Understanding the Home Buying Process
Purchasing a home may seem like an overwhelming process to the first time home buyer who has never been through the process. But buying that first home doesn't have to be so difficult. The information presented here is intended to provide you with an overview of the process. No transaction is like another, and there will be differences in the processes with every transaction you are involved in.
Certainly, the first thing a home buyer should consider is their choice of a real estate professional. It is very important that all parties to the transaction feel comfortable, and so it is important that all parties feel that they can communicate easily with one another. Obtaining a personal referral from someone you know and trust is always the easiest way to find a good and competent REALTOR®.
During the interview process, every REALTOR® you speak with should present you with an information document called Information About Brokerage Services. The Texas Real Estate Commission provides this form, and Texas law requires all real estate licensees to provide the information to prospective buyers, tenants, sellers and landlords. The intent of the form is to give the consumer information about the duties of the broker, depending on whom the broker represents. A broker can represent the buyer/tenant or the seller/landlord. The broker can also act as an intermediary with full disclosure and the written consent of each party to the transaction.
After you have chosen your agent, you will most likely be asked to sign the Residential Buyer/Tenant Representation Agreement. The purpose of this form is to make clear the agency relationship of the broker. Once you and the broker have agreed to the terms and conditions of the document, and signed the agreement, the broker is working for your best interests, and you have become the client of the broker. Previously, without this signed agreement, you were the customer of the broker, and the broker was not working in your best interests.
Before continuing on, more than likely before this point in time, you have met with a mortgage broker or a representative of your bank or credit union, to determine the price range of the home you might want to purchase. It is very important that in today's real estate market that you be pre-qualified before making an offer on a property. Because when the time comes to make a contract offer, the sellers of the property will want to have some assurances that the terms of the contract will be met by you.
The purchase contract will include, depending on the specific property, several addenda items. Some of the addenda items that will be included with the contract will include, but not be limited to, a Seller's Disclosure of Lead-Based Paint, Information About Property Insurance for a Buyer or Seller, an Intermediary Relationship Notice, and a Seller's Disclosure Notice. Some other helpful forms that you may see in the home buying process are Settlement Costs and Helpful Info, For Your Protection:Get a Home Inspection, and Inspector Information.
Once you and the seller have agreed upon the terms and conditions pertaining to the purchase of the property, you will most likely begin the process of obtaining inspections and completing your due diligence during the 'option period'. Generally speaking, you will have an option period (usually 10 days from the effective date of the contract), for which you have paid the seller a non-refundable, negotiable option fee. The option fee you have paid to the seller, and the option period you have negotiated with the seller, gives you the right, at any time during the option period, to terminate the contract for any or no reason at all. If you choose to terminate the contract during the option period, you will forfeit the option fee, but any earnest money you provided with the contract should be returned to you.
During the option period, you will have time to step back from the negotiation process, and take a good deep breath. During this time you should hire a qualified Home Inspector (also licensed by the Texas Real Estate Commission) to take an in-depth look at the current overall condition of the home.
Here is some useful information about what you can expect from the home inspection process.
What is the Inspectors Job?
The Inspector's job is to educate the Buyer about the condition of the home. The Inspector analyzes the home's structural and mechanical features and interprets what they find with the inspection.
Should you be present at the Inspection?
An inspector should encourage the Buyer to be involved. A Buyer who accompanies the Inspector learns more than one who does not. It is the Inspector's job to educate the Buyer regarding the condition of the property, so do not be afraid to ask questions during the inspection.
What if the Inspector finds defects in the property?
You should expect to find some structural and mechanical defects in every property. Even brand new homes will have some defects. Do not be disappointed by a detailed inspection report. You will be more fully informed about the condition of the property and can focus your attention on what is important.
Will the Inspector check everything?
Structural and mechanical components of the property will be inspected, and structural and mechanical defects found by the Inspector will be reported
What are some examples of structural and mechanical items?
When do I receive the Inspection Report?
You may receive a full or abbreviated inspection report on the day of the Inspection. You may also have a more comprehensive Inspection report faxed or e-mailed to you, with digital photos if appropriate, on the evening of the Inspection.
Once you have completed your due diligence, you will have a decision to make. The decision will be whether to go forward with the transaction or to terminate the transaction. However, just make sure that you make any decision within the option period specified in the contract.
If the hurdle of negotiating repairs is successful, you are well on the way to owning your very own home! All that is left to do is to arrange for insurance, get the mortgage loan completed, and finally move-in.
This process just generally outlines what will happen during the home buying process. Remember, if you deal with a good, competent REALTOR® who you work well with, you should not have any problems that will cause you too much stress. The purchase of a home is really nothing more than a natural progression of steps; one action leads to another in the process, and it terminates when you have the keys to your new home during the closing process.