Buyer’s Guide: What do I need to do to Buy a House?
Buying a house can seem like a daunting task to first-time home buyers, but it doesn’t have to be. This may indeed be the most expensive thing you ever spend money on, but it can also be the place where your dreams come true and your precious memories are made.
Your step-by-step guide to buying a house will show you the ropes as you adventure into this new chapter in your life.
What Steps Are There to Buying a House?
6. Inspections, Appraisal, Surveys, & Title Work
7. Closing Time
8. Move In Day
How Do I Get Pre-Approved for a Home Loan?
The first things to know about getting pre-approved for a home loan are that you generally need 2 years of employment history, the last 2 years of filed federal taxes, 2 months of bank statements, and 2 months of paychecks stubs. This is pretty standard for most lenders. Some lenders may have more requirements, but most will not have less than these requirements.
Local lenders we love include:
1. Cole Taylor with Bozarth Mortgage in Guthrie, OK.
2. Jacob Williams with Guaranteed Rate in Oklahoma City, OK
3. Kevin Ridenour with First American Mortgage in Yukon, Oklahoma.
Cole is a good soul who will meet you in the office or wherever is convenient for you. He represents the best of southern hospitality, plus he has an ice cream shop right beside his office- Yum Yum Junction.
Jacob has helped my buyers keep money in their pockets and got them financial assistance for their down payment. Buyers also love the gifts he brings to closing for them! Fire up the BBQ!
When we thought we were not going to be able to buy our home, Kevin jumped in and saved the day. We changed lenders and quickly went under contract with Kevin walking us through each step.
Choosing the right lender for you is so important to the home-buying process. When you don’t have a great lender it can royally mess up the entire experience for you.
One of my buyers worked with Rocket Mortgage who delayed my buyer’s closing for several months because they failed to schedule an appraiser, then they lost some of the buyer’s paperwork, then they wouldn’t let the buyer purchase the entire property- not a great experience for my buyer to go through, but in the end, the selling agent and I pulled it off and we got the deal closed. My buyer ended up getting several acres for $1 in the deal since the lender refused to include them in the purchase.
Remember it is important to get pre-approved- not pre-qualified! You need to have a pre-approval letter in hand when you make an offer on a property, not a pre-qualified letter. To learn more about the difference between pre-approved and pre-qualified read Investopedia’s Jean Folger’s article, “Pre-Qualified vs Pre-Approved: What’s the Difference?”
If you are a Veteran, the obvious choice is a VA loan. If you are buying in the country or a small town, go with a USDA loan as they tend to have lower interest rates, require no down payment, and will cover closing costs- great for the first-time home buyer! The most popular loans are FHA and Conventional. FHA loans require as little as a 3.5% downpayment while conventional loans can be up to 20% down payment but have looser credit score requirements.
Not sure which mortgage to go for? Read this article on the differences between the loans for a deeper breakdown of them.
How do I Choose a Realtor?
Asking friends, family, and neighbors whom they used as a Realtor that they liked is a great starting point, but sadly many people forget who held their hand through the process.
Some look to Google, Zillow, or Realtor.com which can be good sometimes… Zillow and Realtor offer you, Realtors who pay them big money to be featured on their sites- this does not always translate to a compatible Realtor or even a good Realtor.
Google can be tricky because while you can see which Realtors have reviews and which ones do not, this is also not a true reflection of the Realtor’s ability. Many Realtors pay for reviews or provide incentives to get reviews. Don’t discount Realtors who have no reviews this doesn’t mean they are not good Realtors. Do be cautious when proceeding with Realtors with poor reviews- people like to complain but if a Realtor has several bad reviews from different people you should probably keep looking.
The other issue you can run into is posers- those who claim to be Realtors, but they aren’t. Check to be sure you are working with a licensed real estate agent and that they are a member of your local, state, or national real estate association. They should be able to provide their license # as well.
One thing you should NEVER do is work with several agents without telling them you are doing this. Many times a Realtor will ask you to sign an exclusive buyers broker agreement which just means you are using them as your buyer’s agent and all home tours should be booked through them. Agents really don’t like finding out after the fact that you have been looking at homes with other Realtors as well. All Realtors have access to the same houses regardless of how many listings they have. Interview a few Realtors, but choose one to work with.
I belong to the Oklahoma City Metropolitan Association of Realtors (OKCMAR), the Oklahoma Association of Realtors (OAR), & the National Association of Realtors (NAR). Each state has a website for licensed real estate agents where you can check their license # to be sure they are currently active. Locally we can check Oklahoma Real Estate Commission (OREC) for licensee accreditation as well as read the code and rule book, file complaints, and find common contracts and forms. My license # is 149448.
