Process of Buying a Home

Where do you start? Who do I call? What do they need to know? Why should I get pre-approved for a loan?

All good questions! I am sure there are way more as well! I will make every attempt to lay out my personal perspective on the process of buying a home. 

What's On This Page

The process of buying a home is a lengthy one and can take easily months to search, weeks to negotiate, and months to close, never mind the actual move. This page is just a summary of the over-all typical process, and has links to pages with more detailed specific information on each topic. 

Assumptions

Let's start with some assumptions because there are many important steps to take before you get to the actual process of buying a home. If you have not started on any of these, now might be a good time to have a look at these topics:

1. Let's assume you have already done your research on which neighborhoods you would like to live in.
2. Let's assume you have identified your needs, and separated them from the things that are more "nice to have"
3. Let's assume you have discussed these with your partner and have got them listed in order of priority
4. Let's assume you have an idea of what kind of down payment you are willing to make
5. Let's assume you have determined the types of homes you are interested in looking at - such as single family, condominium, or town home, etc.

Ok now that is out of the way, let's get in to it!

** If you haven't identified or prioritized your home buying needs, then check out the "Buying A Home First Steps" section.**

Section 1 - Process of Buying A Home Overview

As with most important stages in life, any process starts with information gathering. Then it moves to sorting through and prioritizing so you can separate what is important to you, from that which is more important to others. 

Here is the order I recommend people follow:

1. Visit a Mortgage Broker / Banker to determine the price range you should keep the search criteria within.
2. Find a Realtor / Real Estate Agent and review the listings
3. Pick a few that seem the most interesting and view the properties
4. Refine your search criteria based on what you have learned to date.
5. Find an Inspector and a Lawyer / Solicitor / Title Company
6. View more listings and visit the most interesting that strictly meet your criteria, or come the closest.
7. When you have found one that looks like it could be the one for you - Make an Offer, usually conditional on Legal review, financing and a home inspection.
8. Negotiate for what you want, until you get a deal that is acceptable to both yourselves and the seller(s).
9. Arrange for your Home Inspector to complete his report - attend during the inspection if you can.
10. Decide if you still want to buy the home based on what you have found. If not, start over. If yes, congratulations! Carry on - the work has just started!
11. Confirm your financial arrangements / mortgage with you Broker or Banker.
12. Have your legal expert complete their review, get any of their questions answered.
13. If there are new concerns or you can't get financing - you may have to cancel and start over.
14. If there are no major issues - Congrats! You can waive the remaining conditions in your offer and you have now purchased a home!
15. Get ready to do the heavy lifting!! More paper work as you prepare for home ownership. Money transfers, insurance documents, title transfers and taxes.
16. Closing! - This is where you get the keys and officially own the home! Time to celebrate!
17. Make any repairs or adjustments prior to moving; set-up your internet service, home phone and maintenance contracts for furnaces or hot water tanks. 
18. Move In! Two small words...sooo much work. 

**  If you are looking for even more detail on the key steps to successfully buying a home, then you will want to explore more on the Steps on Buying a Home page.

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Section 2 - Home Buying Services

There are quite a few services and their respective professionals that you will need to have along in the process of buying a home. Some services you will have to pay for directly, others will have their fees included in the closing costs, and still others are paid for by the seller. 

Knowing what each of these experts do, the role they will perform, and how they get paid, will help you choose which services will meet your specific needs. 

Here is a list of the key types of services you will need:

1. Mortgage Broker / Banker -  If you will need financing in order to purchase a home.
2. Real Estate Agent / Realtor - They are your licensed sales people who are likely your "window" to the market.
3. Lawyer / Solicitor / Title Company - Third party or Trusted agents to help you complete the purchase process and provide legal advice.
4. Home Inspector - Experts on house construction and identifying existing potential issues.
5. Insurance Broker - Sale people who specialize in finding insurance policies /companies for your new home purchase. 

A few other services to keep in mind during the process of purchasing a home:

• General contractors, mechanical contractors, plumbers, and electricians - you may want to get pricing on known renovations or required repairs in advance.
• Locksmiths - for changing the locks on doors (After Closing of course)
• Movers - Doing the heavy lifting for you, so you can focus on assembling the barbecue.

**  For even more detailed information on where and how to find these knowledgeable professionals - feel free to explore the Home Buying Services page.

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Section 3 - Offer and Purchase Agreement

In order to buy a home, you will need a written agreement between the buyer (you) and the seller.

Can you legally buy a home based on a verbal agreement and a handshake? The answer is yes, but there are so many details and variables you will certainly not want to, as it will most likely end badly.

Most people use the standard template offered by one of the Real Estate Associations in either Canada or the United States of America. Some legal firms also have their own template, and there are even generic documents available on-line if both the buyer and seller agree to use it.

