Buying a House in 11 Easy Steps.
1. Hire a Realtor!
If you're on this page, I hope it means you're at least considering asking me to walk alongside you throughout your real estate journey! I'm a full-time realtor in Lexington, Kentucky, with a passion for helping families reach their dreams of home ownership and a deep knowledge of the local and regional markets. I'd love to sit down over coffee or Sorella's gelato to learn more about you so we can find the perfect place that meets your needs. Feel free to email or call/text (859.270.0702) anytime. Whether you choose to hire me or another agent, though, it's super important to find someone you click with (you'll be communicating a LOT) and who is accessible and prompt. In this market, it's crucial to work with someone who will always be ready to move quickly. A couple hours can be the difference between an accepted offer and a missed opportunity.
2. Get preapproved for a mortgage.
After you've found a great agent to represent you, it's time to tackle the equally crucial task of hunting down a fabulous lender to pre-approve you. And let me to emphasize FABULOUS-- mediocre lenders can make your home buying process positively hellish from start to finish. They will miss important deadlines, fail to notify you when underwriters need new information from you, and cause closing delays left and right. It's imperative to only work with the best of the best, and if you'd like a list of lenders who've proven themselves time and time again, shoot me an email and I'll hook you up.
The pre-approval process shouldn't take more than a day and primarily involves a check of your credit score (financing can generally be obtained all the way down to 580) and your debt to income ratio. Your lender should help you understand what you can comfortably spend on a home and also provide you with a detailed breakdown of your loan and all associated closing costs and fees. These numbers vary from one financial institution to the next, so I definitely recommend shopping your loan around to at least two lenders. Once you're happy with the numbers and have received a pre-approval letter, forward it on to me and we'll hurry along to step three...
3. Start looking for the perfect place to live!
Now that you've hired a realtor and are pre-approved for a loan, the real fun begins! Although I probably have a pretty good idea of the house you're hoping to find based on our initial conversation, it'll be helpful for both of us if you'll make a list of 4-5 MUST haves and 4-5 like-to-haves. Must haves are obviously non-negotiable and include things like school districts, number of bedrooms/bathrooms, lot size, and other features it'd be nearly impossible to change. Like-to-haves are amenities like hardwood floors, a fenced-in yard, updated bathrooms, and a Sonic pellet ice maker in the kitchen (which just might be a must, come to think of it). Send that list to me and I'll create a client portal for you that will send you a notification the minute a house that checks off all your boxes hits the market. Houses move *very* quickly these days, and this system is the best way to ensure you'll get the jump on all the other buyers circling Zillow for prey. As soon as you've found a place or three you'd like to explore further, let me know and I'll set up showings right away.
4. Tips for showings.
Rule #1: Keep an open mind! Try to visualize each house for what it could be with a little elbow grease, not what it is at present. Forgive homeowners for pink bathrooms, wood paneling, extensive collections of porcelain dolls, and the dozens of other aesthetic faux pas we'll inevitably encounter. If the place can be "fixed" with a few cans of paint and/or a trip to IKEA, don't rule it out!
Some listings require up to 24 hours notice, so please let me know as SOON as you think you've found a home with potential. I'll meet you at the house (or pick you up, if you'd like) with all kinds of paperwork that will help us understand more about the place than meets the eye-- seller's disclosure forms, neighborhood comps, listing information, etc. Once we're inside, try to keep conversations about anything offer-related to a minimum. Almost everyone has a camera somewhere in the house these days, and it's good practice to assume we're being observed in some capacity. We don't want to inadvertently show our cards and lose leveraging power during negotiations later. Plan on each showing taking 30-40 minutes. If the home is in a desirable area, it's important to schedule something as soon as possible! If you're at work or otherwise unavailable, I'm happy to head over myself and show you the house via FaceTime or by uploading a video walkthrough for you to review at your convenience. (Please forgive my super awkward on-camera voice in advance.)
5. Make an offer.
Yay! All those sleepless nights weighing pros and cons of a dozen different homes finally paid off, and one lone abode has risen from the ashes. There are lots of moving parts on a purchase contract, but the main elements are: the offer price (and your max or walk away price), your earnest money deposit (which shows the seller you're serious about this), your downpayment (which can be as little as $0 for some loan types, contingencies like seller-paid closing costs or home warranties, and the closing day itself (usually 45 or so days from contract acceptance). It's good to go ahead and establish your max price from the beginning in order to avoid getting caught up in the heat of the negotiating process and subsequently having to create a voodoo doll of me or your significant other to punish for your rash decision after the fact. Speaking of negotiations, there's at least a fair chance we'll end up in a multiple offer situation, which is another reason to determine the most you'll pay up front. In those cases, all offering parties are usually asked to re-submit their "highest and best" offer to be considered at a set time in the future. Got a million other questions about making an offer? Totally understandable. Let's meet up and walk through the contract now so you won't have to play catch up when it's time to fill everything out! I'm available around the clock: 859.270.0702.
