Your Guide to Unlocking the Steps to Buying a Home
Whether it is your first time buying a home or you have purchased multiple
properties, the home buying process can seem daunting and stressful. Let
me walk you through the steps and provide the resources you need. This timeline is not exhaustive, but is a good overivew of the home buying process.
Looking for information on school districts, crime statistics, area maps, and other buyer resources? Start here.
Home Buying Timeline
Let me be your guide every step of the way
Research Lenders and Interest Rates
The home buying process starts with finding a reputable lender. Look for someone who responds timely to your questions and has a track record of getting buyers through the closing. Your lender is one of the people you will work closest with through the process. This is the person who is on the front lines of ensuring you qualify for your mortgage and has the funding ready to go for closing. The lender will likely arrange the appraisal for the home and should be in continual communication with the buyer and the real estate agent. Familiarize yourself with current interest rates to ensure the lender is giving you a competitive rate. Start here for a lender I have worked with on numerous transactions who is excellent, but it is always worth the effort to at least talk to 2-3 lenders.
Get a Pre-Approval Letter from Your Lender
Don't start shopping until you know what you can afford. A pre-approval letter from your lender will provide a preliminary maximum price that you will qualify for. Especially in a competitive housing market, sellers won't even entertain an offer without either proof of funds if using cash or a pre-approval letter if financing. This letter ensures you aren't setting yourself up for disappointment by looking at homes higher priced than what you qualify for and that you are ready to put in an offer when you find your dream home.
Look for Homes with Your Real Estate (Buyers) Agent
Once you know how much house you can afford, prioritize your criteria in a new home. Use this buyers wish list sheet for help. If possible, I always recommend to prospective buyers, especially those out of the area, to start to familiarize yourself with the types of homes in your price range weeks and even months ahead of time. In a strong seller's market, your dream home could be on the market for only 1-2 days. Being well-educated ahead of time sets the expectations already for what you will see in prospective homes. Want to get set up on a detailed property search for any location around metro Colorado Springs or metro Denver? Start here and let me help! Learn more here why you specifically want a buyer's agent instead of calling up the listing agent or working by yourself.
Found Your Home? Time to Put in An Offer
Your real estate agent will be able to provide a market analysis to ensure you are submitting a competitive offer. Depending on the home and many other variables, the offer could be below, at, or above asking price. In a highly competitive market or price range where multiple offers are common, escalation clauses and other tactics may be used to make your offer as competitive as possible. Remember that your offer is a contract. Consider consulting a real estate attorney if needed. Negotiations and counteroffers between the buyer's agent and seller's agent are common.
House Under Contract - Time for Inspections
Once the home is under contract, it is not time to start dreaming of where the furniture goes. The inspection time frame (typically 7-10 days) is when the buyer does any due diligence to ensure everything meets the buyer's needs with no surprises. Inspection costs are the responsibility of the buyer, but this is not a time to cut corners. Here is a list of potential inspections to consider and costs for typical items. At a minimum, buyers should consider a general home inspection, sewer line scope (or well /septic inspection), radon test, and a structural engineering analysis if there are any signs of structural issues. Inspection issues are by far the main reason that homes comes back on the market.
Special Inspection Items to Consider Along Colorado's Front Range
This list is not exhaustive, but meant to highlight some special items to consider when buying a home here that can be easily overlooked.
1. Structural stability - The Front Range is home to expansive soils. For buyers in Colorado Springs, here is a great resource to pinpoint down to an address a variety of geologic and natural hazard threats.
2. Radon - Radon is common along the Front Range.
3. Sewer Line Scope - With the expansive soils, sewer lines are especially susceptible to breaking and heaving. Consider a sewer scope to prevent repairs that can exceed $10,000.
4. Methamphetamine - Meth houses that have been remediated must be disclosed and are certified safe. However, meth houses have few tell-tale signs and if found can be extremely costly as remediation can require removing everything down to the studs.
5. Grow houses - Grow houses have become much more common in Colorado. Often much of the electrical work, especially in basements, will have been illegally reconfigured to supply the needs for growing marijuana.
Appraisal / Loan Funding / Prepare to Move In
Typically after resolution on inspection items, the lender will order an appraisal on the property. The appraisal will determine the maximum amount the lender will loan on the property, so especially in hot markets where homes sell for above asking price, the appraisal could mean anything from termination of the contract to the buyers needing to bring more money to the closing than anticipated. The lender will also require tax and other pertinent documents in order to get final loan approval through underwriting. Prepare to move in by getting utility services set up at your new address.
There are a lot of people, variables, time, and stress, to get to the closing. A final walkthrough of the home is always a good idea to make sure inspection items and the house are in the promised condition. Depending on the contract between buyer's and seller's, occupancy for the buyers may or may not occur immediately after closing.