After you make the decision to buy a home, you’ll want to plan a budget and contact a real estate professional to guide you through the entire process. You’ll also need to research and compare available lenders to finance your home beyond your down payment. Your real estate agent will likely be able to suggest prospective lenders if you need assistance in choosing one. A lender will pre-qualify you for a loan in the amount it determines you will be able to afford, so that sellers will consider you a serious and capable buyer.
Once you’re pre-qualified, your real estate agent will begin showing you possible homes. When you decide on a particular home, your real estate professional will make an offer on your behalf to the home’s seller. Your offer amount will depend on the housing market in your area. Your Realtor will guide you as to what your offer should be.
Once both parties agree on an amount, your real estate agent will work with a title insurance agent and/or escrow officer to draft all necessary paperwork.
He/She will then schedule a date for you and the seller to meet for the closing, where the transaction is completed and ownership is officially transferred from seller to buyer.
The steps involved in the home selling process are very similar to those involved in the home buying process. Once you have made the decision to sell your home, you will need to establish an asking price for it. While some sellers successfully sell their homes on their own, a for-sale-by-owner arrangement can be complicated and will require a great deal more of your personal time throughout the process.
For this reason, most people consider the commission paid to a real estate agent well worth the investment, for the convenience, time savings and overall guidance provided. Realtors will also be able to tell you if your asking price is appropriate for your property or home. In addition, they will manage the marketing of your home – from front-yard signs to an MLS listing – while guiding you in preparing the home to be shown to potential buyers.
Once a prospect makes you an offer, you can either accept the proposed purchase price or make a counter offer. When both parties agree on a price, your real estate agent will work with a title insurance agent and/or escrow officer to draft all the necessary paperwork. He/She will then schedule a date for you and the buyer to meet for the closing, where the transaction is completed and ownership is officially transferred from seller to buyer.
Title insurance is an insurance policy that protects you against loss that could result from defects in the title of the property you are buying. The premium is paid only once and is good until the property’s ownership changes. Unlike most types of insurance, which protect policyholders from future events, title insurance protects you against defects that could already exist.
In the strictest legal sense a warranty of any kind within the United States must adhere to guidelines set at the states’ and federal government’s levels. A home warranty is a contract that agrees to provide you with discounted repair and replacement services. While there are several different types of home warranties, it’s important to shop around and find a provider that provides coverage on the different assets you own.
If you’re working with a real estate agent, you can request properties with a specific criteria (area schools, close to shopping, safe parts of town, etc) during your home search. If you’d like to find properties on your own that fit your criteria, sites like Zillow, Trulia, and even your Realtor’s website has functionality to search for homes based on specific criteria.
A single-family home refers to a free-standing property that does not share walls with other nearby homes or structures, and that is built from the ground up at the site of its foundation, on its own piece of land. The pros for owning a single-family home include having a bigger yard for pets and family, more privacy since you don’t share a wall or floor, and more room to grow to build a family. Homes that are under a homeowner’s association may also have additional amenities such as a pool or neighborhood tennis courts. Possible disadvantages to owning a single-family home may include homeowner’s association restrictions and fees that may restrict changes on the appearance on the outside of the home. Another disadvantage to keep in mind is that the owner is responsible for all repairs and maintenance, as well as any remodeling done to both the interior and exterior.
A townhouse is a home that is attached to one or more other houses, located on a specific property that the townhouse owner also owns. Townhouses can range drastically in size and architecture, including multi-unit structures such as duplexes or triplexes. Advantages to owning a townhouse can include less financial responsibility for exterior maintenance and repair costs, heightened security afforded by a more high-density community and amenities for which the homebuyer is not directly responsible (pool, tennis courts, etc). Disadvantages often include less privacy than with a single-family home, less freedom to alter the home’s exterior, and a monthly or yearly homeowners’ association fee.
A condominium, or condo, is very similar to an apartment in terms of structure and multi-unit design. Often, apartments are converted to condos as the result of changes in complex ownership and management. Condominium owners own only the interior of their dwelling – from the walls inward – and, just like with an apartment, their home is attached to their neighbors’. All condominium owners who live in a particular complex share the financial responsibility for maintenance and repairs to the overall property and building exteriors, through payment of a monthly homeowners’ association fee and, if necessary, a special assessment requiring a one-time payment of a predetermined amount. Possible advantages to owning a condo include less individual financial obligation for exterior home repairs and a lower purchase price than a single-family home or a townhouse. Disadvantages may include greater difficulty when selling a condo, as compared to single-family dwellings and townhouses, monthly homeowners’ dues, less privacy than with other types of housing and usually a complete lack of freedom to alter the exterior of the home in any way.
A manufactured home, once typically referred to as a mobile home, is a single-family home that is built at a location other than the land on which it sits. Most manufactured homes are modular in structure, and final assembly occurs on the home site after separate “pieces” are transported from the manufacturing plant to the homeowners’ property. Advantages to owning a manufactured home may include the fact that it is often a less-expensive means of acquiring a single-family residence, and in the event the owner moves to another property or sells the home, it may be easily transported to another location. Disadvantages include an obvious limitation in architectural options (since the homes are built off-site and then moved) and, often, reduced longevity in the durability of the home.
Flood Zone Determinations define geographic areas, or zones, according to their flood history using a classification system that assesses the potential for rainfall to be converted to storm water runoff. This information is very important to a buyer because it will likely affect insurance availability and cost. Likewise, it is important to a seller to know how the flood zone determination for his or her home may affect the sale of the home. Ask your Realtor or Homeowners’ Insurance Provider for details on your property’s Flood Zone Determinations.
A 1031 exchange refers to legislation that allows an investor to sell a property, reinvest the proceeds in a new property and as such defer all capital gain taxes.
Visit our Real Estate Dictionary for detailed definitions of common terms found throughout the home buying and selling processes.