Buying a home is one of the most significant investments you’ll make, and it can be stressful. But with the proper steps, it can also be an easy transition into homeownership. I’ve put together a step-by-step guide to buying real estate to help you navigate the process quickly. Here is a step-by-step guide to a purchase contract.
Step No. 1: Write Down The Offer
- Make a list of what you are offering to pay. The offer should include the agreed-upon price and any additional costs that may apply, such as taxes and fees. Your contract should also contain information about who will pay for closing costs or other upfront expenses.
- Write down the date and time that you made the offer. It will ensure both parties have an accurate record of when their counterparts accepted their contract. To make sure everything is clear about whether or not an agreement has been reached between them on whatever each party proposed terms at this point (it’s always best practice).
- Get yourself a witness. It is someone who can attest later that they saw what transpired during negotiations between two individuals who were engaged in conversation at some point during proceedings. Leading up towards reaching final terms regarding sale price, etcetera which was ultimately agreed upon before being put into writing formally via legal documents signed by both parties involved, fully aware of all details about these matters covered within the said document (aka: “purchasing” stuff!).
Step No. 2: Make an earnest money deposit
- Make an earnest money deposit.
The earnest deposit is a small percentage of the purchase price, typically 1% or 2%. Usually, this amount is held in escrow until closing. And helps to cover sellers’ costs for things like property inspection and repairs. Of course, buyers also tend to use their funds for these costs. But a seller could ask you for your earnest money back if it comes down. For example, if your deal falls through because you backed out or something went wrong with financing, you can get your deposit back! This is essential to a purchase contract.
Step No. 3: Negotiate the price and terms of sale
Negotiate the price and terms of sale.
- You should be able to negotiate the price and terms of sale. For example:
- If you buy a house, you can bargain for lower monthly payments. It might mean paying in cash or getting an alternative financing option like an FHA or investment property loan. If a seller is willing to make any concessions on this point, write it into your contract as part of the negotiation process so that it becomes official later when both parties sign the final agreement and close on their deal!
- A seller who wants quick cash may be willing to accept less than the market value from a buyer who will pay cash upfront rather than wait for closing funds from traditional sources such as a mortgage lender or investment firm (and thus delay closing). If this happens when purchasing real estate, note it in section 3B, “Terms Of Sale,” within your Purchase Contract below!
Step No. 4: Get a home inspection report
Take the time to choose a home inspector familiar with your area and its housing stock. A good inspector will take around three hours to inspect the house thoroughly. And you’ll get a detailed report within seven days of their visit. Be sure to ask for references from friends or family before hiring someone.
The inspection report should include photos of any problems found in each room so that you can see how serious they are (a cracked wall may not be such an issue if it’s just a tiny spot). And possible solutions for them (a new door frame might fix some squeaky hinges). The inspector should also indicate whether repairs are needed immediately or within six months or so. Anything requiring immediate attention should be noted in case you need to bring this up during negotiations with the seller.
Asking questions like “How long do I have left on my warranty?”. And “What kind of maintenance do I need to do on this property?” will help determine if there are any significant issues with your prospective home that might not have been detected during inspections performed by either party’s agents. If it turns out, there is something seriously wrong with the property after all. And especially if it’s discovered after entering into a purchase contract—then consider renegotiating the price before moving forward!
Step No. 5: Obtain homeowner’s insurance
Once you have a purchase contract and the home is appraised, it’s time to get homeowner’s insurance. Homeowner’s insurance protects you against financial loss if the house burns down or gets damaged by natural disasters—but they don’t cover everything. The policy will cover the actual structure of your home if it’s destroyed or damaged by fire, windstorm, hail, lightning, explosion, or vandalism. It also covers personal property inside your house, such as furniture and clothing, but only up to certain limits depending on which coverage option you choose (such as coverage for accidental losses).
Your homeowner’s policy will likely also include liability protection for any injuries on your property. But that doesn’t mean an injury victim can sue you directly for damages related to their hurt (which would be covered under medical payments coverage). If someone does sue you because of an accident on your property, though (for example, if someone slips on ice), then this part of the policy will help pay for legal expenses like hiring attorneys who can defend against those claims.
Step No. 6: Get a mortgage approval letter
Before you sign any documents, you should get a letter from the lender stating that you have been approved for your mortgage. A mortgage approval letter must be signed and dated by the lender, not just your broker or sales agent. The letter should include the following:
- The amount of your loan.
- The rate and term (how long).
- Other essential details include whether there are any conditions on that approval.
Step No. 7: Attend the closing
At the closing, you must sign documents that finalize the transaction. These documents include the following:
- The deed or mortgage (if applicable)
- The purchase contract
- An application for a temporary permit to occupy if you are buying vacant land
You should also bring cash or certified checks to the seller (or their agent) for any money owed on the property. If you’re paying cash and need a letter from your bank stating its availability, get it in advance to avoid any last-minute delays at closing. You may also want a trusted friend or colleague present at closing which can verify that all parties received what they were promised.
Purchasing real estate is a big commitment. Remember to do your due diligence!
When you purchase real estate, you want to ensure that it’s the right property and that you’re getting a good deal. As such, there are several steps you should take before signing on the dotted line.
First, do your research. If possible, visit the property at least twice—once during the day and once at night. And consider taking some photos to remember what it looks like in different lighting conditions. It will give you an idea of how bright or dark each room is. And whether there’s enough natural light throughout the house. It might also be a good idea to know what other homes nearby are selling for if they’re listed on MLS (multiple listing service).
Next, get a home inspection from someone with experience with homes similar to yours. This person will inspect various parts of your home from top-to-bottom, inside to outdoors (i.e., roofing). This inspection report should tell whether any repairs are necessary. Before closing on your home so they don’t become surprises later down the road! Next up: mortgage pre-approval! Make sure everyone knows which lender will provide financing for this transaction since different banks may offer additional terms based on credit score requirements. And other factors like income level–which means being able to need some assistance here! Finally, having someone review all related documents makes sense. Given how important these documents are when making such a significant decision as buying/selling real estate.”