Regardless of the template, it should contain all the detailed information about the purchase and sale process, including (but certainly not limited to):

• Legal description of the property
• Buyers and Sellers legal names and contact info
• Purchase price, deposit amount, and other details of who pays for which administrative costs
• Keys dates, such as closing, irrevokablility of offers, completion date, inspections or other conditional expiry dates.
• Details of any conditions, such as financial or legal reviews.
• Any other pertinent schedules or components of the purchase, such as lawn equipment, furniture, sheds, etc.

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Section 4 - Home Inspections

Do you need to do a home inspection?...I am sure there are some sellers out there who would like to convince you of that you don't need one.

The reality is, a good home inspection arms you with valuable information and acts as the "sober second thought" in a potentially stressful process, or one in which your own excitement may blind you to some important risks related to the home you are interested in.

As knowledgeable as I think I am, I have always completed a home inspection before buying a property.

A home cannot "fail" a home inspection. When done well, it is a detailed visual examination of the existing condition of the home. It arms the buyer with information, including any problem areas the they should be aware of. After that, you the buyer need to decide if that fits your own perceptions of what is good, or not good. Keep in mind, all homes need some level of work.

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US Market: Link to the American Society of Home Inspectors Home Page

Canadian Market: Link to the Canadian Association of Home and Property Inspectors Home Page

Section 5 - Process Timelines

I am sure there are stories out there about people who have bought homes in a matter of days...I am here to tell you that even a month is an extremely tight timeline. 

There is an expression you may have heard - "Anything worth doing is worth doing right."...and let me tell you, anything you do right takes time - it should take time!

If you think I can't relate to the massive effort in will power it takes to overcome the impulse to have it now. I can tell you I am very much an impatient person by nature. However, it is exactly that nature you need to put in check here! I have many... let's call them "reminders" which shove reality in my face. It does not get an easier to suppress those feelings, it does get easier to acknowledge and then not act on them.

You should try to allow yourself as much time as you can in the initial stages before you make an offer. Once you make an offer, especially if it is conditional, there is reasonable pressure form the seller to limit any time a purchase is "conditional". The more time you have spent up front, the more sure you will be when you make an offer.

**  For even more detailed information, feel free to explore the Home Buying Process Timeline page.

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Section 6 - Property Search

Searching for a "new-to-you" home can sometimes be frustrating for the uninitiated. While it is fun and exciting on one hand, it can also take longer as the homes you would like are sometimes unaffordable. Other times many of the "must have boxes" on your list do not occur all in in one property. This process can take time.

If you are working with a Realtor, it takes time for them to start sending listings which meet your requirements, and you can get frustrated looking at many listings. You just have to realize that it can be a bit of a process, and patience (as always) is a virtue here.

The best approach is to try different search methods, and see which ones give you the better "bang for your buck". It will vary depending on the area and availability of properties for sale. It will also depend on your own priorities - how important is location? Budget? House type? Schools? etc. Each one you put as a priority will increase the complexity and time it will take to find what you are looking for.

Here are my ideas on ways to search for a property:

1. Getting listings from a Realtor / Real Estate Agent (most efficient way to start)
2. Online searches via Real Estate Websites (MLS, Realtor.ca, Zillow)
3. Classified ads (either in Newspaper or online)
4. Driving the neighborhood or area of interest.
5. Place your own add for what you are looking for or in the neighborhood you are looking in (either in a newsletter, newspaper, on a bulletin board, or online).
6. Talking to Home Owner Associations or people you know in one.

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US Market:

Link to the National Association of Realtors MLS & On-line Listings Information page

Link to the Zillow Inc. Home Page. 

Canadian Market:

Link to the Canadian Real Estate Association website REALTOR.ca

Section 7 - Closing

This part of the process of buying a home can be the most nerve racking for many people because all of the components come together on a single day. 

The important thing to remember is the "Closing" will need to have all of the documents in place, finances sorted, and the title transfers completed before you can take possession of the home. This can be complicated by holidays, bad weather, volume of work, and regular life events. The people doing the work are as human as you or I.

This part of the process usually includes:

1. Wire transfer remaining downpayment to the Legal Trust account setup for the transaction by your legal team. 
2. Provide proof of your identity - each jurisdiction has different requirements for formal Identification Documentation, but you usually have to provide one with a picture and one other one.
3. The mortgage lien will be registered on the property - you will have had to provide the letter from the bank with all the financing details.
4. Title search will be completed, often you will be requested to purchase "Title Insurance".
5. Property Legal Survey will need to be provided by the seller. Sometimes there are issues here.
6. Registration with the County / City for property deed transfer, taxes, water, sewer, school taxes and in some cases Fire Department services and garbage collection - sometimes these are private as well.
7. Getting your home insurance in place to provide the Proof of Insurance or Insurance Binder to your lender or legal team to meet any municipal requirements.
8. Registration with utility companies or other vendors - electricity, gas, home alarm companies, etc.
9. Registration with Home Owner Associations / Condominium Corporations and payment of any initial fees.
10. Seller to send a copy of the house keys, garage door opener's, etc.

I am sure, while these are the main ones, there are places which have additional requirements somewhere.

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**  For information related to Home Buying Closing Costs, click this link!

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