Hi, can anyone tell me what happens after you see a house and decide you want to buy it? What is the process after that, and how long does it usually take?
It can vary wildly but in general (and in my experience having bought and sold homes in CT and NY).
Assuming you’re working with a real estate agent:
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I contact my agent and tell them I have an offer on a house. The offer can include, price, closing date, down payment amount and if I need to sell my own house and if I’ve been pre-approved for a mortgage.
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My agent calls the seller’s agent and communicates my offer. Counter offer comes back.
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Back and forth until terms are agreed upon. This is only a verbal agreement. This can take a day to a couple of weeks depending on quickly everyone moves.
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Usually an inspection is ordered shortly and you get the report. Now it’s time to write up the contract putting everything down, including any items that need to be fixed or money you’re requesting back because of problems in the inspection.
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Once contract is signed (with or without earnest money) you now have a much firmer commitment. Getting to this point can take a few weeks as well.
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Wait until closing date, do you mortgage finalization and close (1-4 months depending on agreement).
I’ll say it again- State and even local laws do vary greatly, so YMMV in a huge way!
There are different ways of doing this.
The most common way is you get a real estate agent. Your agent works with the seller’s agent (if there is one - some people will sell it themselves instead of going through an agent) and they’ll take care of things like putting in the offer that you want to make, making sure all of the necessary inspections get done, and that sort of thing. There’s a lot to it, so you are best off getting yourself a good agent. Ask around for references from folks who have recently been through the process and know a good one to recommend.
It’s not a fast process. You don’t go in on Monday and fill out the paperwork, get the keys, and move in on Tuesday. Basically, you have to get pre-qualified for a loan, an offer has to be made, inspections need to get done, and then at some point you will go to settlement. Things can get tricky if there are contingencies involved, like someone is buying a house and selling a house at the same time and one deal is contingent on the other deal going through. There are also typically contingencies based on inspections, and if issues come up (and they often do) those have to be settled before the offer can go forward. Once the offer is accepted then you have a contract, and there are penalties if either party pulls back out at that point. Eventually if everything works out you go to settlement and sign and sign and sign and sign and sign and sign and sign forms.
The whole process typically takes roughly a month or two, but sometimes drags on longer than that. In my case, we went back and forth with offers for a long time before we worked out terms that everyone would agree to, and since I was renting in 3 month chunks at the time this forced me to push out the settlement date since I had to renew for another 3 month chunk.
OK, so once it goes to contract, is that a more defined time frame? Because by then it seems like the details are hammered out?
Generally, yes. Although I was shocked to find out where I live now the “closing date” can be plus 30 days! So, we decide to close 2/15, they can take up to 3/15 to actually do it.
That was very surprising, and disconcerting, to me.
The first thing you need to do if you haven’t already, before you even start looking, is get your financial statements together and go see a loan officer. They will go over your paperwork, run a credit check, and (hopefully) provide you with a pre-approval letter, so your agent and sellers can see that you are serious and are able to afford a house. YMMV, but agents wouldn’t even meet with us until we had obtained at least a pre-qualification letter.
Get an agent, unless you really like doing paperwork and making tedious phone calls. Your realtor will take care of all that stuff for you. Their job is to deal with the seller so you don’t have to.
You will have plenty to do on your own, dealing with the bank and whatnot; having a realtor just makes things so much easier. And it’s not an extra expense; in most cases, your agent’s fee comes out of the seller’s back end (though if your agent is with a big company, e.g. Coldwell Banker, there may be a relatively small fee, like a couple hundred dollars).
Look at the listings closely; if it’s a short sale (“May Require Third Party Approval”), know that it can be a long, slow process (4-5 months, possibly even longer). Unless you’re desperately in love with a specific property, don’t do this to yourself.
More advice: Get a good home inspector, if possible someone you know, and follow the inspector and inspect with him. Inspect everything closely.
Good advice. Note that inspectors cannot move anything to gain access to a part of the house. So they cannot move a bookcase to see if there’s a hole in the wall hidden behind it, for example. If you’re buying an older house (early 20th Cent or older) you may want to consider an engineer, rather than an inspector.
Actually I would get BOTH a good inspector AND a good engineer. These older homes can be a mess! An engineer will look for different things then an inspector will. Start with the inspector though. He will see things that you will want to point out to the engineer. It is best if the engineer and the inspector have worked together before.
The cost of both can be well worth the expense. They can save you from buying a money pit, or an unrepairable home.
My brother had many folks inspect his prospective home. He had a HVAC team look at the ducting as well as the furnace and AC unit. He had a master electrician and a master plumber look at their systems. This was in addition to both the inspector and the engineer.
Money well spent since many problems were uncovered. He may be paranoid, but he literally saved over $250,000 because of them.
After looking at some new construction in my area, I would recommended this for newer homes as well. There are some newer homes that are real junk.
What happens is that many people are selling home 1 to buy home 2.
So this can form a chain
A sells to B but this can only occur after B sells to C, which must be after C sells to D which must be after D sells to E.
Now E is in jail and D is in intensive care, while C’s lawyer is on holidays, B’s bank has gone bankrupt… there can be delays…
Near the end of the time allowed, buyers start getting bridging loans organised so they can buy before selling, breaking the chain.
Yes, I understand. That’s called a contingency clause. However, in the places I’ve sold and bought before the closing date was fixed, except for extreme circumstances.
Things can go a lot faster if you have the cash in full to pay for the house.
And regarding inspectors, your realtor may recommend one. Find your own. I’m not saying your realtor is in some sort of shady cahoots with an inspector, but when there’s literally hundreds of thousands of dollars on the line, you really don’t want to take that risk. This is where that $35 or whatever it may be in your city for access to Angie’s List earns it’s money.