Are you ready to own a home?
This might seem like a simple question, but there is a lot to owning a home. From the buying process to the demands of being a homeowner, the journey to homeownership — though rewarding — is a winding road. If you are prepared and owning a home is right for you, then follow these next steps:
1. Build a better credit score
Lenders make their decision on whether to issue a loan based on the likelihood they will be paid back. To do this, they look at your credit score. The higher your credit score, the better chance you have for obtaining financing. Unfortunately, there can be errors on your credit reports that can impact your overall score — to prevent this, make sure to obtain your credit report and correct any errors before applying for a mortgage.
2. Get pre-approved for a mortgage
“Pre-approval” means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with specific mortgage programs. Based on this information, the lender will provide a pre-approval letter demonstrating your borrowing power and your ability to go through with a purchase.
3. Determine what you can afford
Beyond pre-approval, determining what you can afford is a personal decision. Only you know what feels comfortable. Remember, in addition to your loan payment (that includes principal, interest, taxes, and insurance) there are also heating and cooling costs, water and sewer bills, and potential maintenance and association fees.
4. Decide what you want in a house
Make a list of the features and benefits you want in a home — both now and in the future. Consider pricing, location, size, schools, amenities, design, and more, and determine your priorities. If you can’t get a home at your price with all the features you want, then which features are most important? Would you trade fewer bedrooms for a larger kitchen or a longer commute for a bigger lot and lower cost?
5. Work with a REALTOR®
A local REALTOR® truly knows the local market. They have been in many of the houses that are for sale that you have seen online. They understand why homes in certain neighborhoods are priced the way they are. They are also in the best position to help you find the house that most closely matches what you want in a home. Most importantly, a REALTOR® has your best interests at heart.
6. Make an offer
Congratulations! You’ve found a home! Now, you’ll need to make an offer to the owner. In a typical situation, you will complete an offer along with a $1,000 deposit that your REALTOR® will present to the owner and the owner’s representative. The owner may accept the offer, reject it, or make a counter-offer. The owner’s response will determine the next step. (Please note: In some markets, it is not unusual to go directly to signing a purchase and sale agreement. A REALTOR® will be able to easily guide you through the process.)
7. Conduct a home inspection
After your offer is accepted, it is routine to have a home inspection. During these examinations, a licensed inspector determines if there are any physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours. Try your best to attend! This is an opportunity to examine the property’s mechanics and structure, ask questions, and learn more about the property than is possible with an informal walk-through.
8. Sign a purchase and sale agreement
If you are satisfied with the home inspection, the next step is to sign a purchase and sale agreement. This document details the specifics of the transaction, such as repairs to be completed, fixtures to remain with the property, the property’s status regarding lead paint, and, if a septic system exists, the confirmation of a Title 5 certificate (in Massachusetts). The closing date is then finalized, and a five percent deposit is made (which is held in escrow until the closing). If you have any questions about your legal rights or responsibilities, you should consider consulting an attorney.
9. Close on your new home
This is the day you become a homeowner! There are several final steps before you get those keys in your hand.
Before closing, you will have a walk-through of the home you are buying. This is to make sure any necessary repairs were made and that the house is in the same or better condition than when you made the offer. Most lenders will require that you have a homeowner’s insurance binder (proof of insurance) before they will close the loan. Many buyers also purchase title insurance with a one-time fee at closing, which protects owners in the event that title to the property is found to be invalid.
After signing the loan documents, the sellers receive the remainder of the payment from the closing attorney. Congratulations, you just purchased a home!
Are you ready to sell your home?
From the actual transactional process of selling, to physically cleaning and packing all your stuff up—selling a home is a serious undertaking. There are several things you should consider. If you are prepared and selling your home is right for you, then follow these next steps:
1. Maximize curb appeal
A house that “sparkles” is likely to sell faster and at a higher price than its shabby neighbor, even if they’re both structurally sound. However, don’t feel the need to break the bank to get your home to its highest aesthetic potential. Before putting your house on the market, take as much time as necessary (and as little money as possible) to maximize its exterior appeal. Trim hedges, cut the lawn, keep your garage door closed and apply a fresh coat of paint to the front door for an instant facelift.
