You've spent months, maybe even years researching properties, attending open houses, exploring different options with your Realtor, and saving for that down payment. And now, you've finally put an offer down on your perfect home. Congratulations! That is major progress. Now what? Well, take a deep breath - there's still a ways to go. The truth is that even after the demanding and often emotional realities of house hunting, you still have a lengthy process ahead before you can call yourself a homeowner. The weeks leading up to closing can either be stressful, or noneventful; there may be many unexpected things that come up or, if you’re lucky, it may be smooth sailing
As a real estate agent, I’ve found that everyone, even repeat buyers, is more relaxed when they have a good understanding of the process and the number of days – approximately 45-60 – that the whole thing is likely to take. So here’s my insider’s guide to the buying process, from offer to closing.
The Offer
Let's start with the offer itself. Your agent will have advice for you based on market knowledge about what constitutes a serious offer. Your offer sets the tone for the transaction, so it's a critical first step. If you’re a serious buyer, your initial offer has to engage, not alienate the seller. Keep it simple.
You’ll be attaching an “earnest money deposit” check to your offer. The amount of the deposit is usually determined by the type of financing you plan to use. It can be split into two - one up front and one after inspections - or it can be one lump sum. The check itself will be deposited in an escrow account once you and the seller have agreed to and signed the final offer. Keep in mind - if anyone else is putting an offer on the property, you'll want to work closely with your buyer agent to present an offer that is high enough to avoid a bidding war.
The Negotiations
Once you've submitted an offer, one of three things will happen:
- Offer accepted: This is the best case scenario for you. Whether you offered asking price or submitted a low-ball offer, the current homeowner found the offer to be fair and is willing to sell their home at that price.
- Counteroffer: If you tried to buy a home for less than its listing price, the current owner may come back with a counter offer. Usually, this is higher than what you submitted, but lower than the listing price, though the seller may stick to their guns and tell you to pay the listing price or bust.
- Offer rejected: There are also cases in which the homeowner will flatly reject your offer. There are a few reasons for this, especially if the current owner has specific terms, like a requirement for cash-only offers or a large earnest money deposit you may not have.
If the offer is rejected, you'll have to try your luck elsewhere. If it's accepted, you can move on to the escrow process.
However, a counteroffer means it's time to negotiate. Of course, you may choose to accept the seller's offer or simply walk away from the house, or you may choose to accept parts of the new offer and make another offer of your own.
Aside from negotiating on the price, you can use all kinds of processes or responsibilities as pawns in your dealings. For example, you may pay the full price but ask the seller to cover closing or mortgage title insurance costs. These negotiations will go back and forth until an agreement is reached between you and the seller or until one of you decides to walk away from the deal.
Home Inspection
Once your offer is accepted, it’s time to get down to the nitty-gritty of home inspections and repair requests. This can be daunting for many first-time (and experienced) home buyers, and so part of my job as a Connecticut real estate agent is to help my clients navigate what can be a stressful process.
Your first step is to hire an experienced and reputable home inspection company. The inspection should be scheduled as soon as possible after the offer is signed by both parties. The majority of contracts hinge on the home inspection results being satisfactory to the buyer. If the inspection uncovers an issue you are unable or unwilling to deal with, you can walk away from the house and your earnest money will be returned. The money you spent on the home inspection, however, will not. Large issues, such as a crack in the foundation or a roof that needs to be replaced may impact the value of the home, and if you choose, you may renegotiate the offer for a lower price to cover the repairs, or request that the seller pay. With the help of your realtor, you have a variety of options to negotiate a deal you are happy with in light of any major discoveries from the inspection.
Attorney Selection
Early on in the process, you will need to hire an attorney. Most of my clients wait until after the home inspection to actually engage a lawyer. Go with an experienced attorney whose practice includes a good amount of real estate. Poll your friends, get your agent's input, talk on the phone with at least two attorneys, and choose one with whom you feel good chemistry. Like your agent, this person will be by your side until you meet at the closing table, so be sure you have confidence in and good communication with him or her.
Mortgage
Before you began house hunting, you were probably pre-approved for a mortgage, but now that you've put an offer on a house, you need to officially apply. Meet with your loan originator and complete your mortgage application. If you’re a first-time homeowner, allow a couple of hours for this meeting. Do your best not to leave anything out of your conversation with the loan originator and feel free to ask any questions you wish. By law, he or she must hold all information you share confidential. Let the lender – not you – decide which aspects of your financial picture are relevant to your ability to qualify and purchase. The lender will generally request an appraisal for the home to ensure it's worth what you plan to pay for it. Through the entire home-buying process, you will want to stay in contact with your lender. Reply promptly to requests for additional paperwork or information. This fastidiousness will greatly increase the likelihood of your loan being approved within the time frame set forth in your offer, and will save you many a panicked phone call. After all the necessary qualifications are met, and after a successful appraisal, you will receive your loan commitment letter from the bank, detailing the terms of your loan. If you have even the slightest question, review it carefully with your loan officer, and let your buyer agent know you’ve received your commitment. Then jump up and down and hug your partner and/or your dog, or even your cat.
Appraisal
After the home inspections are complete, your lender will arrange for an appraisal to be done on the home. In Connecticut, appraisers are licensed, and look at a number of factors when determining value, such as recent comparables sold, upgrades and updates, and general condition of the property. Once it's performed, the appraiser may find that the home is worth less than what you plan on paying for it. This can present a bump in the road, as you may need to renegotiate the price of the home. If the lender is happy with the price of the home, your loan approval is still on track.
Closing
You've made it! Iron that button down and shine your shoes; in a few mere hours you will officially be a homeowner! Most of the time, there will be a final walk-through before the signing and closing just to be sure that the previous homeowner has removed their belongings, and that the fixtures are all there. Once you're satisfied that all is in order, your agent will give the attorneys the "all clear." Then, get your signing arm in good shape! You will have a small mountain of paperwork to sign and pass around - much more than the seller, so don't be alarmed if the seller and their attorney don't show up until you're nearly through with your stack of paperwork. In many instances, they will have already signed their paperwork in the days leading up to the closing, and you won't see them at all.
Once you've signed yourself into a happy stupor, the closing attorney will make sure the transfer of the Deed is recorded at town hall. You'll get your new keys in hand and are free to head over to your new place, where many years of happiness await you.
