Prepare for Purchase
Buyer's Guide
Everything you need to know about the process of buying a new home.
Everything you need to know about the process of buying a new home.
Prepare for Purchase
Choose a Realtor®
Get Pre-approved
Find Your Dream Home
Contract to Close
Make an Offer and Negotiate
Inspections and Appraisals
Final Loan Approval
Costs to Consider
Buying a home is more than a down payment and figuring out the monthly
mortgage. A range of out-of-pocket expenses can arise during and after the
transaction, so be sure to discuss these with your lender and your agent
to be prepared.
Lender Fees
Loan Application; Credit Report ($15–30*)
Appraisal ($300–500*)
Home Inspection
Home inspection ($400–800*); Radon inspection ($100–250*);
Termite inspection ($50–100*)
Closing Costs
Rough estimate is about 3% of the sales price. This includes recordation taxes,
title insurance, all lender fees and settlement charges.
Moving Fees
Repair and Maintenance C...
Typically 15–30 year fixed rate
20%
Good credit, proven steady income (2 years+ for independent contractors).
Typically 5–10 year fixed rate, followed by an adjustable rate for the rest of the term
20%
Slightly more lenient on credit.
Typically 30 year fixed rate
3.5%
Option for individuals with lower credit scores. Homeowner occupant only (no investors). Stringent home inspections. Condos must be FHA approved. May take longer to close.
Typically 30 year fixed rate
Not Required
Veterans, army members and spouses only. Homeowner occupant only (no investors). Home condition requirements. May take longer to close.
Our dynamic search tool allows you to type in what you’re looking for—no scanning through endless rows of checkboxes. Draw custom map boundaries to only see results where you want them. Using Compass Saved Search, you'll never have to worry about missing your dream home. Easily set preferred listing criteria and receive alerts when new listings are posted.
A visual portfolio of homes, this platform allows you, your agent and anyone else involved in the search process, to share and track listings. Comment in real time and receive automatic pricing and status updates—all in one centralized place.
Our strong Compass network allows our agents to be in the know about upcoming listings that may meet your criteria before they hit the market, offering you a competitive advantage when they become available to the public.
Your Realtor® will pull a list of all the homes that recently sold to give you a better idea of the market.
Is this a “Hot Home,” is it under-priced, are there other offers? The amount of competition will determine how aggressively you want to structure your initial offer.
Make sure you speak with your agent about all terms of the contract and to understand deadlines, liabilities and clauses that allow you to terminate the agreement, etc.
Decide how much you’re comfortable putting down as an act of good faith. Typically the deposit will be held in escrow by the title company and subtracted from your balance at the end of the transaction. Depending on the jurisdiction, the EMD commonly ranges between 1–5% of the sales price.
Price, Number of Contingencies and Length of Terms
Price is obviously an important factor, as it will determine how much the seller nets. Work with your agent to figure out the value of the home and how much you’re comfortable spending.
Contingencies are terms that need to be met in order for the contract to go to closing.
The more contingencies, the higher the risk for the seller. By waiving a contingency, you
strengthen your offer. However, you may be risking your EMD, as the contract may not protect you if such contingency is not met.
Considering the length of each term is very important when submitting an offer. Everyday that a house is under contract, the home is essentially “o” the market. The seller is “taking a risk,” by waiting for each term to be met.
Cash vs. Loan
Amount a seller is willing to credit back to a buyer to help with closing costs. Check with your lender for maximum % of sales price; asking for credit will often weaken the offer as it lowers the seller’s net sales price.
In highly competitive situations, buyers will conduct a pre-inspection prior to submitting an offer, and waive this contingency. However, if you do request a home inspection, aim to schedule it within 7 days of ratification.
Assessment of value conducted by the lender—usually conducted within 21 days of ratification. By waiving this contingency, you may be responsible for the difference between the appraised value and sales price, if the house is assessed at a lower value.
If your offer is contingent on financing, the sooner you receive a commitment letter from the lender, the more confidence you can instill in the seller that the deal will reach closing.
Under 30 days is ideal, but some loan programs take longer to close. The closing date is important, as this is when the seller receives the funds for the transfer of the deed.
*Please note that the closing date is not necessarily the same as possession date. In some cases, sellers may want to rent back the property for a period of time. Most lenders will allow for a 60 day Maximum Rent Back Period.
HIGH
Pricing
Above Asking
Contingencies
No financing contingency
Waived inspection
Waived appraisal
Timeline
21 Days
Pricing
Full Asking
Contingencies
Conventional financing
Home inspection
Appraisal
Timeline
30 Days
Low
Pricing
Below Asking
Contingencies
Seller credits
Multiple home inspections
Appraisal
Timeline
60 Days
An offer can have a lower price than another, but still be stronger! For example, if a seller values moving out quickly, a lower all cash offer that closes in 3 weeks might be more attractive. Your agent will know the best strategy to make a compelling offer based on market conditions, while considering your needs and comfort level.
Once you have submitted the offer, the seller may reject, accept or counter your offer. Be prepared to go back and forth until you reach a suitable agreement for both parties. When all terms are agreed upon, the offer is signed by both parties and officially ratified. Negotiations are not necessarily over at ratification of the contract. They can also go on during the inspection and appraisal periods.
Home inspections can be nerve wracking, but they are an important part of the process. There are many types of inspections depending on the location and home you are looking to purchase.
Take the time to attend the inspection so you can have a better sense of how the home works, see which areas will require maintenance, and assess whether you will need to consider home improvements down the line. Don’t be afraid to ask questions!
Expect to have a list of items from your inspector in a couple days. Don’t panic! Every home has a list of potential repairs, and most will be minor.
Home inspections are another opportunity to negotiate. Speak with your agent about what items they recommend asking for repair. Focus on the items that matter the most. Keep in mind that the seller is not obligated to make all the requested repairs, unless required by a lender (FHA, HPAP, VA etc.).
This is the assessment of value on the home by a third party appraiser. It lets the lender know how much they will be able to lend for the home.
After you’ve completed your final walk through, it’s time to sign some papers!
During settlement, the title attorney will go through your final settlement statement, line by line.
The title company will be in charge of disbursing the funds to the seller and the bank (if they still owe a balance on their mortgage).
Don’t forget your government-issued ID, cashier’s check or certified funds (if amount you owe isn’t wired to the title company prior to the settlement), and personal checkbook for any small last-minute expenses.
Make sure you receive all copies of the keys.
