How to Buy a House 2024
Steps to Buying a Housing 2024
It’s a new year. Home buyers are going to be fronted with a market that has given way to lower interest rates, but also one that has a limited amount of supply of homes for sale. There will be more multiple offer situations with better and better terms for sellers.
Buyer’s it’s a seller's world… And we are all just living in it. So let’s discuss the steps to buying a house in 2024. Not only buying a house, but the steps on ensuring that you get the house that you love and that you are not having to search every weekend for 6 months putting in 25 offers. Because that process sucks. It sucks for you as the buyer, but also sucks for us agents!
Real quick. My name is Jeff Chubb and I am a retired investment banker turned real estate agent that has sold more than a 1,000 homes. If you have real estate questions, then I am here to help.
So you have decided you want to buy a house. The first step should be meeting with a real estate agent to discuss the home buying process as well as their credentials! You will want to ensure that your agent is not a newly licensed agent, because experience matters more than ever in a real estate market like this.
During this meeting, the agent should go over the home buying process as well as the current market conditions. They will also talk to you about where you are looking and what you want in your dream home. Now if you have already bought a house before, then you are probably thinking… I don’t need to go over the process. That’s fine. But you will want to go over all the characteristics on how to make your offer stronger and more attractive to a home seller. And if you are needing to sell in order to buy, well my friend… Your meeting may take a little longer as a good agent should go over your options in regards to that house sale. Can you buy without selling? Would a suitable housing clause make sense? What are the chances that we can get this done with a good ole home sale contingency? And if so, then how many 10s of thousands of dollars will that contingency end up costing me in the end? Ya, if you own a home. You may need this meeting more than the first time home buyer!
Step 2 is working on your financing. Now I know most people would say this is where you get pre-approved, but in this market… You need to do better. You need to get pre-committed. A pre-commitment is where the bank has committed you personally for the loan. In other words the only thing they need to fully underwrite your loan is for you to go under agreement on a house and the bank verifying the asset through an appraisal.
But there is some additional homework to be done here. If you are putting more then 5% down, then we really need to go over how much ‘appraisal gap coverage’ you can afford to offer a seller. A lot of times this will be the difference between winning an offer and not. I actually consider this the secret sauce to getting a contract accepted.
Step 3 is the fun part. You will have been reviewing properties and now it’s time to go check out some houses. Maybe you fall in love with the first house you see. Or maybe it takes the 10th house. The important thing to remember here is that this is a personal step. An agent’s opinion of the actual house really doesn’t matter. It’s about what’s important to you and it checking your “needs” boxes and a bunch of your “wants” boxes.
Now I personally always have an exercise with my clients where I have them rank the house on a scale of 1 to 10 after each visit. This helps keep all the properties from blending together and helps us ensure that it fulfills your needs.
Once you have found a place that you like, then that’s when we move on to step 4. This is essentially when we start putting together an offer gameplan. A good agent will reach out to the listing agent to find out more about the home seller. Like if there is a date that they need to close by or if there is an offer deadline.
Remember that ranking scale that we talked about a moment ago? Well this is also when that ranking scale matters again. You will most likely be more aggressive on a house that ranked a 9.5 then a house that ranked a solid 8. This is when we talk about whether you want to do a home inspection and if so, then if you would like to do one with a threshold amount. Will you be offering appraisal gap language? Maybe there is a need for a rent back or a suitable housing clause. Can we and should we use an escalation clause?
This is when we fine tune all of this because I have noticed more and more that most seller’s are not coming back asking for a best and final. You need to put your best foot forward from the onset because we may not get that second chance.
Step 5 is the agent writing up that offer and sending it over to the buyer for a review. Now I personally take the time to send a long email detailing every little nuance of the offer. I always just want to ensure that everyone knows what they are signing and what the repercussions are if they were not to go through with it. It’s a contract. It’s a serious thing and in my opinion, it should be handled that way.
Step 6 is the presentation to the seller. In this case we put together an offer package to send over to the seller. I always do a nice cover letter that talks about all the strengths of the offer. I will also point out a negative and do my best to spin it. A great example of this is that maybe a buyer is putting a lower amount down, but they have already been fully committed for their loan. We will let the mortgage broker know about the offer submission so that way they can reach out to the listing agent and talk about all the strengths of the buyer. I also take the time to point out that I am not some new agent that is going to make newbie mistakes. And that I have a team of professionals behind me to help ensure this is a smooth and enjoyable transaction for both the listing agent and the sellers. Agents are not looking for an agent to make their life more difficult. Listing agents want someone they know will act professionally. This is another reason why you do not want a new and inexperienced agent.
Step 7 is getting the response from the seller. Normally I would have us going into the offer acceptance process, but in this market… Most buyers will have to jump back to step 3 and start the process over again. And they will most likely have to do this 3 to 5 times in the process. If the market goes crazy hot again, then this could easily be 10 or more times!
I have noticed that the buyers that take the time to meet in step 1 and get fully committed in step 2 end up securing a house a lot quicker than those that do not.
So the offer got accepted and now it’s time to move on to step 8. I call this the dating phase. This is really when we do the due diligence on one another. If we are doing a home inspection, then this is when it would be done. If you as a buyer are wanting to go downtown to pull the jacket of the property to see about permits being pulled, then this is when it is done. If you have questions about water leaking in the basement, then this is when it is done.
Step 9 is working on your financing. Step 8 and 9 are kind of happening at the same time. This would be the time that you may do some rate and closing cost shopping. But ultimately, you will want to lock the rate in and start the process within a couple days after going under agreement.
Step 10 is when we sign the Purchase and Sale Agreement. If dating is the equivalent of getting the offer signed, then the P&S would be the equivalent to the engagement. This is when things are serious. The only contingency that remains at this point would be the financing contingency… If you have one that is! This is also when the remainder of the deposit is due. And that tends to be a lot more money… Which makes me think of an engagement ring and why I call this the engagement!
Step 11 is the continued work with the mortgage company to get them everything they need. This will include documents like bank statements, W2s and 1099s. But will also include getting a homeowners insurance policy as an example. But it’s rather light lifting until about a week before the closing date.
Step 12 would be calling the utility companies to get your names on the services and let them know when the start dates will be. You do not want to walk into a house with no electricity! It’s a real pain in the back side!
Step 13 is reviewing the final financial numbers and arranging payment of the balance owed. Sometimes a buyer will wire the funds to their closing attorney and other times they will get a cashiers check. That’s 100% up to you, but just know the end can get a little crazy with adjustments.
Step 14 is the final walk through. You will always want to walk through a property before you actually sign on the dotted line. You will want to ensure that a property is being delivered in the way that a seller has promised. You want to ensure that they didn’t remove an appliance that was supposed to be there or leave a bunch of junk in the attic that wasn’t supposed to be there. The final walk through is generally done the evening before or the day of closing.
Step 15 is the closing. We can thank Covid for a more streamlined closing process. A lot of banks will have the buyer electronically sign disclosure documents which just leaves the recorded documents that are in need of a wet signature to be signed. Examples of these documents are like the closing disclosure and the mortgage. The closing should take 30 minutes… Tops.
Step 16: Has nothing to do with you, but that is the time it takes to take the documents you signed and get them recorded with the registry of deeds. Once this is done, then the house is officially yours!
And Step 17 is moving in!
If you have any questions about the home buying process, then let me know. And let me know if you are wanting to see all the Cohasset Homes For Sale. I am here to help whether you are looking to move in the next 9 or 90 days.
All of my contact information is in the description below or you can reach out to me at YouTubeRealEstateAgent.com.
Until next time.