If you are new to home buying, or if it’s been a while since you bought a house, here’s a step-by-step overview of how the process works.

1. Determine your Budget

Select a lender to get pre-qualified, or better yet, get pre-approved.  the pre-approval process accurately estimates your monthly payments and the funds required to close.  Budget for property taxes, homeowners insurance, and any homeowner association dues if applicable. (Mortgage lenders typically include these expenses in your estimated monthly payment.)

When you submit an offer, including a pre-approval letter from a lender should increase your chances of the seller accepting your offer.

2. Research and Find the Right Home

If you are not working with an agent at this stage of your house-hunting process, use online property search engines, and also research lifestyle options that are important to you.  This can include things like low crime rates, walkable neighborhoods, proximity to hiking trails, and quality local schools.  Attend showings and open houses and use online home-buying resources for tips and strategies.  To enhance your search, leverage technology to receive alerts for new listings that match your desired home characteristics in your preferred neighborhood(s).

3. Compare the Home’s Price to Recent Sales

If you have contracted an agent, request them to provide you with a Comparative Market Analysis “CMA”, or comparisons of similar homes in the area that have recently sold or are currently on the market. If you are at this stage without an agent, build your own comparative home analysis using recent comparable sales.  This information will let you know if the seller’s asking price is reasonable.

4. Determine your offer price, contingencies, and timeline

When faced with a competitive market and multiple offers, it is crucial to carefully consider your offer price, contingencies, and timeline. These factors can greatly influence whether your offer will be accepted.

Recognize that each seller has unique needs, which may include time to find a new home after selling their current one. Take a comprehensive approach and assess how your offer can fulfill both their requirements and your own.

If you want room to negotiate in a buyer’s market, set your offer price lower than the maximum amount you are willing to pay. In a sellers’ market, where homes are selling quickly and often above the listing price, you may need to submit offers for properties that are listed below your affordability range.

Additionally, you will need to set the date of ownership transfer and consider including contingencies such as inspections and appraisals in your offer.

5. Prepare and Submit Your Offer

At this stage of your home-buying journey, it is advisable to contract a buyer’s agent who can assist in drafting the agreement for your signature or e-signature before submission.  They can provide many benefits at this stage, including crafting contingencies necessary to help protect you. If you have a financing pre-approval letter, it is important to submit it as well.

If your offer significantly deviates from the asking price, it may be beneficial to include a letter summarizing the market conditions or comparative market analysis that influenced your offer. The seller’s agent is obligated by law to provide any written documentation you present to the seller.

6. Seller’s Response

Once the seller reviews your offer, they have three options:

  1. Accept your offer as-is
  2. Decline the offer entirely
  3. Counter the offer to initiate negotiations

If the seller accepts your offer, they will sign the purchase and sale agreement, which makes it legally binding. If they decline your offer, the negotiation process ends. In the case of a counteroffer, you have the choice to accept some, or all of their proposed terms, or counter-back with your adjustments.

Negotiations often involve multiple rounds of counteroffers between the buyer and seller. It’s important to note that price is not the only aspect that can be negotiated. You may also find yourself discussing repairs, contingencies, furnishings or fixtures, and the closing timeline.

7. Finalizing and signing the sales contract

Once the parties involved have mutually approved all the terms of the agreement, including the price, inspection, negotiated repairs, and closing date, the contract will be revised accordingly.

At this stage, the property is officially “under contract,” and the listing will usually state that the sale is “pending.”

Assuming everything progresses smoothly with contingencies and financing, you will soon become a homeowner.  Most escrow periods last 30-45 days after acceptance of the offer.