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Home Buying Process

Buying a home is exciting, but also quite complicated. You have to know where you want to move, and that means understanding pricing trends, crime statistics, and school ratings. Even if you know where you want to live, you have to learn the basics of home construction so you can be sure you buy a well-built house. Also, you will want to learn about secured debts so you can secure financing at a decent interest rate and understand the terms of your mortgage. This section includes in-depth information and helpful tips on each phase of the home-purchasing process, from researching communities to making an offer and closing on your new home.

Searching for a Home

Choosing the right home (or homes, since you'll probably make more than one offer) is no small task and requires a substantial investment of time and energy. Your real estate agent will help you search for listings if you're also selling a home, but you also may hire an agent specifically for the buying process. A good place to start is an honest assessment of what you and your family can reasonably afford. Then, you'll want to investigate the neighborhoods in which you're interested by just driving, or even walking, around (in addition to researching schools, average home prices, crime rates, etc.).

Once you have set some general parameters, you can begin looking for listings in your area. Here are several ways to learn about listings in your target neighborhood:

  • Drive around and look for homes with "For Sale" signs; open houses tend to occur on weekends, so plan accordingly
  • Word of mouth
  • Classified ads in your local newspaper
  • Online (for example, and
  • Real estate companies (either visit their offices or check online)

Evaluating The Condition of a Home

Once you have found one or more homes that meet your criteria, it's time to start checking some off of the list by evaluating their condition, the cost of any repairs or upgrades, and the cost of ownership in general. Certain issues, such as bad plumbing or a cracked foundation, could be deal-breakers; but for this with the right know-how or a willingness to spend money, major fixes may not be a reason for elimination. Generally, you want to look at the home's structural integrity, whether there is water damage or leaks, the condition of the plumbing and electrical systems, the age and condition of the roof, and so on.

Making an Offer

Once you've settled on a home, you can make an initial offer. Keep in mind that you likely will be outbid if you underbid for a home; but you also don't want to bid too high just in hopes of getting the offer. Although you generally can out of a contract for even minor defects or blemishes in the home (this would considered a "contingency"), an accepted offer constitutes a contract to buy. Here are some general considerations to make before making an offer:

  • How much can you afford?
  • What is the seller's price and how does it compare to similar homes in the area?
  • What is the overall condition of the real estate market in your region?
  • What is the seller's position? (if they need to sell quickly, for instance, then a pre-approved loan may prompt them to accept your offer)
  • What conditions should there be? (contingencies, etc.)

Closing the Purchase

In all likelihood, the seller will come back with a counter-offer, which may include a higher price, certain contingencies, or other conditions. Once both parties are satisfied with an offer and it is accepted, the buyer will initiate the inspection process. If everything checks out, then the deal goes into escrow -- this means a title company (or simply "escrow company") will hold the title of the home and manage the funds for the house until the sale is official closed.

The closure date is when the property and funds actually are exchanged, when the house official becomes yours (even if the bank technically holds the title). But before closing, while in escrow, the mortgage will be finalized through an inspection, title report, obtaining title insurance, obtaining homeowner's insurance, and then the final walkthrough.

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