Starting on the journey to homeownership is an exciting milestone in anyone’s life. The process may seem daunting, but with the right guidance and preparation, it can be a smooth (ok somewhat smooth!) and rewarding experience.
Here’s a step-by-step blog post to help you navigate your way to buying a home in Texas!
Initial Buyer Consultation
Your journey begins with an initial buyer consultation with me. This is a crucial step where we will meet (usually over iced mochas at Mazama!) to discuss your needs, where I will learn about your family, your home preferences, and budget. This is your opportunity to ask questions, understand the buying process, and set realistic expectations for your home search. I will take notes and also send you a buyer questionnaire to fill out next!
Remember, unless you have an unlimited budget then you need to aim for a 7/10 home. A 10/10 home would most likely need to be completely custom built on the perfect lot and would cost millions! In that case… email me and I’ll connect you with the best custom builder’s in the area!
Getting Prequalified with a Local Lender
Before you start looking at homes, it’s essential to understand your financial standing. Interest rates, down payments, types of loans, HOA fees and property taxes can cause your financial ability to vary wildly! You’ll need to talk with a local lender to understand where the best price range to search for is.
I always recommend to NOT shop at the top of your budget. You’ll need to be comfortable with your payment and still have enough cushion so that you don’t feel house poor. There are too many fun things to do in the area that you should leave some financial margin for! But… you are the driver here, so it’s always up to you! I’m just the guide!
Getting prequalified with a local lender gives you an estimate of how much you can borrow based on your financial history. This step not only helps you set a budget but also shows sellers that you’re a serious, qualified buyer.
Click here to read about a creative financial solution when mortgage rates are high.
Click HERE for a list of local lenders that I know!
Setting Up an MLS Search
Once you’re prequalified, it’s time to start the search for your dream home. I will set up an Austin MLS (Multiple Listing Service) search tailored to your preferences. This powerful (but boring looking) tool provides access to thousands of listings and updates in real-time, ensuring you won’t miss out on potential homes.
When I set you up through my MLS it is always immediately up to date, whereas Realtor.com and Zillow.com may have a bit of lag time with updates.
Seeing Homes in Person
Now comes the exciting part – seeing homes in person!
This is your chance to envision your life in each home, assess the condition of the property, and explore the neighborhood.
I will bring print outs of each home so that you can make notes. I will also be able to check in with the listing agents to see what the seller’s situation is and advise you on market conditions and comps.
Finding THE Perfect Home
When you find THE perfect home that checks your boxes (remember to shoot for 7 out of 10!), it’s an exhilarating moment.
Sometimes you will walk in and just feel it. You’ll just know that it’s THE ONE!
I’ve even had people feel goosebumps and tell me that they just *know* it’s their new home.
It’s the culmination of your search and the beginning of the next phase of your journey – making an offer.
Submitting Your Highest and Best Offer
In competitive markets, it’s crucial to submit your highest and best offer.
I will help you in determining a competitive offer based on the home’s value, market conditions, and your budget. But don’t worry, because I am a Real Estate Negotiation Expert!
Negotiation isn’t playing hard ball and doing manipulative mind tricks to twist people’s financial arms, it’s actually finding a mutually acceptable agreement between two parties. It’s a little give and a little take. It takes people skills, good questions and cooperation.
I will be able to advise you on the market that we are currently in based on ongoing research that I do on a daily basis. I follow trends and information on the national housing market and also the hyper local market. I also follow both the “bears” and the “bulls” news to see a more complete perspective on the way the FED and the economy is trending and will provide you with that information for you to assess your level of risk tolerance and decide what you would like to do.
Negotiating the Offer and Executing a Contract
Once your offer is submitted, negotiations begin. This process may involve several counteroffers until both parties agree on the terms. You need to remember not to get too emotional over this part. Some agents will ask for everything, others will ask for nothing additional. This is one of the biggest benefits of having a real estate agent- you have a shield between your emotions and the other party involved in the transaction.
Once the negotiations are agreed upon, you’ll sign or e-sign and execute a contract, marking a significant step towards homeownership!
Depositing Earnest and Option Money $$ (Normally around 1% of the contract price + an option fee paid up front)
Within three days after the date of the contract execution (if you sign an offer on a Monday then you have until Thursday at 5 PM to deliver), you’ll need to deposit earnest money, a good faith deposit showing your commitment to the purchase, and option money, which buys you an option period to conduct inspections and potentially renegotiate or terminate the contract.
