Purchasing a home is a long process and will be one of the largest purchases you’ll ever make. So it’s important to understand the steps you’ll need to take to purchase a home. In this article, we’ll take you through the process of purchasing a home and go through some do’s and don’ts.
If you have additional questions after reading this, please feel free to contact Utah Home Central at the number above. They will be happy to help you.
Step 1: Pre-qualification Letter
The very first thing you need to do is contact a lender and request a pre-qualification letter. The lender will ask for your financial information and based on that, will tell you how much of a loan you can qualify for. This is important, you don’t want to waste your time looking for houses you can’t afford. The pre-qualification letter is also an important document that you’ll send along with any offers. This tells the seller that you’ve been to a lender and the lender feels your financially able to purchase the seller’s home.
Step 2: Hire a Realtors
Once you have your pre-qualification letter, you can now start looking for homes. The best way to do this is to contact a real estate agency and hire a realtor. It’s important to know that you normally will not have to pay that agent anything because in most cases, the MLS requires the listing agent to share their commission with the buyer’s agent.
However, in the listing agreement, the agent might state that the agent must get 3%. If the listing agent on the home you’re purchasing is only offering to share, say 2% for example, then your agent might require you to pay the additional 1%. If their contract with you states this, then don’t sign it. There are other agencies out there that will not make you pay anything if the listing agent is offering less; they just accept whatever is being offered.
Utah Home Central will not make you pay anything if the listing agent is offering less. In fact, Utah Home Central will rebate a portion of their commission back to you, so you actually make money by using Utah Home Central. To learn more about this click here.
Step 3: Find homes using an Auto-hotsheet
Next you need to know what homes in Utah are for sale. Your agent should setup what is called an “Auto Hotsheet”. He or she will take all of the criteria you are looking for in a house and put it into the Multiple Listing Service or MLS system. The MLS will then send you a list of all the homes for sale in Utah matching your criteria.
Each day it will send you other properties that have either just been listed or where the price has changed. This way you see the listings right as they come on the market. This is important because some homes go quickly and you’ll need to be one of the first ones to see the property if you want a chance at getting it.
If you see a property you like, simply let your agent know you’d like to go see it and your agent will setup a time to do that. If your agent sees a property he or she thinks you’ll like, then they may contact you to see if you are interested.
Step 4: Submit an Offer
Once you find a house you’re interested in, it’s time to submit an offer. This is where your agent can add a lot of value. He or she should do a market analysis on the home to see if it is priced at market value. Your agent will also know if it’s a buyer’s market or a seller’s market and will be able to help you draft an offer with terms suitable for that market.
They will also help you include terms that will give you the best chance of getting your offer accepted. The contract will have a finance deadline in it, so make sure you talk with your lender to find out how long it will take them to approve your loan. You don’t want to put a deadline in your contract your lender cannot meet.
Step 5: Due Diligence
Once you have an accepted offer, it’s time to do your due diligence on the house. Even fairly new homes have issues, so you’ll want to make sure you know what those issues are and whether you’re willing to still purchase the house. In Utah, the seller is required to disclose any material defects in the house they are aware of. They do this normally by filling out a Sellers Property Condition Disclosure form. They are required to share this with you at the beginning of the contract process. Make sure to look these over carefully.
However, there may be issues with the house the homeowner isn’t aware of. Therefore, you will want to hire a home inspector who will come in and do a thorough inspection of the house. You may also want to have the inspector test for additional items such as mold, meth, and radon. You inspector will most likely find a lot of things. It’s just a fact of life that things deteriorate over time, so don’t expect it to be in perfect condition. However, if you find things that are unacceptable, you can ask the seller to either repair the items or ask for a credit from the seller. If you ask for a credit, it will be your responsibility to fix those items yourself once you own the home. Your agent can help coach you here also.
Usually there is a deadline for you to complete your due diligence, so make sure you are able to resolve all concerns with the seller before that deadline. If you are not able to resolve your concerns with the seller, then the contract allows you to cancel the contract and get your earnest money back as long as you do so before the due diligence deadline. If you are still negotiating repairs at the time of your due diligence, then your agent will need to ask for an extension.
Step 6: Order our appraisal
If everything goes well and you still want to move forward with the purchase, then it’s time to order your appraisal. Your lender is the person who orders this, so you’ll need to call your lender to get this ball rolling. Your lender will not lend on any amount greater than the appraised value, so if your appraisal comes in lower than the contract price, three things can happen.
- The seller can drop their price to the appraised value or;
- you can make up the difference by adding more funds to your down payment or;
- you can meet the seller somewhere in-between.
You’ll want to council with your agent on the best approach if this happens. If you can’t come to an agreement with the seller, you are allowed to cancel the contract and get your earnest money back as long as you cancel before the appraisal deadline.
Step 7: Finance Approval
As mentioned earlier, your contract will have a finance deadline in it. Make sure you call your lender on a regular basis and find out if they need anything else from you in order to get your loan approved. Make sure your lender knows what your deadline is. Lenders are notorious for messing up deals because they weren’t able to meet their clients deadlines.
Some underwriters move at their own pace, not caring how it will affect the person getting the loan, so you need to keep on them. If for some reason your lender won’t have your loan approved by your finance deadline, then you will need to request an extension from the seller. Your agent will help you with this.
Step 8: Closing!
Once the loan has been approved, it’s time to close on your new home. But before you do that, your contract allows you to do a final walkthrough of the property 7 days before you close. When purchasing real estate, there is no three day right of rescission law that says you can cancel your purchase if you don’t like the house. Once you close, that house is yours.
So make sure you do your final walkthrough to ensure the house is still in the same condition as when you put in the offer. If you asked for repairs, this is a good time to check to make sure the seller made those repairs. Either your agent or the title company will call you to setup a time. Your contract will have a settlement deadline, so make sure you sign your documents before the deadline.
Step 9: Rebate Check
If you’ve hired a realtor like those from Utah Home Central, you will receive a rebate check in the thousands of dollars range. You can use this money to purchase new appliances, new furniture, go on vacation, or whatever you like.
Note: if you are paying cash, then you can skip steps 6 and 7.
Message from the broker of Utah Home Central
So what are you waiting for? If you decide you’re going to purchase a house, give us a call! We’ll help you find the best price for that dream home and when you close, we’ll send you a check worth thousands.
