Look back to last month’s post for the beginning steps.
Start Shopping for a Home – this is the most exciting part of buying a home, but it can also be discouraging. Use tools: newspapers, real estate listings are useful, but the Multiple Listing Service can be your friend. It often features pictures and views of the house, and you can sort by size, location, rooms and price. Realtor.com is another website for screening homes.
When walking through a home, focus on the things you can’t change. Paint and flooring can be changed, but the size of the home, number of bedrooms and bathrooms, and the view can’t be changed.
Make an Offer – Once you have found a house that meets your needs, you are ready to make an offer. Ask your realtor to share comparable sales – similar types of houses in the area that have been sold recently. Those sales can give you an idea of how much to offer to pay for the house you are looking at. Make a reasonable offer, and the seller will be likely to accept it. If it is too low you insult the seller. Using Zillow.com or Truilia.com, you can see the actual value of neighboring homes.
If the seller accepts your offer, it is time for the next step: Get a Home Appraisal. The mortgage lender does this step, in order to make sure the home will be appraised for at least the value you are offering.
Get a Home Inspection. The buyer hires a professional inspector for this job. They look at visible portions of the roof, foundation, plumbing, electrical, and heating and cooling systems. From an investment point, this is one of the most important steps to buying a home. Your purchase agreement should give you a way to back out of the deal, if the home inspector finds a serious problem. This is called the contingency. Your offer should be contingent upon a successful inspection. Walk through with the inspector and the completed report. When I bought my current home, the inspector identified an aged furnace and not all of the outlets were grounded. In addition, a radon test was conducted and it was 3x the approved level. My offer to buy the house was contingent on having the radon problem mitigated.
Settlement/Closing. The step of actually transferring the property from the former owner to you, the buyer, is called the closing. Prior to that date, the lender will give you a written estimate of the costs, so you have enough money to cover your closing costs. There is lots of paperwork, and many signatures are required. The seller gets paid, real estate agents receive their commissions, lender fees are paid, and you get the keys to your new home. Iowa State has a fact sheet on Buying a Home PM1460.