Earnest money can be any amount of money, but the standard is 1% of the contract price. Option fees are usually anywhere from $100-$500 for 5-10 days. During the height of the pandemic people were paying as much as $10,000 for 1 option day. Wow! I’m glad those stressful days are behind us!
This money can be wired (make sure you contact the title company to avoid wire fraud) or delivered by check made out to the title company.
Conducting Home, Septic, and Other Inspections $$ (You will pay several hundred dollars per inspection up front)
During the option period, you’ll conduct home, septic, and other inspections to ensure the property doesn’t have any hidden issues. If the home has a pool or well then I recommend getting those inspected also. These fees will be up front and you will need to pay them at time of inspection. You need to budget for $300-600/per inspection. Once the inspectors are paid then you will have the reports released and can talk further about the issues that were uncovered.
Most home inspections are 25-35 pages long and will have tons of minor items highlighted. The home inspector will be able to educate you on what items are critical in the home and which ones would cost only a few dollars or a can of caulk to repair. I always recommend to negotiate the repair or closing costs paid by seller in lieu of repairs for health and safety items such as plumbing, hvac, roof and electrical.
If the issues are too complex and you decide to walk away from the house then you can terminate the contract for any reason during the option period and be able to get your earnest money back.
This is also a good time to begin getting home insurance quotes for your new property.
Working with the Title Company and Lender for Final Approval
After inspections and the close of the option period, you’ll work with the title company and lender to secure final approval for your loan. This involves verifying all the information submitted, ensuring the title is clear, and setting the closing date. You will need to provide many more documents to the lender during this time while their processor and underwriter make sure that you are clear to close and are fully approved for the loan.
This is also a good time to call and have all of the utilities put in your name starting the day after you close on the home and to contact the post office for mail forwarding.
Appraisal for the Lender $$ (You will be billed for the appraisal up front)
Your lender will order an appraisal to confirm the home’s value. You will be billed for this up front and the cost is anywhere from $300 to several thousand depending on the size of the home and property. This step is crucial for the lender to ensure the loan amount is appropriate for the home’s value. The appraisal is done to protect the lender by assessing the market value of the home. They do this by various methods and use closed sales that are most similar to your property to determine the final value.
Appraisals are subjective and different appraisers could give your home different values. I provide a list of the best comps to the appraiser beforehand to ensure a smoother process. If the home does not appraise for the amount you are purchasing it for then you may need to bring additional cash to close.
The appraisal is one of the only things in the contract to close process that no one has any control over. We can talk further about the risk of this happening during the offer stage. There are several different boxes to check in the contract that involve different levels of risk depending on your decisions. I will educate you on all of them before the offer is submitted.
Once the appraisal is submitted then it usually goes through a quality control check with the bank and then will be released to the buyer. It’s always happy news if the home appraises for MORE than you are purchasing it for. This means that you purchased it under the market value and have instant equity at closing!
Final Walkthrough and Closing
Before closing, you’ll do a final walkthrough of the property to ensure the home is in the agreed-upon condition. Sometimes the seller will have taken an item that was supposed to be left per the contract (like curtains or a hot tub) or sometimes the house will have damage from the sellers moving out. This is a good time to make sure that everything is in good shape before signing the closing documents.
Then comes the closing day, where you’ll sign a stack of documents, pay your down payment and pay the remainder of the closing costs, and a few hours later you can come back after funding and pick up the keys to your NEW HOME!!!
Congratulations, you’re now a homeowner!
It’s time to have your friends over to help with the heavy lifting and have a pizza party on top of your boxes!
After this I recommend getting the home re-keyed, updating your driver’s license and filing for your Texas homestead exemption! But that is all info for another blog post!
Does it seem like a lot?
Well IT IS!! This is why you need a good communicator, a realtor with empathy and a can-do attitude and a great lending and title team.
Don’t worry. I can connect you to the other amazing vendors and we can do everything possible to get you to the finish line! There are ALWAYS bumps along the way. Many, many things can go wrong, but I love to help problem solve and over-communicate so that everything can get done to the best of my ability.
Ready to start?
Give me a call! 512-569-8480 or email at laurenclark@magnoliarealty.com
Check out my Dripping Springs Guide HERE
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Click HERE to view current homes on the market.
Click HERE to get a FREE home valuation
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