6. My offer was accepted! Now what?
You bought a house! It's official! Well, almost. ;) The real fun begins now, as we'll set quite a few things in motion that will ultimately lead to the successful closing of your new home. I'll immediately email a copy of the signed contract to your lender so he/she can get started on the loan approval process. Go ahead and gather tax documents from the last two years and pay stubs for proof of income, as you'll have to turn that over to the loan underwriters sooner rather than later. We'll also want to work on scheduling a home inspection right away, so I'll send you a list of excellent inspectors to choose from based on their availability and price. Depending on the size of the house you're buying you should expect to spend around $300-400. I'll also schedule a termite inspection to coincide with the home inspection, which is $45 in Fayette County (up to $100 for surrounding counties). Communication is key from here on out, so expect timely responses and updates from me along the way. I'm excited for you!
7. The home inspection.
Ahhh...the home inspection. This is easily the most anxiety-inducing step of the process for both buyers and sellers, as significant and unforeseen issues uncovered by a thorough inspector run the risk of sending the whole deal south. Fret not, though...that's generally the exception and not the rule. The inspection takes around 4 hours and is a comprehensive evaluation of the structure, roof and systems of the home-- everything from leaky faucets to the age of the furnace. We'll meet the inspector for a walkthrough at the end of his inspection, where he'll detail his discoveries in person before sending you a report replete with descriptions and photos. Please bring a check to cover his fee for a job well done.
Once we receive the report, we'll meet to discuss the things we'd like to ask the sellers to address (if applicable). It's important to do this as soon as possible, as we have a limited window for submitting repairs (usually 14 days from contract acceptance). We aren't permitted to ask for repairs previously detailed on the seller's disclosure form, ones that bring an older house up to code, or cosmetic fixes that aren't related to the home's operating condition. I always recommend saving the inspection repair form for the BIG stuff-- electrical, structural, plumbing, etc. Loading it up with a bunch of nit-picky items you could remedy with $20 and a trip to Lowe's will likely overwhelm sellers and make them less willing to tackle more significant issues. Once we've sent the form over, the seller has 4 days to gather quotes and determine what they're willing to do. If we can't agree on those terms, you are free to walk away from the transaction and get your earnest money deposit back. If both parties are satisfied, we move forward and they start fixing. Simple as that!
8. The appraisal.
Congrats! If we've gotten this far, it means we've successfully negotiated repairs and are ready for the next step. Some lenders insist on ordering an appraisal right off the bat, but I always ask them to hold off until we've worked our way through the inspection process so you don't end up paying to find out the value of a house you no longer want. You'll need to pay for the appraisal when it happens, and it generally costs somewhere in the neighborhood of $350-500. A few days to a week after the appraiser has been to the home, he/she will send a report to your lender to be forwarded on to you. If the appraised value is equal to or higher than the list price, we're good to go. If it's less...we've got a bit of a hill to climb. The bank won't fund your loan if the house isn't worth what you're paying for it, so our first plan of action will be to revise our offer to reflected the appraised value. The seller can either accept or reject that offer. If they reject, you're left with two options: walk away from the deal and get your earnest money back, or come up with the difference. For example, if the sale price is $300k, the house appraises for $275k, and the seller won't accept less than $280k, you can either void the contract or bring an additional $5k to the closing table. Make sense? Feel free to email me with questions.
9. Hurry up and wait.
Once we've jumped through the inspection and appraisal hoops, we'll hopefully have some time to catch our breath and tie up loose ends while the bank is reviewing the loan and the sellers are finishing up the repairs we requested. We'll have a pretty good idea when we'll be able to close at this point, so now is a good time to get movers on the phone, contact the utility companies that provide service to the house to get everything switched over into your name (I'll give you a list), and make other arrangements for painters/cleaning crews/etc. One word for the wise: while it'll be very tempting to go ahead and spring for that Pottery Barn bed to replace the one you've had since high school, PLEASE don't make any big purchases prior to closing day! Lenders will almost always run one more credit and income check right before final approval, and any financial boat-rocking could very easily jeopardize the whole kit and caboodle. Treat yo self AFTER the ink dries.
10. The final week and final walkthrough.
No sooner than 72 hours from our scheduled closing day, you'll get a final closing disclosure from your lender to review and approve. These numbers should pretty closely align with the estimate you first received at the time of pre-approval. If they don't and/or there are other discrepancies, we'll have time to get all that sorted during the three-day buffer.
The night before (or afternoon of) closing day, we'll head over to your new digs with repair request form in hand to make sure everything is up to snuff and the sellers have addressed everything they said they would. If that's the case-- and it almost always is --you'll sign the form and we'll celebrate completing the last official step before facing the mountain of paperwork sitting on the closing attorney's conference table. Go home and pack those last few boxes (I'm happy to help with that, btw!), get some sleep, and stretch your hands for signing because...
11. Closing day!
We made it! Yay! You're buying a house TODAY! Dress however you'd like, bring your driver's license and a check to cover applicable closing costs (or cashier's check if the closing attorney requires), and plan on sticking around for an hour or so while you get intimately acquainted with your seldom-written initials. I'll be there to cheer you on and give you a gift to commemorate the end of our long and enjoyable journey together, one that has led us to the perfect place to call YOUR home! Pat yourself on the back and don't be a stranger-- I can't wait to swing by and see what you've done with the place. I'm excited for you!