Steps in the home buying process

Just like most things in life buying a home has a process and steps you should take when buying a home. Although some of the steps can be skipped while buying a home the order in which they are done should usually be followed. Of course there is a little leeway in the process and some of the steps don’t apply to everyone but the basic idea is the same in all deals.

Danny Skelly


Orson Hill Realty

What is the first step in buying a home?

 The old chicken or the egg. What comes first? Should a buyer be pre-approved from a lender or start looking at homes? Most real estate agents will tell you that you need to be pre-approved before even looking at homes. A buyer will need a pre-approval prior to making an offer but it isn’t always necessary to prior to start looking for homes. Some buyers do know their budget and their ability to qualify for a mortgage. These buyers are able to search for homes and preview homes prior to getting qualified first. Again buyers should keep in mind that no matter what they will still need to be qualified for a mortgage prior to submitting an offer. Since the market here moves so fast it is always a good idea to have that pre-qual letter in your pocket just in case you come across your dream home and don’t want to miss it! 
Getting pre-qualified is very easy and painless. All you need to do is call a lender (here in Colorado most real estate agents would recommend using a local lender because it really does matter if the lender understands mountain properties). The lender can usually get enough info from a buyer in about 10 minutes. They ask you how much you make, about how much your debt is and how much you pay a month in expenses. Then they run your credit and bam! you get a letter on the lender letter head telling you how much cash they will give you. The lender letter is not a guarantee you will get the mortgage but it means if all the info you gave them is true you will most likely get the mortgage. The lender will also tell you about what your rates will be and how much the you will need as a down payment. 

The reason this is a good idea is that a buyer will know how much home they can afford. There really isn’t any benefit looking at homes you won’t be able to buy. That is wasting your time and the real estate agent’s time. There are times buyers are are even surprised that they might even qualify for more than they think.

Now That I Have My Lender Letter in Hand What’s Next?

Now that the buyer has talked to their lender the fun part starts. It is time to sign up on a local real estate agents website to get property alerts. DO NOT USE ZILLOW OR ANY NATIONAL WEBSITES! USEReal Estate Agent Danny SkellyA LOCAL AGENT SITE! Sorry that was all caps but it is very important that the information you get is accurate and those websites have out of date and bad information. Now that you are signed up on a local website you will begin to get alerts. All buyers that have been looking for homes for sale in Colorado knows the inventory is very tight and homes move very fast. Depending on the pricepoint homes go very fast. The lower the price, the faster a buyer needs to act. In some areas and some prices a buyer needs to see the home within a day or two or they will miss it. For example a home in good condition priced under $400,000 in Evergreen, CO will be gone in 2 days. That is why the information you get needs to be fast and accurate. 
So the buyer has received the listing alert and they and they absolutely love the home. Now all you do is call up the best real real estate in Colorado, Danny Skelly, and he sets up a showing. 

The Home is Exactly What You Are Looking For and Fits Every Item on The Wish List – Now What?

At this point the buyer has their lender pre-qual letter in hand and the urge to buy their dream home. Now the real estate agent determines if the dream home you found is priced right or priced too high. The agent writes up an offer and you submit it. At that point the seller either accepts, rejects or counters your offer. There is a lot of back and forth between the agents, they try to convince the other agent that their offer and price is right. A lot goes on behind the scenes at this point that the buyer and seller usually even know about. It is how the sausage is made. Once all the terms are agreed on it is time for the next step.

Yay!!! We are Under Contract!!! It’s Over Right?

No it is just beginning. The buyer now needs to set up inspections and everything else. The buyer needs to get quotes on homeowners insurance and get proof of all the information they provided to the lender over the phone during the pre-qualification process. At this point the buyer is hiring an inspector and the lender is ordering the appraisal. The home inspector will look at the house. Their job is to find symptoms of an underlying problem. At that point they should recommend a professional to further access the problem. At that point the buyer makes their inspection objections and that is where requests are made to the seller for repairs. This is another time to sit at the negotiating table. When the objection is made once again the seller can either accept, reject or counter the objection. If buyer and seller agree to repair terms it is time for the next step.

The Appraisal is Back

This part is easy. Either the home appraises or it doesn’t. The seller isn’t forced to lower the price if it doesn’t appraise but usually they do. Reason for this is no bank will lend more money on a home than it appraises for. At this point the buyer would need to bring more cash to the closing table. Problem with this is most people would not buy something for more than it’s worth. So if the seller wants to sell their home they will most likely lower the price.

Congratulations! Next step is the closing and you have your dream home!