The Real Estate Buying Process - Step 1 Introduction

During a recent appointment with one of my clients I was asked to explain the buying process. This client, a first time buyer unfamiliar with the process, explained that every step after the initial offer was a mystery. Consequently, I explained the process in detail offering examples where I felt they were necessary. Slowly it began to make sense and I watched as my client began to feel a bit more at eased. 

Helping a client feel more comfortable and relieving stress is always a positive aspect to my profession, yet I was not completely satisfied with how the situation was resolved. I realize that this client’s immediate curiosity was quenched; however, I deemed my actions insufficient. My shortcomings were not due to my answer. In fact I felt confident that my reply was an accurate description of the buying process. The issue arises due to human nature. My client had listened with the intentions of remembering everything, yet many times people forget. Obviously, I would always be willing to explain the process as many times as necessary, but why should I force clients to rely on my verbal explanation when I could just as easily create a written resource for all my buyers?

As a professional dedicated to my client’s understanding of the real estate process this question was far too valid to ignore. Therefore over the course of my next few blogs you will find “The Buying Process” complete with examples and explanations to help clarify situations. To avoid confusion I have written this description from the point a buyer finds their dream home. I hope you find this information helpful and look forward to answering any questions you may have as readers.

Step 1: Writing an Offer  

There are quite a few decisions to make regarding your initial offer. With the help of a realtor who researched the market properly you should be able to develop a reasonable price to offer the sellers. Many buyers unfamiliar with the process think that price is the only issue of importance. This is incorrect because the terms of a contract may be just as important as the price.

Example: Consider a seller who has a family and purchased new construction scheduled to be finished in late September. This seller decides to sell their current home in June, yet wants the closing to coincide with the closing on the new home to be purchased. In the middle of July two separate buyers both write up offers for the home on the same day. After negotiation with both buyers concludes the seller is left with a decision to make. The first buyer is offering $20,000 more then buyer number two. The catch, however, is that the first buyer demands to close in August so that their children can be enrolled in time for school and settled in the new home. Buyer number two is willing to wait to September to close. The seller thinks it over and decides that buyer number two’s offer was better because it saved the seller the inconvenience of having to find a place to stay for a month. Another words the money was not worth the inconvenience. This seller’s decision may have been different had the first buyer offered $50,000 more, but who knows maybe not. The point of this example is that in real estate time is money and depending on the motives of an individual the outcome will change.

The terms of the buying contract are as follows:

1. Purchasing Price
2. Initial Deposit
3. Additional Deposit
4. Home Inspection / Radon Test / Lead Paint Test
5. Mortgage Contingency
6. Closing Date / Balance of Deposit

Each of these contract terms will be addressed in chronological order; however, while writing the contract you need to first focus on four components.  The four components are the dates of each term, how motivated you are to purchase the home, the current state of the real estate market, and if there is any other interest or offers on the home. Why are these aspects important to writing the offer? They are because each will force you to make contractual decisions crucial to purchasing your dream home.  

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