You're Ready to Buy a Home But You Don't Know How to Get Started
Buying a home is an important decision that needs to be well thought out. It’s a decision that often involves the interests of more than one person. The decision to buy a home is likely your largest financial purchase, only second to things like college
tuition, the purchase of a new car, or bringing a new life into the world. Together we will review and discuss the how to buy a home in five, easy-to-do steps. By the time you’ve finished reading this, you will not be an expert, but you will have
a general understanding of the process that goes into buying a home, and you may even leave with a few tips and tricks up your sleeve that will help you purchase your first home. Let’s get started!
Buying a home is not as difficult as some people may make it sound. Yes, there are some people who find the process very arduous, but they are not the majority. Generally speaking, there are five broad steps that a person should do when buying a home.
Let’s quickly identify what those five steps are:
- Mortgage Pre-Approval
- Locate a Trusted REALTOR®
- Locate a Home
- Negotiate the Offer
- The Closing Process
Listed out like that the process should be simple, right? You’re right, it should be simple, but in each step, there are nuances that make those steps more or less difficult. The amount of time it takes to buy a home is determined largely by the amount
of effort you put into it. Let’s discuss the rhyme and reason for each step, and highlight some of the areas where a little effort on your part can greatly expedite the process.
Step One: Mortgage Pre-Approval
A lot of us, myself included, have been window shopping. We see the sparkling objects glistening in the store front windows, demanding our attention. We have no idea what the cost of those items are, and we find ourselves being lured into the
store only to find out that whatever that doodad was, it’s out of our budget. Driving around your neighborhood and looking at the ‘For Sale’ signs or browsing a website like Zillow, is exactly the same as window shopping. We see all those beautiful
homes, but have no idea what our budget is. The mortgage pre-approval process, solved that mystery for us.
Being pre-approved for a mortgage will tell you exactly how much spending power you have. Congratulations! You now have BUYING POWER! We’ll discuss our one word of caution around mortgage pre-approvals a little but later in this post. Let’s not
jump ahead of ourselves just yet though. Let’s discuss how you can become pre-approved for a mortgage.
Becoming pre-approved. There are many places and people you can connect with that can help you to be pre-approved for a mortgage. In general, most people seek mortgages through their personal bank, or they will source a local connection with a
local loan officer. Each provider comes with their own unique advantages and disadvantages. Here are some great ways to locate lenders in your area:
- Do a Google search (If you don’t know of one, here’s one of ours. Click HERE*).
- Go to your local bank.
- Ask your family and friends who they’ve used.
- Ask a local REALTOR® for a referral (Need a Referral, here is ours. Click HERE*).
- Talk to local Real Estate Investors.
Regardless of who you’ve chosen to provide you with your mortgage, there is going to be a lot of paperwork. If you remember, we explained to you earlier that depending on the amount of effort you put into this process, you’ll greatly impact how
quickly and easily you will buy your home. Getting this paper work in order ahead of time, is a great way to shave days off the pre-approval process. There may be other documentation required of you, but here is a list of the most common types
of documents you’ll need:
- Copies of your W2 forms for the last two or three years.
- A personal financial statement.
- A decent credit score (Rule of Thumb: 580+).
- Employment verification (Your lender will help you with this).
- Your social security card, and photo I.D.
- Tax documents for the past two to three years.
There may be other documentation that your lender will ask of you, besides what was listed above. We strongly encourage you to get that documentation to them as quickly as possible. Here is a tip to help you expedite the process:
Tip #1: Create a Google Drive document where all your information and documents are located. This not only helps you to be organized, but will allow you to then share that file with any loan officer you’re trying to be pre-approved with. No need to attach documents to emails repeatedly, and it will help them speed up their process.
Why pre-approval matters. If there is one thing that we’d like for you to remember about the pre-approval process, it’s that by being pre-approved you are marked marked as a serious buyer. Another reason your pre-approval is so important is
that you will now know what the top end of your budget is. I think you know what that means now… NO MORE WINDOW SHOPPING! Okay, so now it’s time for that word of caution.
Just because you know what the top end of your budget is, does not mean that you should look for a home at that high end. We recommend that you set a personal spending limit based on your pre-approval that accommodates your lifestyle and your
needs. We cannot tell you how much to spend, taking the time to do a self-inventory of your needs and wants in a home, may save you a lot of headache later. Let’s move on to the next two steps.
Steps Two & Three: Find a REALTOR® and Locating a Home
Your REALTOR® is by far the most important person on your home buying team. Why is this? This is because your REALTOR®is going to help you through the entire home buying process. Here are a few things that your REALTOR®will help you to
- Understand neighborhoods.
- Analyze housing data and trends.
- Assist you negotiating your offer.
- Order inspections, and...
- ...Help you to navigate the closing process.
Your REALTOR®does a lot, and that is why you pay them a commission. Let’s talk about some simple ways that you can find a REALTOR®.
