The steps involved in buying a home can both intimidate and overwhelm a first-time buyer. If you have never been through this before, you will probably have no idea what to expect or how the procedure begins.

In general, there are seven steps to this transaction:

1. Make an offer

After you find your dream home, the next step is to write up an offer and sign a real estate contract. Is a contract necessary at this initial stage? Yes, it is. By signing the contract, you are expressing your commitment to move forward.

Most real estate contracts have contingencies attached to them. Generally speaking, these contracts are contingent on disclosure review, inspections, loan approval and some other matters. These contingencies allow either party to exit the deal if things don’t go as expected.

2. Disclosure review

The law requires the home seller to provide the homebuyer with several documents including disclosure, city reports, preliminary title report, and any other specific local documents. Aside from these mandatory reports, the seller has to disclose any flaws or issues that might reduce the habitability or resale value of the property.

In general, sellers have to answer a number of ‘yes’ or ‘no’ questions about the general condition of the property and the neighborhood through a transfer disclosure statement. Of course, if there were serious issues, the seller’s agent would probably have mentioned them before the contract was signed. If they didn’t and you discover major issues after signing the contract, you can walk out.

3. Appraisal

Buyers will have to contribute a certain sum toward the purchase as down payment. The lender will contribute the balance. However, the bank won’t hand over the money without appraising the value of the property. The bank will appoint an appraiser to ensure that the purchase price mentioned in the contract is in agreement with comparable sales in the neighborhood. If it’s not, the bank may deny the loan.

4. Inspections

Your house is likely to be the biggest purchase you will ever make in your lifetime so you need to ensure that there are no major problems with the property. As per the law, the buyer can hire an inspector to conduct a thorough inspection of the house. They will investigate all major components and systems. You should consider accompanying the inspector. If the inspector detects problems, they may ask you to hire a specialist like an electrician, plumber, roofer, or an engineer.

Don’t ignore the suggestions of the inspector even if you feel that there is nothing wrong with the property. If you detect problems at this stage, you can approach the seller to negotiate some kind of fix. If you detect some major issues and the seller refuses to fix them up, you can easily exit the contract.

5. Loan approval

Besides appraising the value of the property, the bank will consider your eligibility for a loan. It will also want to inspect the preliminary title report to ensure there are no liens against the property. The bank may take up to one month to process your loan application. If they do not approve your application, you can exit the contract through your loan approval contingency.

6. Final walk-through

One or two days before closing, you should consider visiting the property again. Make sure that nothing has changed since your last visit. Also ensure that the seller hasn’t removed any fixtures or made unwanted modifications.

7. The closing

The closing papers may be signed at some title company or at an attorney’s office. In some areas, the buyer and the seller never meet. They sign their papers separately.

Regardless of how the closing happens, you should be prepared to sign several documents. You’ll have to arrive at the office with your photo ID. Prior to signing the closing papers, you should have reviewed the closing statement.

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