First off, congratulations on entering the the second phase of buying a house. That’s right, the SECOND phase; Whether you realize it or not if you’re reading this article you’ve likely mulled it over at some level, even if only deep within your subconscious. Maybe you’re a savvy, investment-minded individual thinking about the future; perhaps you’re simply experiencing a severe case of FOMO as you hear about all your friends buying houses; or maybe you’ve simply outgrown your current place; for whatever reason, at this point you’re solidly planted in phase #2.
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#1- A Lingering Thought
Let’s back up for a moment and discuss phase # 1. In this phase, the idea of purchasing a home isn’t a fully-formed plan, and is very likely simply a passing thought, or idea. Butthat’s excellent! The greatest feats of mankind each started as a simple idea.
During this period you’ve likely found yourself coming back to the idea of buying a home, over and over. It wasn’t a serious, time-consuming consideration, but a pesky recurring thought that wouldn’t go away. As a result, you began noticing the things you admire about your friend’s homes, or you found yourself holding a lingering glance at the beautiful home down the street, or just maybe, the “For Sale” and “Open House” signs on the corner suddenly caught your attention. You spent some time ignoring it, then you gamed it out in your mind as a potential scenario, now you’re truly considering it, and here you are reading a piece titled “The Six Phases of Purchasing a Home” Welcome to phase #2.
#2- Exploring the Idea of Buying a Home
Now that you’ve given in to that still small voice in the back of your mind, you’re in a preliminary exploratory phase. You’ve probably already done a home search or two, huh? Thought so. During this phase potential buyers begin researching the process of buying a home in earnest; They’re considering their finances and purchasing power, glancing at the inventory, and likely searching online about what to expect (again, here you are!), as well as asking close friends about their experiences and recommendations.
While no serious commitment to actually buying a home has been made yet, with each passing day it begins to feel more and more like a real possibility. As you do your homework, it becomes obvious that it makes much more economic sense to purchase your own home to build personal wealth, than to continue contributing to that of your landlord’s.
Now you’ve decided; It’s time.
This conveniently brings us to phase #3: Committing to buying a home.
#3- Committing to Buying a Home
This period is an extension of #2, and a pre-cursor to #3, in that it incorporates the activities of both. At this point purchasers have been doing some preliminary groundwork, but now that they’ve officially set out on the adventure of becoming a homeowner, everything steps up a notch. What were innocent casual searches before are now auto-emails with pre-defined filtered criteria, only returning properties that are perfect matches for their dream home… or something they’ve landed on which they can both afford and find joy in.
This is a crucial step because this is where buyers assemble their real estate teams (cue dramatic inspirational music and a cast of superheroes appearing!). Ok, maybe not quite so cinematically divine, but still an exciting and highly consequential decision. A real estate team’s makeup will vary slightly depending upon the individual buyer’s circumstances, but most are made up of three key players: The buyer, their realtor, and their lender.
The buyer has the vision and calls the shots, the realtor knows the housing market and current inventory, and handles negotiations, and the lender helps the buyer better understand the specifics of the finances, issues a pre-approval (required to submit an offer in most cases), and processes the loan.
Choosing a real estate team is an integral step in the process, and buyers should choose professionals who are experienced and bring a great deal of value to the table, but who also help the buyer feel at ease and educated about the process; They serve as both advocates and educators.
#4- Actively Pursuing a Home to Buy
Now that a solid team is formed, the buyer is well on their way to purchasing a home. Here the buyer enters phase #4. During this time the buyer and their agent are actively monitoring the housing inventory. In step #3 the agent likely set up an auto-search, so both the agent and the buyer are pinged when a new listing that matches the search criteria goes active. Now, the buyer is also attending open houses on the weekends and visiting the strongest contenders with their agents. At this stage, the buyer is ready to take action when the right home hits the market. The real estate team is on high alert.
And then it happens; The perfect home has been identified, and it’s “the one”. Buyer and agent discuss the specifics of an offer, the offer is written and submitted (along with the pre-approval letter from the lender), and then the buyer hears those magic words they’ve been anxiously awaiting: “Your offer has been accepted!”
#5- Contract Process
Woo hoo! Now phase #5 commences: the contract phase. The length of this phase is determined by the settlement date included in the offer; It may be a very quick turn-around of 14 day, or a pretty lengthy period of 60 days. During this time the contract’s contingencies are worked through (items such as the home inspection, appraisal, reviewing documents if located within a homeowner’s or condo association, etc.). This is when the buyer, with the aid of their agent, performs their due diligence and gathers all the relevant information on the property. During this same period, the buyer’s lender is processing their loan documents, and eventually sends them to underwriting for final loan approval.
#6- Closing Day!
And finally, once all the action items of the contract period are satisfied, the magical day arrives, the day considered by many to be one of the most important days of their lives; It’s closing day! This is the sixth and FINAL step of the home buying process. Closing day (also called settlement day) is when the buyer finally takes possession of the keys to their new house. Settlement itself is a relatively simple affair, merely requiring a lot of initials, dates, and signatures.
For some, this process takes months, and sometimes even years, and for others it can be a blazing fast affair of only a few weeks. For most, it seems far more daunting than it actually is. So, if you’re an early-stage #1-er, or you’ve found yourself progressing into phase #2 land, don’t hesitate to start considering the makeup of your real estate team; They’ll help ground you and focus you on the objectives ahead.
Start with your friends who have purchased before and ask what they loved or didn’t love about their realtors. Maybe they have a strong suggestion, or perhaps they didn’t have a great experience and they’ll share why. Either way, you’ll get valuable insight about what to expect along the path to homeownership.
Happy house-hunting!
Ed Cook Licensed Realtor – South Florida http://edcookrealestate.com
