.Sheets@Century21.com