You’ve crunched the numbers, thought about your lifestyle and made the decision to buy a home. It can be a complicated, stressful process. But knowing what to expect can reduce some of that anxiety and help you confidently find your way to your new home.
To help, here’s a step-by-step guide to the home-buying process. You could swap the order of a few early steps – you can get pre-approved before finding an agent, for example. But you don’t want to find the perfect place first, only to have a better-prepared buyer swoop in and snag it.
Step 1: Check your credit report and score
Before contacting a lender, it’s smart to check your credit report. By law, you can get a free report once a year through Annualcreditreport.com. The report pulls data from the three major credit-reporting agencies: Equifax, TransUnion and Experian. Having the information in hand before you talk with a lender lets you dispute any errors in the reporting. Based on your credit report, Fair Isaac & Co. (FICO) assigns you a credit score ranging from 350 to 850. The higher your credit score, the lower the interest rate on your mortgage. Scores are based on:
• Payment history: Have you paid your bills on time?
• Amounts owed: What is your overall debt?
• Length of credit history: How long have you been borrowing money? Mortgage lenders like to see a long credit history.
• New credit: Have you applied for new credit?
• Types of credit: Lenders like to see a variety of types such as bank cards, car loans and student loans.
So what is a good credit score? You can expect a good mortgage rate at anything above 720. Home buyers who pursue an FHA loan can usually secure a loan if their credit is 580 or over. FICO scores are available at www.myfico.com for a one-time or monthly fee. Once you know your score, you can find out what interest rate you will likely qualify for by researching interest rates on Zillow.
Step 2: Figure out how much you can afford
Or better yet, decide how much you’re willing to pay. Just because you can qualify for a larger mortgage doesn’t mean you want to have that kind of payment each month. Use the mortgage affordability calculator to help determine what you can afford. Now is also a good time to research your housing market and start going to open houses in your prospective neighborhood to give you a good sense of what your money will get you.
Step 3: Find a real estate agent
This person will be your lifeline through the process. Not so long ago, people didn’t have much to go on when selecting an agent. A postcard in the mail or a name on a sign might have been all you had to consider if you didn’t have a personal referral. But now it’s a breeze to check reviews online. Go ahead and meet with a few agents and ask some questions. Your agent is your chief advocate, confidante and hand-holder in the process so you want to find a good fit.
Step 4: Get pre-approved by a lender
It’s a smart move to get pre-approved for a loan early in your home search. Zillow has an easy-to-use tool that lets you find a licensed lender in your area with a history of positive customer ratings, who can help you get pre-approved.
Pre-approval requires the lender to pull the credit information (see Step 1) and asses your financial situation. The lender will then give you a letter that states the amount they would be willing to lend you. If you get in a multiple-offer scenario, being pre-approved may give you an edge because the seller will have more confidence that you will be approved for a loan large enough to purchase their home.
You are not obligated to get a loan from the lender who you get a mortgage pre-approval from. When it’s time to officially apply for a mortgage, it’s best to get loan estimates from at least three lenders to compare their interest rates and fees.
Step 5: Start looking at homes
Let the serious shopping begin! By now you’ve talked things over with your agent and you both know what you really want and need in a home. Armed with this, your price range and knowledge of the local area, look at listings online and with your agent, who will come up with properties for you to tour. Chances are you’ll discover some new things to love or hate about homes and refine your search.
Step 6: Make an offer
For most buyers, this is when the butterflies really show up. Once you’ve found a home you want your agent will work with you to craft an offer. Remember, the listing price is only a starting point. Your agent will understand the market and help guide you to make the most attractive offer, whether it’s below, at or above listing price. Are there any contingencies to your offer? Will you require an inspection? These are all things your agent will help you with. Once you’ve submitted the offer you get to wait. It will seem interminable. You may get neither a simple yes or no but a counteroffer to consider. It can be something of a dance. If you get a solid “no,” it’s back to Step 5. If you get to a “yes,” celebrate!
Step 7: Home inspection day
If your offer called for a home inspection, this is a big day. Sure, you get to have a home inspector look over the home to make sure there are no unseen defects you want to negotiate to have fixed. But more importantly, this is the most time you’ll get to spend in your new home until closing. Go ahead and start measuring things and figuring out what goes where. This may be the last time you are inside the home until it is yours, several weeks from now.
Step 8: Get insurance and establish utilities
If you already own a home, simply call your insurance agent and let them know you’re buying a new home. They will handle writing a new policy. If you don’t have an insurance agent, now’s the time to find one because your lender will require homeowners insurance. Even if you don’t have a mortgage, insurance is a critical part of protecting your investment. You’ll also want to give utility companies your move-in date to establish service. There’s nothing like moving into a cold, dark house because you didn’t get an account with the power company!
