Buying a home is very exciting process when you understand each step! If you are unfamiliar with each step it can seem very overwhelming and at worst daunting. It’s typical for buyers to feel very defensive due to the feeling of being overwhelmed. Buyers might find themselves both navigating the process and trying to decipher who they can trust along the way. In this article I will help you break down the home buying process and help you feel more confident when engaging with real estate professionals.

Step 1: Determine your budget and get pre-approved for a mortgage

Before you start looking at homes, it’s important to determine your budget and get pre-approved for a mortgage. This will help you narrow down your search and ensure that you’re looking at homes that you can afford. To get pre-approved, you’ll need to provide your financial information to a lender, who will then determine how much money they’re willing to lend you. One of the worst feelings in the world is finding “The Home” and then finding out that you 1. Can’t qualify to buy it or 2. you have to get pre approved and then you can’t make an offer in time. It’s important to note that todays real estate market is VERY active. As long as there is low inventory demand will continue to remain high. This will also mean that the days on market for “Move in Ready Homes” and homes in desirable areas with minimal issues will stay low. Days on Market (DOM) is a seemingly simple measure of time on market, but its best viewed as a gauge of when issues may exist. Make no mistake people are actively looking to buy. A great indicator of this is the Views and Likes numbers on Zillow. These are REAL people interacting with these listing they aren’t just numbers on a screen. I don’t like to reference Zillow as a data source too often, but in this regard this is raw data that is very real!

Finding a lender that you can communicate with effectively, that you trust with your personal financial information and will help you navigate the lending process, and will find a way to get you approved no matter what is an invaluable asset. Any experienced real estate agent will have a list of preferred lenders. These lenders are people that have experience and have helped the real estate agent help their buyers / sellers to get to the closing table with little headache or reasons for stress or concern. Some times buyers like to shop around for their own lender which is definitely encouraged, but wouldn’t you feel better to work with someone that knows your name. Someone that your Trusted Real Estate Agent has a long time professional relationship with and someone that isn’t going to disappear once you close on your new house. If this lender wants to get more referral business from agents they need to maintain a relationship with this agent and their client.

Step 2: Find a real estate agent

Next, you’ll want to find a real estate agent who can help you navigate the home buying process. What if I told you that you could higher a seasoned professional that will help you make a few hundred thousand dollar decision or in some cases a few million dollar decision for FREE! Enter the Buyer Agent. At the end of the transaction it’s the Home Seller that pays the buyers fee. This system is setup in this way in an effort attract a buyer. If the buyer had to pay their agent that would be an additional cost of anywhere from $5,000 to $50,000 + for million dollar homes that the buyer would have to bear the burden of. This would discourage a buyer from the start and very few buyers would enter the market. In todays market the average buyer struggles to cover down payments and closing costs as it is! However, there are programs and mortgage loan types that help to cover the down payment. More HERE on down payment assistance strategies. Generally, you want to look for a buyers agent who has experience working in your price range and who has a good reputation in the industry. The general rule of sales is that you want to work with someone that you Know, Like and Trust!

Having a buyers agent is one of the most important MUST HAVES in the home buying process. Too often buyers think they can just call the number on the sign or on the listing and work with that agent. Its important to know that this agent was HIRED by the SELLER to REPRESENT the SELLERS INTERESTS. As nice as the seller agent is to you and no matter if they have to act as what’s called a DUAL AGENT (representing both the buyer AND the seller) the sellers agent will most likely act in a way that gets the deal done at the best price and is incentived to sell the property for the highest prices because they get paid the full commission.

Step 3: Start searching for homes

Once you have a real estate agent and you are Pre Approved from your trusted lender, you can start searching for homes that meet your criteria. Your Buyers Agent will sometimes ask you to sign what is called an “Exclusive Buyers Agency Agreement” – This is agreement typically outlines the responsibilities of BOTH the Buyer and the Buyers Agent. Even though the buyers agent works for free until the buyer closes on the house there is ALOT of risk and required expenses for the buyers agent. The Exclusive buyers agreement helps to remove some risk of showing a buyer a property (working for the buyer) and then that buyer turning around putting an offer on the house with their cousin who has a license. Typically, the buyer will only see the Buyers Agent “Working for them” at showings, but behind the scenes the buyers agent is working on reviewing comparable properties to assess its value, they are reviewing any sellers disclosures, they may be going to open houses in the area or verifying the flood zone status. They can be calling the town zoning officer to verify zoning status and any potential issues with the property. There is a lot you don’t see that is happening. Trust your agent and ask questions. There is no such thing as “too many questions” or a “bad questions”. Asking and talking with your agent will help you to develop rapport and trust between you and your agent which is best for everyone!

Your Buyers Agent in collaboration with you will work to setup showings for you to attend and will provide you with information about each property you’re interested in. This is when it’s important to work with a agent that is very familiar with the area you would like to buy. Too often buyers and sellers think that agent only can work in one or two towns, but that’s not true and isn’t giving your agent enough credit. Your buyers agent / sellers agent is a member of your community at large and they will have a lot to say and know about an entire county or even a state! It’s important to always ask questions. Remember you chose your Real Estate Agent because you know them, you like, them and most of all you TRUST them. If they don’t know the answer they will be open and honest and say “I don’t know, but I will find an answer for you” to me this is the sign of a good agent. Someone that isn’t lazy and will fight for you. I can’t understate the value of this. You NEED someone to advocate for you in this process. Stick with your chosen agent as long as they fight for you.