Go ahead click the OREC link and check my license #- you know you want to. 😊
The Realtor you work with should be able to provide all of this information to you. If they cannot, they are not the real estate agent for you. One can be a licensed agent, but if they do not belong to professional trade associations then they are not Realtors so they are not bound by the same ethical standards as those who are Realtors. If they are not Realtors, chances are they do not have access to the MLS either.
The MLS is that wonderful database that shows Realtors all of the homes on the market, the upcoming properties, the pending properties, and the sold properties. Is this needed? Well, only if you want your agent to have access to every property on the market. Any real estate agent who is not a Realtor and does not have access to the MLS has to search listings on Zillow, Realtor.com, and Craigslist- all the things you can do yourself. What a time-waster! Do yourself a favor and choose a Realtor.
Now that you understand the importance of choosing a Realtor, not just an agent, how do you decide which one to work with? Attend open houses- do they greet you or are they on their phone? Did they knock on your door recently or send you a cutesy letter in the mail? Those seemingly little things are huge in the real estate world. Greeting you, door knocking, and mailing letters are all ways the Realtor tells you they want to work with you. Looking at their phone and posting only on social media says they don’t have time to meet you face to face because they are busy with social media.
Don’t get me wrong- social media has a time and place but it should not be your only source of how you choose a Realtor. You are about to make the biggest financial decisions of your life and you need someone who is there to guide you through it all they can’t just be a pretty face on social media. Don’t discount the newbies either- they are fresh out of school and if they have a good broker then they will perform well too, if they don’t, their broker will fix any issues they encounter making your transaction as smooth as possible.
Key takeaways: do your research and go with your gut- if you met them and liked them, use them- of course after making sure they are licensed to be an agent. If you are in the metro area of Oklahoma, I would love to work with you or help you find an agent that fits your needs. Contact me!
What is the Best Way to Search for a Home?
The best way to search for a home is to have a great real estate agent! Let them do what they are paid to do! Your Realtor can set up MLS searches that are fit to your needs and have them automatically sent to your email each day, every few days, however often you want them. They can have them come to them first as well to approve before sending them to you. This ensures that no property you might want to tour gets past you.
Once you hire a Realtor, you really should not need to scour pages for hours looking at properties. Let them do their job and you start picking out paint colors and curtain patterns.
The best thing you can do is be real with your Realtor. If you don’t like a house- tell them. If you love a house- tell them! Realtors are not mind readers- they only know what you tell them. If you spend the first day looking at houses you abhor- tell your Realtor exactly what you didn’t like about them.
Common reasons people don’t like houses:
1. Location- too close to XYZ (train tracks are a doozy!) not close enough to XYZ, terrible view, whatever it is about the location tell them! Otherwise, they may just keep looking in that area that you don’t want. Location matters the most when choosing a house. You can change everything else about the property, but you can never change the location.
2. Price- many Realtors want to push you to the max budget because after all they do get paid based on the sale price of the home- the more you pay, the more they get paid. If the average house in your market is $150,000 and you qualify for $300,000 and all your Realtor is showing you are $300,000+ homes check to see if there are homes for less that meet your desires- if there are, ask to see them. If the Realtor declines to show those then you know they are not looking out for your best interest, but that of their payday. It is possible that a Realtor doesn’t show you houses on the lower end because they don’t fit your tastes- like requiring marble countertops, a pool, and 4+ bedrooms- which is understandable. Just remember, in Real Estate you have to be willing to pay more for luxury, no one is going to sell you luxury at an economy price, and at the same time- don’t pay luxury prices on an economy home.
3. Style- if your Realtor shows you ranch after ranch and you prefer Victorian- did you tell her? If he keeps showing you turn-key new builds and you want more of a budget-friendly fixer-upper- did you tell him? If you did tell your Realtor and they just aren’t listening it may be time to cancel that Buyer Broker Agreement you signed with them and find a new agent. If you didn’t sign that agreement yet, then simply let the agent know you don’t feel like you are compatible and would like to work with another agent. No harm, no foul.
4. Size- if you need a 5-bedroom house but tell your agent that a 3-bedroom is okay- then most of the houses you look at will be… 3 bedrooms. Why? Because most houses built in America are 3 bedrooms. Oddly enough, according to Statista- 2 bedrooms come in second most popular followed by 4-bedroom homes. Just 4.6% of homes in America are 5 or more bedrooms. So you may be looking for that unicorn of a home for a while. Contact Us about finding land and the perfect house plan to fit your needs if you are the unicorn category.