Finding a REALTOR®
. Ladies and gentlemen, you are literally
one Google search a way from finding a REALTOR®. The trick is finding an experienced one. Here are some tips to help you find a REALTOR®:
Tip #2: Your REALTOR®is your agent. Pretend that you’re a professional athlete for a moment. Your agent has your best interest in mind and they want to get you the house you want for the best price possible. They cannot do this if you do not communicate timely with them or if you’re unwilling to compromise. Be honest with them, and have some flexibility.
Locating a home.
- Visit https://www.realtor.com/.
- Ask your friends and family for referrals.
- Visit local community boards.
- Ask your hairdresser or barber.
- Use one of OURS.
REALTOR®scan use the Multiple Listing Service (MLS) to help find a home. The MLS is a REALTOR®super power that gives them access
to data and information about houses that you likely do not have.REALTOR®can also set you up for daily or weekly emails about homes that are coming to the market that meet your exact buying criteria. This is also really powerful since
many of us work jobs, and and do not have a lot of time to browse Zillow from the work computer.
There are a number of things to consider when picking your "home sweet home", but here are some things to take into consideration:
Steps Four & Five: Negotiate and Close
- The number of bedrooms and bathrooms.
- The square footage.
- The Big 5 (Don’t know what this is? Ask your REALTOR® .) in good order, and not needing to be replaced soon?
- Garage spaces and type.
- What neighborhood do you want to live?
- How long will you be in the home?
For many people the last two steps are the most stressful and least exciting. Although the anxiety level may be high, you must be poised and focused because these two steps are crucial if you want that house. We honestly believe
that these two steps can be the most fun and give you an opportunity to shine creatively if you are prepared, and willing to work as a team with your REALTOR®.
If you’re reading this and you’re already a master negotiator, than good for you. Many of us are not good at negotiating and if
you have children, our advice is to let them do all the negotiating; children seem to be much better at it than adults are. For everyone else, use a Realtor! In all seriousness, negotiating the price of the home is important because
you only get one chance to buy a house, and letting someone who is good at it will only benefit you. If you’d like to become a better negotiator, we recommend you read
How to Win Friends and Influence People
by Dale Carnegie, and Never Split the Difference
by Chris Voss.
Whether your working with a REALTOR® or you are representing yourself here are some things you can consider:
Tip 3: Don’t be afraid to walk away from a deal. There are many homes on the market and you deserve the one that you want. Buying a home under pressure can lead to a lot of costly repairs, and to you not being happy.
Tip 4: Always place your earnest money with a tile company/closing attorney. NEVER under any circumstance give it to the seller.
- Weigh the pros and cons of using or not using contingencies in your contract.
- Consider placing a larger amount of earnest money down.
- Be pre-approved for a loan!
- Appeal to what the seller is wanting, e.g. shorter inspection periods or shorter time to close.
- EVERYTHING IN REAL ESTATE IS NEGOTIABLE!
Closing is the event where the deed transfers from the current owner to you as the new owner. This process is handled with a tile
company or by an attorney depending on your state. ALWAYS close with a title company or an attorney, a lot can wrong with title. It’s possible that even after you close the home, you could not end up with the deed because of
a cloud on title. This is one example of where purchasing title insurance and working with a reputable title company/attorney can save your butt. Here are some things to consider:
- Ask your REALTOR® , family members or friends for recommendations on title companies.
- Call and interview them. Ask about things like closing fees, remote closings, how they communicate with you, and etc.
- Title is 3rd party member to the transaction, they do not represent anyone.
- Relationship is key. They are the ones who ensure that you’re actually buying that house.
If you’re working with a good title company/attorney this process will be super straightforward and easy. You can close at their office, in a coffee shop or even in the home if it’s vacant. You and the closing agent will sit
down with a stack of paperwork, verify the details and sign on the dotted lines. Once everything is done, you take possession to the home as identified in the contract.
Welcome to Your New Home!
Congratulations! You’ve just purchased your new home. Buying a home can be a lot of fun but also very stressful. We understand this this post has demystified the process, but we cannot predict or tell you everything there is to know about buying a home. Undoubtedly, something will come up that we did not cover in our brief conversation. It is for those unforeseen reasons why you should surround yourself with a high caliber team. Feel free to contact us if you have any questions about buying home. We will answer what questions we can and get you connect to the right people for the ones we cannot.
Sharp Homes is a full service real estate agency located in the Kansas City Metro are, and brokered by eXp Realty, LLC. We serve people who are looking to buy, sell or invest in a home for their future. We understand that
this decision is an important, life altering decision. It is easy to over paying for or under sell your home. We have streamlined, and tested process that has put us in the top 3% of all real estate agencies in the K.C
Metro, and starts with a no obligation buying/selling consultation. After your consultation, you will have the confidence and knowledge you need to buy or sell your home.
to arrange your consultation.
* Disclaimer! In this post you will find links to some of the people with whom we have done business. We share these contacts with you because we believe that they are not only good people, but because they do good business. We receive absolutely no commissions or payments implied or otherwise for making these referrals. Buying real estate involves risk, and it is your responsibility to complete your due diligence on any vendor or contractor before entering into a business relationship with them.