2. Maximize interior appeal
There is a big difference between making minor and inexpensive “polishes” and “touch-ups” to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room and doing extensive and costly renovations, like installing a new kitchen. In readying your house for sale, consider how much should you spend and put your money where it matters most. Enhance your home’s interior by removing all clutter, repainting dingy walls, and repairing cracks, leaks, holes, and other cosmetic damage.
3. Partner with a REALTOR®
REALTORS® are professional real estate experts that subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. A professional with this high caliber industry knowledge is essential in a time when home selling has become more complex than it used to be. Your REALTOR® should be able to give you up-to-date information on what is happening in the marketplace and the price, financing, terms, and condition of competing properties. These are key factors in getting your property sold at the best price, quickly, and with minimum hassle.
4. Set the price of your home
Several factors, including market conditions and interest rates, will determine how much you can get for your home. Home selling is part art, part science, part marketing, and part negotiation. Your REALTOR® will be able to help you determine the selling price for your home.
Additionally, as a seller, you may want to consider hiring an appraiser to give you a full appraisal of your property before listing your home for sale. Otherwise, an appraiser is usually paid for by the buyer later in the transaction after an offer is accepted. Some of the things an appraiser uses to determine your home’s worth are the location of the home, the proximity to desirable schools and other public facilities, the size of the lot, the size and condition of the home, and recent sales prices of comparable properties, among other factors.
5. Market your home for maximum exposure
The next step is the marketing plan. Marketing includes the exposure of your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc.
Advertising is also a part of marketing. The choice of media and the frequency of advertising depends a lot on the property and specific market. Your REALTOR® will know when, where, and how to advertise your property.
Sometimes, the best marketing comes from experience and networking. The National Association of REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family, and personal contacts. A REALTOR® can make sure your home reaches the maximum number of buyers through cooperation, advertising, and personal networking.
6. Accepting an offer
Perhaps the most complex moment in the sales process comes when you get an offer for your home. Sellers who have chosen the right REALTOR® prepared their home for sale, and priced it right are strongly positioned for a smooth real estate transaction.
It’s important to note that the highest offer is not always the best offer. Sometimes a lower-priced offer, perhaps with a better-qualified buyer or more attractive terms, is more preferable. You can also return with counteroffers to one or more of the buyers. Your REALTOR® will educate you on the terms of the offer and help you understand the offer in the context of the housing market in your area. Additionally, always consult your attorney before signing an offer.
7. Host a home inspection
It is routine for the buyer to hold a home inspection after you have accepted an offer. During these examinations, a licensed inspector determines if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours. Try to leave the premises, be courteous, and make agreed-upon repairs promptly.
8. Sign a purchase and sale agreement
In Massachusetts, it is common practice for the parties to sign a purchase and sale agreement, typically after a home inspection is completed. There’s a lot to consider before you sign a real estate purchase agreement. This document details the specifics of the transaction, such as repairs to be completed, fixtures to remain with the property, and, if a septic system exists, the confirmation of a Title 5 certificate (in Massachusetts).
The typical residential real estate purchase contract is complicated, densely written, and packed with legal jargon, but be sure to read the entirety of the contract carefully. Take your time and ask your REALTOR® questions about anything you don’t understand. Be flexible and willing to negotiate. If you have any questions about your legal rights or responsibilities, you should consider consulting an attorney.
9. Close the sale
At the closing, the buyer will provide funds to buy your home and the settlement agent will review the sales agreement to determine what payments you’ll receive. The title to the property is transferred to the buyers and arrangements are made to record that title transfer with your local registry of deeds. Once the settlement papers are signed and the house keys are transferred, you’re free to move into your new home.