Buying a home can be a daunting process with a lot of moving parts, if you’ve never done it before or been through the process then there is much to learn and be aware and cautious of. This Home Buying Process Timeline article will cover most of the aspects from selecting an agent, obtaining financing, finding the perfect home, the escrow process and even what to do after closing. After reading this article you’ll be better suited to take on the home buying process and what to expect. Being aware of the pitfalls and how to properly navigate the Home Buying Process can save you dearly… literally thousands and may even save you from litigation. Now that you see the benefit of knowing this process let’s get started on the first step which is getting proper representation throughout the buying process.
Selecting an Agent
Before even getting into the actual process of buying a home you must find an agent to represent you. Locating an agent is the very first step and perhaps the most important to make sure your home buying journey is successful, limiting your liability as much as possible through the process. When looking for an agent to buy or sell a home you’ll want to make sure that they will work well with you. Consider hiring an agent that is quick and efficient with follow-up, provides responsive and thorough communication and is tech savvy. An agent like Jason Thoele with Tholco Real Estate Group is an agent that checks all these boxes and he carries a five star rating with Zillow, Realtor and Yelp!. A tech savvy agent will have an edge over other agents and their ability to find you the perfect home before other buyers see it. Test the follow-up on the agent before you hire them, call, text and email them to see how quickly they get back to you, granted many agents are busy but if you don’t have a response the same day… move on.
When hiring your Realtor, use the online tools you have available to check an agent’s skill set and competency. There’s no better way to get the right agent than to see what others are saying about them. Many major real estate websites like Zillow and Realtor even display past client reviews so you can read about the agent. Additionally, make sure and check Yelp! Yelp is and has been a trusted source of client testimonials for some time, so rest assured if you locate an agent with a high rating five star rating then you’ll most likely be satisfied as well.
Jason Thoele has a Five Star Rating with Zillow, Realtor.com and Yelp! Click here to see what others are saying about Jason!
So now you’ve selected an agent to represent you in the home buying process, let’s talk next about the financing process. Similarly important as hiring the right agent you’ll also want to choose a competent lender. Do not make a costly mistake by just going with a big company like Quicken or your local bank for simplicity. Many times there are Mortgage Brokers that can offer better pricing, rates, fees and discounts than the larger guys and may even excel in the more challenging deals such as buyers with past credit issues. With our extensive experience in the real estate market with many lenders and banks we’ve taken the guess work out of the process of locating a lender for you. Complete the form located on our Financing page and we can have one of our tried and true lenders reach out to you to discuss the loan approval process in more detail.
The Technology of Searching for Homes
Here comes the fun part… You’ve selected a great agent and also now have your loan preapproval in hand so you’re ready to go. The communication and buying criteria of what you’re looking for in your next home will want to be established right away so you make the best use of your time during your home search. Many agents like Jason Thoele will map out the properties and schedule the showing appointments in order to ensure the most efficient use of the clients time. Once the buying criteria has been established your agent will start the home search process. The most effective search a buyer can take advantage is by having their agent enroll them in the Multiple Listing Services (MLS) Auto Prospecting System.
When an agent searches homes for sale for their clients they’ll use many tools to assist in locating the perfect home. Most homes are listed in the Multiple Listing Service (MLS) and the auto prospecting system will email you the buyer in real time as new properties come on the market. While this is the best tool to use and your home will probably be found here your home search won’t end there. Your agent will also scour the internet on popular sites for properties listed for sale by owner that aren’t listed for sale by an agent. These two searches will cover all potential sellers looking to sell their home so you’ll be 100% covered in your home search.
Finding the Perfect Home
By this time you’re likely receiving frequent communications from your agent with emails on homes for sale based on what you’re looking for. Now the time comes to start looking at the homes that catch your eye in person. As you see homes of interest to you communicate with your agent and let them know you’d like to see the house along with a schedule that works for you. Your agent will reach out to the Sellers and/or Selling Agent to get your home tours scheduled for your personal viewing. As you walk through the home, refer to your agent on any questions or things that interest or concern you. This communication will assist your agent in future properties and help make the best use of your time during your home tours. What I do with my clients is introduce them to the house with information about the house when we arrive. I’ll also provide candid objectivity to help you as Buyer see things that might not be immediately perceived. Once you find the perfect home the next step will be to make an offer. Let’s talk about that next!