Step 9: Closing day
This is the big day. You’ll sign read and sign papers and then read and sign some more. Even though you’re just sitting around a table, it can be exhausting. But it also means you’re nearing the finish line.
Step 10: Get the keys and move in!
This is it. You did it. You are now a homeowner! Your sale contract will specify exactly how soon you get to move in. Sometimes it’s by a certain time on the day you sign closing papers. Sometimes possession happens a few days after closing. Whenever it is, you’ve just ended the adventure of home buying and started the adventure of homeownership.
While it’s well known that it’s the photographs in a real estate ad that will pique a buyer’s interest in a home, the right words in the may just get them into the car. Yet, finding ways to describe your listings – coming up with catchy headlines and intriguing come-ons – is pretty challenging.
Writers are admonished to always remember their audience. Real estate agents would do well to remember that advice too, but to also keep in mind that their audience is two-pronged: buyers and other real estate agents.
The second and third rules of thumb? Don’t be repetitive, and never, ever be boring.
The MLS typically doesn’t give agents a lot of room for descriptions. This is valuable space, so don’t repeat information that will show up in the details section. In other words, there’s no need to reiterate that the home has three bedrooms and two bathrooms since those facts are already mentioned in the property details section.
Save the description box for compelling, intriguing information that will reel agents and buyers into the home for a closer look.
Highlight the Best Stuff
Know what buyers want and, if the home you’ve listed has any of those features, hit them hard in your listing description.
Any unique amenities – a gourmet kitchen, hardwood floors, oversized yards and garages – are worth highlighting. Brand names, such as Bosch, Sub-Zero, Wolf and Viking, should be sprinkled throughout the text. Don’t neglect to “mention appealing features such as those pullout shelves in the kitchen cabinets or the walk-in pantry,” warns Melinda Fulmer of MSN Real Estate.
Read through this well-written listing description of a Seattle mansion. How much do you want to walk through its “terraced gardens” and “manicured grounds,” not to mention take in the “iconic views of the Seattle skyline & Elliott Bay”? The real estate agent who wrote this listing description certainly knows how to write a dazzling listing description!
Improved homes are attractive to buyers. New roofs and windows are especially appealing, but any improvements are worth mentioning. A homeowner who cares enough to replace, repair or improve is a homeowner who has most likely maintained the home, which is comforting to buyers.
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Use the Right Words to Describe the Listing
Next time you sit down to write about a new listing, keep in mind that some words sell more effectively than others. They have more power: the power to compel a buyer to act.
To illustrate the power of words, take a look at a study conducted by Paul Anglin, a professor with the University of Guelph in Canada. He and some other researchers spent three years studying real estate listings. One aspect of the study centered on how a listing ad’s wording affected the eventual sales price and days on the market.
From this, they extrapolated a list of words that sell, and some that don’t. The study was conducted over 10 years ago, so whether these words and phrases are valid in today’s market is debatable. But the study itself indicates the importance of taking your time to consider each word you use in the listing description.
Some of the words that Anglin claims help sell homes include:
- Beautiful – Homes described as “beautiful” sell for 5 percent more, and 15 percent faster than those described as being in “move-in condition, according to Anglin’s study.
- Curb Appeal
- Fixer Upper
Words that don’t sell:
- Must Sell
- Value – Homes described as a “good value” sold for 5 percent less than other homes, according to Anglin.
- Move-In Condition
- New Paint or New Carpet
Even if you end up not employing some of Professor Anglin’s power words, come up with a list of your own, unique to your market.
Begin your ad with a compelling headline. A good place to get headline ideas is magazine covers. Notice how the copywriters use words and phrases to entice you to purchase the magazine to read what lies within.
Copywriters have a number of strategies when composing a headline, including the ever-popular “how to.” Personally, I’m a fan of the “reason why” type of headline: “8 Reasons to. . .” or “10 Things. . .”
Make Your Words Draw a Picture
Would you like to “entertain beneath soaring Venetian plaster ceilings” in your new home, or “cook for 2 or 20 in [its] well-appointed kitchen”? Thanks to this Kirkland, Wash. home’s compelling listing description, we certainly would!
Selling the sizzle instead of the steak involves using words to paint a picture of what living in the home looks like. “Relax and unwind in the hot tub after a hard day at work,” or “Imagine entertaining friends and family poolside on a warm summer day.”
Even a less-than-perfect home has its plusses. Look for them, and call them out in the description by pointing “out the opportunities, such as the hardwoods hiding underneath the carpet or the storage space afforded by the extensive built-ins,” says Fulmer.
Go over your copy once more before submitting it to ensure you haven’t violated fair-housing rules by mentioning national origin, race, gender, disability or familial status. Then, hit the submit button and sit back while the calls from interested agents and buyers flood in.