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STEP BY STEP WALKTHROUGH
First-Time Home Buying Process
The home buying process can be intimidating for first time Austin home buyers. If you’re feeling anxious, it may help to know that around six million homes are purchased in the United States each year, and many of them are bought by first-time buyers just like you. In some ways, buying your first home can be a lot like having your first kid. The more you know going into it the better.
With that in mind, it’s important to have a basic understanding of all the relevant steps in the home buying process before diving in. The last thing you want to do is go into the home buying process with no preparation at all. Doing so can lead to you getting held up at a particular stage of the buying process or losing out on a chance at your ideal home. To help you avoid as many risks as possible, our team has compiled this comprehensive, step-by-step guide that home buyers can use to ensure that things are handled the right way. Let’s cover all the basic steps you’ll navigate while buying your first home in Austin, TX.
Narrow Your Search Based on Price
Before you begin the home buying process, you are encouraged to speak with a lender who will help facilitate and determine how much you can afford in a home and what type of loan you will be using. The lender will provide you with a pre-approval letter for the amount you require. This will be vital when you submit an offer.
Choose an Agent
Once you have decided on the price range and the features you are interested in, your next step will be to decide whether you will search on your own or use the services of a Real Estate Agent. Real estate agents have access to all of the homes on the market. They have inside knowledge of a variety of homes that have either just been listed or are about to hit the market. They will research property listings for potential matches to your criteria and schedule showings for you at a convenient time. You can work with an agent under a Buyer Representation agreement and receive advice and opinions, usually at no cost to the buyer. Remember, there are no out-of-pocket fees that you pay to the buyer’s agent. These costs are incurred by the seller.
The licensed agents at Rock Properties understand the home buying process and are committed to keeping your best interests at heart. Rock properties has assisted home buyers in the Austin & Round Rock area for over 15 years and is happy to share our experience to assist you in finding the best home to meet your goals and wishes. We will provide guidance to you during the contract negotiation phase of the selling process. We will also coordinate and schedule the home inspection, appraisal, and closing for you, as well as provide the documentation needed to secure your closing.
Search For Your Home
Once you have received your pre-approval from your lender, it’s time to begin your home buying search. Your ROCK Properties Realty agent will help you narrow down your criteria; including which neighborhoods you want to target, school districts, size of home, home features, etc. We will use the Austin Multiple Listing Service to create a customized and real-time search of active listings to begin viewing properties you’re interested in purchasing.
Make an Offer
Once you find the right property, your ROCK Properties Realty agent will review market conditions and determine the best way to approach making an offer. This can mean anything from low-balling to offering over the asking price in a multiple offer situation. The negotiations may go back and forth a few times before finalizing terms. This step is a bit more nuanced and involves several steps of its own, so we’ll cover it in more depth later.
After both parties have accepted the terms, you’ll go “under contract.” At this time you’ll provide an “Earnest Money” check to the title company to open escrow and provide an “option check” to the seller for an option/inspection period. You have 3 calendar days to deliver “Earnest Money” and 3 calendar days to deliver “Option Money”. Deliver documents requested by the lender within 24-48 hours.
Option & Inspection
Now begins the negotiated option period, usually about 7 days but can range from 5-10 days. Inspections are performed to get an accurate picture of the material aspects of the property, including any minor and/or major defects that could affect your decision to purchase the property. It is important to note that negotiations will also take place during the option period based on the results of the inspections.
After the inspections are complete, and any changes or negotiations made to the contract have been agreed upon by both parties, your lender will order an appraisal on the property. Please keep in mind that it is imperative that you provide documents to the lender as soon as possible when requested.
On the day of closing, you will need to bring a cashier’s check for your down payment and closing costs along with a photo ID. You will receive keys once all docs are signed and your lender releases funds to the Seller. Once complete, you should have a sore hand and a smile on your face!
Things a Home Buyer Shouldn’t Do
The home buying process can be sensitive to multiple factors, some of which are in the control of the buyer. Avoid the following circumstances to prevent any unnecessary delays when buying your home. These events could possibly disqualify you from obtaining a home mortgage loan.
⦁ Don’t change jobs
⦁ Don’t hurt your credit by missing payments
⦁ Don’t become unemployed
⦁ Don’t buy a new car or other high dollar items
⦁ Don’t apply for a credit card
⦁ Don’t make high dollar purchases on a credit card
⦁ Don’t decrease your savings account
⦁ Don’t cosign for anyone
MOVING THROUGH THE PROCESS
How to Make an Offer on a House
Making an offer on a house is one of the most monumental steps in the home buying process. Just to get to this point, you’ve had to do a lot of work: getting to know your local market, making a list of sales similar to the house you want to buy, etc. Now, it’s time to decide how much to offer on a house. Here are the general steps involved in making an offer on a house:
- You pick a starting price and make a written offer.
- The current owner either accepts, counters or declines.
- If accepted, you’re under contract.
- If the seller makes a counteroffer, you either accept it or make a new offer. This can go back and forth.
- If the offer is refused, you can make a new offer or begin a new round of house hunting.
Costs of Buying a Home
1% of the sales price is customary, but earnest money is a negotiable term. The earnest money is credited to the Buyer at closing as a portion of the down payment or closing costs. Earnest money is refundable if the buyer backs out during the option period.
The amount is negotiable, but generally ranges from $100-500. The option period gives you time to have the property inspected and negotiate any repairs/credits. It also gives you the right to terminate the contract and receive your earnest money back.
During the option period it is recommended that you hire an inspector to look at the property. The majority of the time on a home under 3,000 square feet, an inspection will run around $350-$500. You should also have a pest/termite inspection completed, usually around $100.
An appraisal of the property typically costs between $450 – $550. You will need to pay your lender/appraiser for this prior to the completion of the appraisal.
If the Seller does not have a usable survey, the survey is typically purchased by the Buyer. A survey will typically cost around $500-$700.
Closing costs consist of mostly loan items, title fees, and sometimes taxes. The total amount generally falls between 2-3% of the purchase price. These costs will be paid at closing along with your down payment.