Home Search Tip: We’ve made it easy to be notified of new homes on the market with our listing alerts available right to your email, sign up for free now to search for homes and receive those alerts daily! If you’re agent doesn’t have the automation of listing alerts or the tech ability to send those emails to you when new homes hit the market then it might be time to find an agent that’s not stuck in the 80’s!
Making an Offer
Congratulations is in order as you’ve finally located the perfect home. It may have taken you looking at 5 properties or maybe even 25 or more but you’ve found the one you love and that’s great! Just as a side note the average person scours through hundreds of homes prior to filtering down to a list of usually 15-25 homes before selecting the perfect one. So while the journey may seem long and endless it’s really not and all that searching will pay-off in the end. Now that you’ve found the perfect home you need to make an offer to the Seller.
For the most part the California Residential Purchase Agreement (RPA) is a boiler plate contract that has been drawn by Attorneys for the California Association of Realtors. While the contract doesn’t allow for much verbiage or options to be changed, items such as price, close of escrow dates, certain contingency timelines, deposit and who pays for certain items will need to be specified in your offer. Prior to submitting your offer, ask your agent to pull recent comparable property sales so you have up to date information on the neighborhood value. One of the worst things you can do is submit an unintentional low-ball offer and set a Seller on the defensive for no reason. Likewise you do not want to pay more than what the actual fair market value is.
After you’ve determined what price and terms you’d like to offer on the property your agent will draft the offer for your review and signature. Once you have the offer completed and signed then you need to determine how you’re paying for the home, there are two ways to buy a home, with a loan or all cash. If you’re obtaining a loan then you’ll need a copy of your lender approval letter, if by cash you’ll want to include a bank statement showing sufficient funds to purchase the home at close of escrow. Some agent will also ask for a copy of the Buyers deposit check but this is about 50/50, most just want the RPA and proof of loan or cash. The next step will be for your agent to submit the offer to the Seller or Listing Agent so now you wait… for how long? The standard contractual timeline for a Seller to review an offer is 3 days unless the Buyer would like to make the time more restrictive. As an agent I don’t want to give a Seller time to shop my Buyers offer so I most of the time I’ll write the offer with a 24/hour expiration. If you have any questions on this, contact me.
Offer Tip: When submitting you offer, if you’re a first time buyer or family purchasing the home take a moment an write a letter to the Seller about you, your family and maybe even what you like about the home. This extra step gives an opportunity for the Seller to get to know the Buyer and when there are multiple offers on a property this personal touch is often what it takes to tilt the scales in your favor.
Now that you’ve received an “Acceptance” on your offer… great Job! Did you know that the word Acceptance is an actual definition in the purchase agreement and it’s super important because it’s the foundation of what all your contractual timelines are built on. The Purchase Agreement’s actual definition is as follows; “Acceptance” means the time the offer or final counter offer is accepted in writing by a Party and is delivered to and personally received by the other Party or that Party’s authorized agent in accordance with the terms of this offer or a final counter offer. We’ll talk more about Buyer timelines in our next section but for now it’s important to remember what your Acceptance date is so you properly adhere to the contractual timelines and stay within your contractual obligations.
When your offer is Accepted, copies of the Purchase Agreement, Lender Approval Letter and any other applicable documentation associated with the Purchase Contract will be forwarded to escrow and the lender to begin the processing of your file. Your lender and applicable Escrow Officer will reach out to you to begin the next steps in getting the file completed which will also cover more in the next section.
To begin this section I think it’s appropriate to first define what “Escrow” actually is. Wikipedia sums it up best with their definition; “Being in escrow is a contractual arrangement in which a third party receives and disburses money or property for the primary transacting parties, most generally, used with plentiful terms that conduct the rightful actions that follow. The disbursement is dependent on conditions agreed to by the transacting parties.”
Once all transacting parties, i.e. Buyers and Sellers have completed their transactional and contractual obligations then escrow can close. Before that happens though there are many items and contingency dates that need to be met and/or signed off on. Below are some of the common items a Buyer and Seller might be expected to encounter through a real estate transaction. Let’s talk about a couple in further detail…
- Timelines – The entire process of a real estate transaction hinges on certain timelines and contingency dates. For instance when an offer is Accepted the timelines of that transaction start on the definition of the “Acceptance” date. As previously mentioned above the mere definition of the word Acceptance in combination with the definition of “Days” below is what sets the pace for the timelines within the Purchase Agreement.
- “Acceptance” means the time the offer or final counter offer is accepted in writing by a Party and is delivered to and personally
received by the other Party or that Party’s authorized agent in accordance with the terms of this offer or a final counter offer.
