Home Buying Process – Part I of III

Getting Ready to Look

This is Part I of three parts listing the broad steps in the home buying process.  The steps listed are generally in order of occurrence. Although, some will occur at the same time or cross other steps. I have put “Select a real estate agent” first because an agent can help at each step. However, some buyers prefer to perform a number of the steps alone or on the internet. And, up until one makes an offer, that will work.

Select a real estate agent – In Texas, all real estate agents work for the seller until the buyer signs an agreement with an agent to work for you as the buyer. And, in almost all cases, the seller pays the entire cost of the commission. So, as soon as you know you want to buy a home, it makes sense to sign a buyer’s agent agreement. It gives you a free consultant and someone representing your interests. Either party can terminate the Buyer’s Representation Agreement at any time.

Making sure

In selecting an agent, ask your friends if they have someone they would recommend. Most agents will focus on a particular part of town or niche (e.g., townhomes for young professionals.) Most will also have training and designations in particular subjects. And, they would be willing to meet with you for an interview. Based on the recommendations of friends, location specialties, niches, training and personality, you can select an agent.

Obtain Loan Pre-approval – There are two reasons to make this early in the process. First, it is beneficial to have the bank’s view of your ability to pay for a particular amount of loan and to obtain their input on size of down payment (which will affect rates.) They can also offer different types of loans and payment plans. Secondly, many sellers will want a copy of the pre-approval as part of the offer. The pre-approval is a review of your credit and ability to pay. The third leg (collateral) of the loan process will not start until you have a contract on a home.

Select a neighborhood or neighborhoods – Broadly, after selecting neighborhoods based on price ranges, most people are concerned with schools; proximity to work, shopping and recreation; safety; and feel (e.g., homes well maintained, new homes, old trees, etc.) More recently, with changes in flood insurance rules, you should consider whether the neighborhood is in or out of the flood plain. Your insurance agent can determine the flood plain status.

Select home preferences – Price, size, yard, number of bedrooms and bathrooms, having a fireplace, size of garage, pool, stairs, etc. should be considered when thinking about the home. These considerations can be broken into needs versus wants. And, I prefer to weight the criteria based on importance. However, most people do not go into that much detail.

Select properties to view – HAR.com has the most up to date information on homes listed for sale in and around Houston. And, you or your Realtor can set up automatic searches to notify you when a property fitting your needs and wants is listed. In the current market, it is important to react quickly as many homes are sold in a few days.

At this point, you are ready to start receiving information about homes and selecting those you want to see. Good luck.