Home buying can be stressful. After all buying a home is one of the biggest purchases you can make! Join ABQExpert for a lightly comedic look at the home buying process.
So, you are ready to buy a home in Albuquerque! Maybe you’ve lived here all your life and are ready to buy your first home or maybe you just moved here to finally get your hands on the best chiles in the world. Either way, I’m here to break down the home-buying process for you.
There are basically ten key steps. The first three can be done in any sequence, but I highly recommend the following order:
1. Get Pre-Qualified/Pre-Approved
Why is this so important? Well, if you can’t get pre-qualified you are unlikely to be able to get a loan for your home. Most buyers go the mortgage route for buying a house since cash on hand in the quantity needed to buy a home is rare. Unless you’re a millionaire, a high school chemistry teacher, or looking for a real fixer upper, you’re likely going to be working with a lender. How do I get pre-qualified? Well, find a lender you want to work with. This could be your bank or credit union or a trusted local mortgage company. You can also go online to a number of organizations who will do this with you and connect you to a lender, but just make sure you do your research.
2. Find a REALTOR
Why can’t I just do this on my own? Well, you can, but it’ll likely be a headache. The good news for you? Your REALTOR don’t cost a thing! The selling side actually pays the buyer broker commission. This is accounted for through the listing price of the house. So, going without a professional representing you won’t make it any cheaper for you. This means, you don’t have to pay for them AND you get someone who represents YOUR interest. As a buyer, when you are looking for a real estate professional you should do your research. Ask friends and family for referrals. Go online and search. There are thousands of agents in your area, so there is one out there for you that you’ll want to work with. Someone who meets your needs, is a great negotiator, and knows the city.
3. Search Online
If you’re a human living in the first half of the 21st century you’ve very likely been looking at house porn on your phone through one of the major players, Zillow, Trulia, Realtor, Redfin, or the lesser known Bluefin. Okay, not the last one, but you get my point. There are a TON of resources at your disposal as a consumer to give you an idea of what houses are in your city and how much they cost. Now, if you have already found your agent and you aren’t doing this step first, they’ll likely hook you up with your own portal tied to the MLS so you are notified as soon as something goes live or into pending. They’ll also tailor your search to meet your needs and do the hard work for you.
4. Go House Hunting
Yay! You found some houses you want to see. Now it’s time to play out your HGTV fantasies and look at these homes in person. Find a house you love? Tell your agent, and they will get you in the door. Now, during our global pandemic things have changed some. Some sellers are also requiring a pre-qualification letter or pre-approval letter before making the appointment so it is crucial you have those first steps sorted out. Some buyers are even going through virtual house hunting sessions with their agents to get a feel of the property to limit the amount they see in person. This step can be short–maybe you find the one within the first few visits or it can be long–maybe you don’t fall in love until you see dozens of properties.
5. Make an Offer
You fell in love with a home so now you make an offer. Your agent will sit down with or talk over the phone or virtually to go through what you want to offer. This all changes depending on the market, how long the home has been out there, if there are obvious repairs, and so on. Some buyers are having to enter into a multiple offer situation where they have to fine tune what they offer (maybe a higher price or tighter closing) or some are buying a home that hasn’t had any offers and is overpriced, so they offer something lower or with more things paid by the seller like inspections. Either way, your agent will walk you through things and get your offer to the selling side. This offer is a contract so if the seller accepts and signs then, hurray, you just started the official home buying process. You may enter into rounds of counter offers and negotiations, but at the end of the day when the time has come your offer is accepted and you are under contract.
6. Start The Escrow Process
Escrow? What the heck is Escrow? Escrow is the title account opened to disperse funds during the transaction. The first disbursement comes in the form of Earnest money. The Escrow account is opened with a third party title company. It is the job of the title company to perform a title search on the home you are buying (this ensures there are no active liens like unpaid property taxes, mortgage payments, contractor dues, and so on). They conduct a survey–not quite like Family Feud–this survey basically is done to make sure your home is where it says it is and that there are no encroachments that are unknown The title company also prepares everything for closing day and works alongside your lender to prepare statements for closing costs and documents for transferring everything into your name.
7. Conduct Inspections
Now it’s time to conduct home inspections! That’s right, buckle-up you’re an almost homeowner so you have to inspect your home–okay I’m kidding you won’t be conducting the inspections an independent third party company will. Typically, the buyer chooses the inspection company or companies depending on how many inspections you want. As a real estate professional I recommend getting a full home inspection, sewer inspection, and termite and dry rot inspection. The first is critical to know if there are any major defects. The second, the sewer line inspection helps to see if there are no blockages in your sewer line (such as mega tree roots or you know an underground colony of lizard people). There are a number of inspections you can choose from and depending on the condition of the home and your own worries your number of inspections can change. If you are happy with the inspections and don’t need anything repaired then you can move forward with no negotiating repairs if you are unhappy, you have two choices: you can walk away (as long as you have an inspection contingency in place) or you can negotiate repairs with the sellers. This can go anywhere from asking them to fix certain things before you move in, reduce the price, or credit you a certain amount at closing.
8. Complete Appraisal
The appraisal is one of the last hurdles to go through, and potentially negotiate depending on the outcome, before closing on your future home. An appraisal is when another third party, the appraiser, comes in and appraises the value of the home. They are typically selected by the buyer’s lender and paid for by the buyer as part of the lender fees. Each appraiser’s technique is different and obviously things have changed some since COVID-19 has happened, however the end result remains the same. The appraiser gives their professional opinion of the home’s assessed value. This value is given to the lender and buyer side. If it comes in at list price or higher than everyone is in the clear. If it comes in lower, then the lender will either want the price lowered or for someone (buyer or seller) to pay the remainder. When the value comes in lower this is where more negotiating happens and in some instances the deal falls through if an agreement can’t be made.
It’s closing day, almost time for you to move into your brand-new home. Alright, closing day consists of lots of signing and reading through paper work as everything is transferred from the sellers name into yours. This is also the time when you are basically authorizing everything to fund. Unless you are buying everything with cash then there is still one step until the house is officially yours and that is for things to fund and record.
10. Fund and Record
Funding happens when your lender wires funds to the title company who then sends things to the seller side–thus officially paying for your home. Recording happens when all the official documentation is sent to the county assessor’s office and everything has recorded in your name. After that is all completed the home is officially yours.
Buying a home is exciting and a dream sought out by many. At times, it can feel quite overwhelming too. That’s why it’s important to find the right agent to be by your side, walk you through everything, and set most of these steps up.
Looking to buy in the greater Albuquerque are? Reach out to me today and let’s get started on writing the next chapter of your home ownership story!
Elizabeth Benedict is an Associate Broker and REALTOR® at ERA Sellers and Buyers Real Estate in Albuquerque, New Mexico. She holds a Masters in Literature from the University of New Mexico. When she is not helping her community buy and sell houses she is usually writing.