A Home Buyers Step by Step Guide

Eliza Jessee, REALTOR

1. Get pre-approval for a mortgage loan from a qualified loan officer or mortgage broker. Documents needed usually include employment and income verification, bank statements, debt information, credit history and identification. Your pre-approval letter will tell you the maximum purchase price your lender will allow. If an offer is made above this amount, you must make up the difference out-of-pocket at closing. It is important not to take out any big loans or lines of credit that will affect your credit score between now and when you close on your home. I have recommendations for a fantastic loan officer if you don’t have one chosen.
2. Sign Buyer-Broker Agreement with your agent. This signed agreement allows your agent to fill out forms approved by the state of Utah and the National Association of Realtors to make offers and negotiations with your approval, as well as show homes. The Buyer-Broker agreement spells out an agent’s fiduciary duties to their buyer, such as confidentiality, loyalty, obedience, disclosure, accountability for funds, and reasonable care and diligence.
3. Go house hunting with your agent. This is the fun part! I get to take you to see homes! Realtors can create a link for you to see homes listed that meet your criteria for location, price, square footage, and lot size, and then schedule showings. Pay attention to things you like and don’t like about the home, and also about the neighborhood. Keep in mind that a more detailed home inspection will be done during the due diligence process, only after an offer has been made and accepted.
4. Make an offer and negotiate with the seller. Once you’ve decided on a home, your agent will work with you to create an offer based on your budget and comparable sales data for similar homes nearby. This offer could be below, at, or above asking price depending on the market! If the seller presents a counteroffer, I will help you understand your options and present possible solutions during negotiations. Usually an earnest money deposit is required at this time. Once an agreement is reached and earnest money is received, you are now “under contract.”
5. Title insurance and title search. A search of title and a preliminary title report is completed by the title company to make sure there are no liens or other encumbrances placed on the property. I can contact the title company of your choosing to complete this portion of the transaction or use one that my brokerage has used often. The title company will also be involved during settlement and closing in issuing the lender’s title insurance, which is part of closing costs paid for by the buyer. The seller will also get title insurance issued for the buyer, which is part of the seller’s closing costs. This protects you from someone asserting a claim on your home from the time before you purchase it. In Utah, the buyer and seller can use different title companies. This is called a “split closing.”
6. Complete necessary inspections of the home to give you piece of mind. I want you to feel confident in the purchase of your home and not have surprise home repairs later! This step is referred to as the “due diligence” period and has a deadline in your contract. Home inspection cost is typically between $300-$500 but can be higher depending on what tests are done. I also provide a “Due Diligence Checklist” to help you know what to look for during this period. Your earnest money deposit is usually refundable if the home inspection or other due diligence processes cause you to change your mind about purchasing the home. I have recommendations for home inspectors if you need help finding one.
7. Button up your loan. You will need to choose which mortgage option you want from the lender who pre approved you. They can make sure you get a loan that meets your needs and discuss all options with you. It is important to work out financial discrepancies with your lender as they pop up and not wait to resolve them.
8. The home appraisal is ordered by your lender. The appraiser is chosen by the lender to ensure impartiality in determining the home’s value. The reason for the appraisal is to determine whether or not the home is worth the loan amount. Lenders will only allow you to pay up to or less than the amount the home appraises for. If the home appraises for less than the contract price, the difference must be made up out-of-pocket at closing or the purchase price must be renegotiated.
9. Settlement and Closing. Settlement is the “signing party” where the buyer(s) sign loan documents and the seller signs the deed. Closing happens when funding has occurred and the deed has been recorded. You finally get the keys to your property! Congratulations!