- “Days” means calendar days. However, after Acceptance, the last Day for performance of any act required by this Agreement
(including Close Of Escrow) shall not include any Saturday, Sunday, or legal holiday and shall instead be the next Day.
- “Acceptance” means the time the offer or final counter offer is accepted in writing by a Party and is delivered to and personally
- Earnest Money Deposit – Within 3 days of Acceptance or other negotiated timeline the Buyer must deposit Earnest Money Deposit (EMD) to the applicable escrow company. These funds are good faith monies meant to be put on the line in the event a Buyer breaches contract. While many times missed timelines are the main reason for breach of contract which we’ll cover in this article it’s not meant to be an exhaustive list and other items may well jeopardize a Buyers deposit so please contact us for more information and specific questions.
- Seller Disclosures – Within 7 days of Acceptance or other negotiated timeline the Buyer must receive a list of Seller disclosure paperwork. This list of required documents may differ slightly from area to area but an owner occupied Seller in California will be required to complete these forms and submit to the Buyers Agent for Buyer review. Documents in this Seller packet include but are not limited to the Transfer Disclosure Statement and Sellers Property Questionnaire just to name a few.
- Inspections – As per the Purchase Agreement a Buyer has 17 days after Acceptance unless otherwise negotiated to do their due diligence and conduct inspections. During this time, a Buyer can fully inspect the property from top to bottom and everything in between. Sellers must make the property available for a Buyer to do their inspections during this time. The types of inspections done will vary by area but the two most typical inspections in California will be a General Home Inspection and Wood Destroying Organism Inspection, sometimes referred to as a Termite Inspection which is actually an incorrect name to describe it. Feel free to check out our article on Proper Inspections Before Purchasing a Home for more information inspections. Depending on the results of these inspections a Buyer may choose to do more detailed inspections on items that may arise of concern. Remember, as a Buyer you’re paying an inspector to find things so do not let a thorough report scare you.
- Appraisal – Similar to the timeline on the inspection, as a Buyer you’ll also have 17 days after Acceptance for the appraisal to be completed. Now, this will only be needed if you’re obtaining financing to purchase the home. Sometimes cash buyers will opt for an appraisal but it’s not very typical and if you fall into this category you’ll need to have your appraisal done within the same timeline. One important aspect to remember when evaluating the condition of the property is the condition listed on the appraisal report. A bit of advice when submitting a repair request to the listing side would be to wait till the appraisal report is in. Regardless what a Buyer may deem as important with regards to repairs, some lenders will require repairs to be done if there are items called on the appraisal such as missing smoke or carbon monoxide detectors and breached garage firewalls just to name a few.
- Loan – The loan contingency timeline is 21 days after acceptance. This means a Buyers loan must be fully approved by the lender of their choosing within 21 days of the Purchase Contract being executed by Buyer and Seller. As a Buyer if your home loan is not fully approved and you’re asked to release the loan contingency you’ll want to proceed cautiously. Unless otherwise noted in the contract the loan contingency is the last remaining contingency and once removed all parties are locked in. Cancellation of a Purchase Contract at this point will certainly put a Buyers Earnest Money Deposit into jeopardy.
- Close of Escrow – Unlike an inspection, appraisal or loan contingency timeline the Close of Escrow date can either be a hard date or amount of time to close after Acceptance. As a Buyer if you feel you will be in negotiations for a while prior to Acceptance it’s advisable to write the Close of Escrow date based on contract Acceptance. Using a hard date to establish your Close of Escrow with a long contract negotiation will push a Buyer to close perhaps more sooner than they’re comfortable with or able to.
- Buyers Inspection Advisory – One very important form that an agent and Buyer must be aware of is the Buyers Inspection Advisory. This form stipulates the importance of Buyer inspections and gives examples of the types of inspections that can be done on properties. Furthermore the document states that Real Estate Brokers are not inspectors and cannot advise a Buyer on inspections items or condition of a property. Additionally a referral to an inspector from the Realtor does not guarantee a inspectors performance so Buyers are encouraged to do their due diligence on any referred inspectors.
- Types of Inspections – The types of inspections a Buyer can do is only limited by the Buyers want. Literally, a buyer can spend as much money on doing any inspection on a property they want as long as the inspections are done within the time allotted as mentioned above. Once all inspections are done you’ll have reports of what condition the property is in. Your agent and you will discuss those reports and establish what if any items you’d like to have repaired. Don’t be nervous there’s no such thing as a home in perfect condition. With inspections many times comes repair requests which once discussed with your agent will be sent to the seller’s agent for review and acceptance, rejection or countered terms. Traditionally there are two types of inspections done on most homes which we will cover more in the bullet points below.
