Sprinting, is more like it! As 2024 begins to unfold, it seems that the minor adjustment in interest rates in favor of a buyer has spurred an influx in buyers emerging on to the market who may have been on the fence previously. January has seen multiple offers and only days to get a house sold, once again. With so many new, first time buyers preparing to “jump in”, I thought it might be helpful to explain the overall process of what to expect.
1. Contact a reputable, knowledgeable, experienced real estate agent (ahem) to get the process started. The initial call should take just about 20-30 minutes as you explain what you are looking for and why, what your timing needs are (do you need to move immediately, or is this a plan to execute a year from now?), how knowledgeable you are about the areas you are hoping to live in, and of course, price point. From there, your real estate agent will have some howework for you (see #2 below), and then will likely set up a time to meet in person and review how you might all work together.
2. If you are financing a loan, you will need to get in touch with a loan officer. If you don’t already have one you know and trust, the agent you engage with will likely have a few referrals for you so that you can explore your best options. Get pre-approved with the loan officer you select (after having spoken with a few to get a feel for who you may work best with, who offers the best service, and of course, who has the best loan program for you). This is extremely important to do early on and BEFORE you request to go look at property with your agent. There is nothing worse than falling in love with a property that may not be financially in reach.
3. Sign a Buyer Representation Agreement with your real estate agent. This is an agreement that sets out a timeline during which you will work exclusively with one another. It will outline expectations regarding commissions to be paid to the agent at close of escrow, what their duties are to you, and more. Traditionally, the commissions are paid by the seller, however in some cases, you may find that there is no commission offered by the selling side and you will want to have that conversation and be prepared for that possibility in the event that the commission will need to be paid by you, the buyers. There are several ways to facilitate this, be it adding to the closing costs, financing it, etc. Each situation is unique, and you want to have an open line of communication with your agent about this possibility so that you have a solution before it becomes a challenge.
4. Get out there and tour properties with your agent. It’s fine to go to open houses also, if you are just looking casually. However, if you are seriously considering a home, you should always have your agent with you as they should have a somewhat trained eye to look for and point out any deficiencies in a property to be aware of prior to writing an offer.
5. Once you have selected a property, you will write an offer and, hopefully, have it accepted. Be prepared for competition out there. Your agent will give you advice about how to best position yourself and this is where their experience and connections in the industry will really come in to play for you.
6. Once your offer is accepted, you will be expected to deposit “earnest money” in to escrow, which is usually about 1-3% of the purchase price and is part of your total down payment. This money sits safely in escrow while you do your due diligence, described in #7 below.
7. You will have anywhere from 10-17 days (on average, however this time frame is negotiable) to complete your due diligence, including investigation of the property (this is your chance to learn everything you can about the physical aspects of the property to make sure it’s a project you are comfortable taking on, for example), and get the loan and appraisal completed and approved (if applicable). Your agent should have referrals for you for the various tradespeople you may want to consult with. If there are deficiencies in the property, unless negotiated that you will take the property “as-is”, you will have an opportunity to request that the seller complete any necessary repairs or credit you in lieu of completing these repairs. This is referred to as the “request for repair” process. The seller is not obligated to accept and if you are not satisfied with their response, you, the buyer, typically may choose to cancel (and get your earnest money back) or accept their response and move on to complete the purchase.
8. Once this 10-17 days is up, you will do what is referred to as “removing your contingencies”. This contingency removal is a pivotal point in your purchase process as you basically commit yourself to buying the property. Once you sign off on your contingencies, your earnest money becomes at risk of being retained by the seller if you should cancel for ANY reason. Be sure and consult with your lender before doing this to be sure there is no risk of your loan not funding.
9. You will conduct a final walkthrough with your agent anytime within 5 days prior to close of escrow to ensure the condition of the property is in the same or better condition as it was when you opened escrow. This is also your opportunity to verify any repairs that were completed/requested during the investigation process.
10. Signing your loan documents (if applicable) will occur anywhere from a week to a day before close of escrow. At this time, you will be notified of how much money you should be prepared to wire in for closing (the remainder of your down payment plus your closing costs).
11. CONGRATULATIONS! Close of escrow occurs once the loan has funded and the deed has been recorded. This is an exciting day! Your agent will likely meet you and get you your keys that same day. This is time to open champagne and celebrate your homeownership!
I work with both buyers and sellers all over San Diego. I LOVE to educate my clients and walk them through their unique experience step by step. If you are considering buying or selling, please give me a call! I’d love to help you, too!