Step 4: Make an offer

When you find a home you like, your agent will help you make an offer to the seller. At this stage in the process you are ready to pull the trigger and submit an offer to purchase a home. This is when your agents experience comes in. They will use their market knowledge to assess the value of the property and help you not pay too much for a home, but help you buy the home for the appropriate market value. In today’s active market buyers and sellers are struggling to keep up with understanding the value of a home. In the past year alone here at the Jersey Shore, sellers have been seeing their homes seller for 5%, 10%, even 20% over their perceived Value or List Price. They have also seen the market shift within the past year (2022 to 2023) and now homes are selling for 105% or 97% of their list price or perceived market value. It’s really tough to keep up, but thats why working with an agent is more important than ever!

The purchase price is a very important piece of the offer, but it’s not the whole offer! To help you stand out from the rest of the offers your agent can help you negotiate on Terms. There are a number of variable needs that a seller may want and if you can give it to them then they might accept an offer that might be lower than the highest offer. It’s not always about price. I’ve heard of some offers including a trip to Disney World!

In the world of writing an offer you might here the word – Contingencies. It’s best to understand this as “things the seller needs to wait for the buyer to do or acquire”. Some sellers can also have Contingencies. I just bought a multifamily property that requires the seller to remove the tenant and get a letter from the town certifying that the property can continue to be used as a multifamily property. This is an example of a seller contingency.

Another contingency is the type of Mortgage you are using. Whether your financing type is a Conventional Mortgage, FHA Mortgage, VA Mortgage or a USDA mortgage each of these lenders will have their own requirements to fund the loan. Your job as the buyer and the buyers agent is to help the seller feel confident that the Lender will have fewer reasons to NOT fund the purchase. Typically a higher down payment will make the lender feel better because they have to lend less thus reducing their risk. Lenders hate risk, the bank always wins. If the lender feels better then naturally the seller will feel better that the offer will be funded and the seller gets paid.

Lastly, the seller typically want to know when they can complete the sale of the property and make their profit, if any. Typically you will see a closing taking place within 30 to 60 days. During this time inspections and mortgage approvals will take place in an effort to close on the purchase.

Step 5: Negotiate the contract

The seller will either accept your offer, make a counteroffer or just outright reject your offer. Your buyers agent will help you to negotiate the offer with the listing agent to help both the buyer and the seller to come to terms that are acceptable to both parties. In NJ, Real estate agents will in most cases use common National Association of Realtors Forms or Local MLS forms that are written by lawyers to setup a rough framework of how the offer to purchase will be structured.

After the seller has an offer with terms they like they will accept the offer. Both the buyer and seller will sign the offer. This is called the Realtors Contract which will, then be sent to Buyers and Sellers Attorneys for Review, otherwise known as Attorney Review.

During Attorney Review, the buyers and sellers will consult with their attorney’s and the Buyers Agent and Sellers Agent will step back a little bit. The real estate agents will stay in contact with the Attorney’s and Lender to help keep the deal together should any issues arise. It’s important to note that you can’t get excited yet that you have an accepted offer. I’ve seen plenty of deals fall through if a seller gets a better offer during attorney review. It’s not till the buyer and the seller have concluded attorney review and their is a legally signed and attorney approved contract that they seller and the buyer are bound by laws and another offer can’t be accepted.

At this stage the attorneys will first start review by stating “This contract is rejected as written”. Don’t Panic. This is their way of rewriting the contract and negotiating terms with the opposing attorney. The attorney’s will work to define when the deposit is due by, when the closing date is, the terms of any contingencies and the actions required of both the Buyer and the Seller. They will define under what terms and conditions the Buyer AND the Seller can terminate the contract. Once all of these details have been defined and agreed to both parties will sign the attorney contract and then you have successfully concluded attorney review!

Congratulations! You now have a contract and the property is Under Contract!

Step 6: Get a home inspection

Once the contract is signed, you’ll need to get a home inspection to ensure that the home is in good condition. At this stage you will consult with another professional that is an expert and is certified in all parts of how a home works. This person will most likely be a recommendation from your Trusted Real Estate agent. If you haven’t heard of the Home Inspectors Certification exam, its quite the rigorous exam that is only passed by the most knowledgeable and qualified candidates. I encourage you to attend the home inspection with your buyers agent. During the inspection, you should ask your inspector any questions to help you better understand your new home. If any issues are found, you can negotiate with the seller to either have them fixed or to adjust the price of the home. These are called – Seller Credits.

Step 7: Close the deal

Finally, you will confirm with the lender that you have concluded the inspection period and that you are ready to close when they are. Once the lender is ready to lend otherwise known as Clear to Close. You’ll attend the closing where you’ll sign the final paperwork and pay the closing costs. Costs typically consist of Home Owners Insurance, Flood Insurance, Pre Pay Taxes and any negotiated credits. The Buyer will sometimes bring funds to the closing table for the down payments.

The title company will review the Title or Ownership of the property to ensure that no one else can claim ownership to the property. They will verify that you don’t have any outstanding liens against you that could prevent the lender from lending. The title company will verify that their are no outstanding liens on the property that could be transfered to the buyer or are required to be paid by the seller. The title company takes all of these steps before they release the funds to the seller.

Before the closing day the lender will transfer to buyers funds to the title companies escrow account. Once the title company verifies there is clear title you will sign all closing documents and the title company will transfer the funds to the seller.

Once the transaction is complete, you’ll receive the keys to your new home!

By understanding these seven steps, you’ll be better equipped to navigate the home buying process and feel more confident when engaging with real estate professionals and step into this ever changing real estate market. Remember to take your time, ask questions, and work with professionals you trust to make the experience as smooth and stress-free as possible

If you would like to work together on buying your first home I would love to connect with you and help you start the home buying process and be your guide to navigating todays house market!

Call, Text or Email me today to get started: 732-567-1441 / RPhil.Lewis@foxroach.com