- General Home Inspection – This is the most common type of inspection. The home inspector will inspect the interior and exterior of most all areas of the home from floor to ceiling and everything in between. They’ll provide a detailed report listing all items that were inspected and the overall results. A home inspection is meant to be your first line of defense in finding the condition of the property. Most home inspectors are not licensed contractors so do not expect them to provide in detail fix or estimates but what a home inspector will do is point out all potential problems in a home so that if you feel a further inspection is needed by a professional in a particular trade then you can have that done.
- Wood Destroying Organism Inspection – Along with the General Home Inspection considered a typical inspection comes the Wood Destroying Organism inspection or “Termite Inspection” as many will call it. The WDO inspector will concentrate their inspection on locating Section 1 and Section 2 items. Section 1 is defined as active wood destroying issues and Section 2 is further defined as potential problems. Items that fall under Section 1 would be dryrot, fungus or active termite infestation to name a few. An example of a Section 2 item might be be dirt in a flowerbed that is higher than the foundation or a loose toilet as these items might cause issues in the future. Once the inspector is done with their internal and external inspection of the home then they’ll provide a detailed report listing all items falling under these two classifications and a diagram of the property with each issues approx location. Additionally they’ll usually provide an estimate to cure applicable items.
- Closing Escrow
- Buyers Final Walk-Through – At this point your emotions will be in full swing but you shouldn’t forget one critical step which is your final walk-through. This item is crucial because you’ll want to make sure that the home you’re buying is in essentially the same shape as when you made the offer. Barring that no repairs were done on the property through negotiation, the home should be in the same exact condition as in the beginning. As per the Residential Purchase Agreement, if a final walk-through is being done it would need to be completed within 5 days of the close of escrow date. As a Realtor I will always try and schedule the walk-through early and as close to the 5 day mark as possible because if something is not right you want to have some time to be able to fix it. Don’t pass up this step, it should take no more than 30 minutes and then a Buyer has peace of mind.
- Signing Loan Docs & Closing Funds – It’s time to sign some very important documents and bring in your money to close escrow! The loan documents you sign need to be correct so make sure you take your time and read and understand them. Effective October 2015 there was a new law that went into effect called the TILA–RESPA Integrated Disclosure (TRID) rule. This rule mandates a lender to fully disclose all fees and costs 3 days prior to closing so that a Buyer knows exactly what they’re going to be charged for the loan. Prior to signing loan documents at the escrow company you’ll likely be contacted by the escrow officer with an amount to bring in for your closing funds. This amount should be the total amount of your down payment minus your Earnest Money Deposit. Now, the amount won’t be exact because escrow often asks for a bit more as a buffer but don’t worry that’ll be returned to you after close of escrow.
- Lender Funding – After you’ve signed loan documents and escrow has confirmed your closing funds have been received then the escrow officer will let the bank that is lending the money know they’re ready for the lenders closing funds. This amount will be the total amount of your loan minus your down payment that will need to be wired by the bank to escrow. The funder who is the person that will wire the money from the buyers lending institution to escrow will authorize the funds for distribution and usually funds are received at escrow within a couple hours as long as the funds were wired prior to appropriate cut-off times. The funding of a Buyers loan wired to escrow is the second to last step in the escrow process if a Buyer is obtaining a loan, once the funds have been confirmed to be received by the escrow officer then escrow will release the file for recording.
- Recording – So we’re at the end of the road now that Buyers closing funds and lenders funds if applicable have been received and confirmed by your escrow officer. The next and final step in the escrow process is the recording of the “Grant Deed” which is the transfer of ownership from the Seller to the Buyer. Once recordation has been confirmed by the County Recorders Office the property will officially be the new Buyers property. Typically the time from the escrow officer confirming all funds are received to recording confirmation is usually the same day unless the funds were received late in the day. If funds were received after a cut-off time then the recording will take place on the next business day.
Things to do after closing
Now that the property is officially yours you’ll want to get keys from your agent to your new home and possibly consider having a locksmith rekey the property for your assurance there’s not an extra key out there somewhere. Next step would be to transfer the utilities into your name. If you need to know who services your area, check out our Utility Service Providers page. Lastly you’ll want to put a change of address in with the post office asap so you do not loose any mail.