5. Interior Design- this is the worst reason to not choose a house. If the layout is funky that is understandable, but if it's because of the paint colors, flooring, tile choices, backsplashes, kitchen counters, appliances, or the flowers in the garden then get over it! Those are all things that are easily replaced. If the location, price, style, and size are all good fits, then do yourself a favor and make an offer- you can repaint, refloor, retile, and garden to make this home truly yours!
How Do I Make an Offer on A House?
Once you find the perfect house and you are ready to make an offer, tell your Realtor! They have been waiting for this moment and are excited to write that offer. Just be aware that in the state of Oklahoma, it's illegal to sign a contract on a Sunday. So make that offer by 11:59 pm Saturday or early Monday at 12:01 am to keep all things valid and enforceable.
If you think about it- you already knew that law. It’s why car dealers aren’t open on Sundays. They cannot legally sell you a car on Sunday because they cannot enter into contracts on Sundays in Oklahoma. So now we know. Not to say that there haven’t been Realtors who have done so- as long as the contract isn’t contested they likely go unnoticed- but if someone did contest it, the contract would be found invalid and unenforceable.
Your Realtor will run comps also known as a comparable market analysis which will tell them what is a reasonable offer to make on the home based on similar homes in the area that sold within the last 90 days- unless the market is slow, then they may go back as far as 180 days, or if the market is hot then they may only pull 30 days for comps.
Once you know what the house is worth, you and your Realtor will sit and hash out the details. Decide what to include in the offer- you love the fancy chandelier in the foyer but hate the wall mounts in the living room- guess what? Those are fixtures so they come with the house unless you ask for them to be removed. And sometimes fixtures are removed because the homeowner added them and thinks they are theirs. So ask for the chandelier to remain, just in case, and ask for the wall mounts to be removed. Otherwise, move-in day may come and those ugly wall mounts will be there and the fancy antique chandelier removed and replaced with a standard fixture.
If you want it or don’t want it- stipulate it in the contract!
Remember fixtures are anything permanently attached to the house. If you took the roof off the house and turned the house upside down- anything that would fall out is not part of the house- the rest is a “fixture” in the house and is supposed to remain. But like I said before, if they added it they may think they can take it- so ask for it.
True story- we asked for the old farmhouse kitchen sink to remain because it was unique and the homeowner said it was the only thing she liked in the kitchen. Me too! I was worried she might try to take it with her- so we included it in the contract! But we didn’t ask the owners to remove their items from the basement. Never even crossed our minds that they would leave personal belongings. They did! They left an entire basement of junk- 20 years' worth! We had to pay a trash container guy to bring out a 20’ container for us to put all their junk in and haul it all away.
Learn from others’ experiences- if it’s not in the contract you cannot enforce it, so if you want or don’t want something- write it in the contract!
The contract is your Realtor’s baby and they will usually make sure everything is good. All you have to do is check the additional information you added like keep and don’t keep items to be sure it’s correct and sign the offer. Then you wait…
What Ways Can A Seller Respond to My Offer?
1. Accept- this is the best scenario for all involved. You have a contract and it was easy peasy.
2. Counteroffer- this means that the sellers approve of most of your offer but some items they disagree with and have changed. If you agree to the changes you have a contract once you sign the counteroffer. If you disagree with the counteroffer, then you will write a counteroffer to their counteroffer. This can go back and forth several times until you have a signed contract or either party decides to walk away from the deal.
3. Rejection- this is the worst scenario for the buyer. Chances are if the seller doesn’t even counter they feel insulted because you lowballed them. If you did not lowball them, then have your Realtor ask why they flat-out rejected the offer rather than countering. Most agents want the sale and will tell you why the offer was rejected so you can write another more acceptable offer to their client.
4. Multiple Offers Come in at Once- This is great for the seller, but bad for the buyers involved. Agents cannot disclose what the other offers are, they can only say if they accept or reject your offer. Most selling agents will let the buyers’ agents know that there is a multiple-bid scenario occurring. This means that you need to be prepared to bring your highest and best offer if you want the house. This is why the best time to buy is winter, early Spring, and late Fall- no competition- at least in Oklahoma. Summer time= bidding wars.
I am Under Contract! What Now?
Once you are under contract on a house, it’s time to get to work.
Tasks you must complete in order of typical due dates:
1. Earnest Money must be deposited with the chosen Title Company or your Realtor’s Trust Account within 3 days of a signed contract. In Oklahoma, many sellers will accept $250- $500 for Earnest Money. Check with your Realtor for what you will be expected to pay so you don’t have any surprises. The Earnest Money goes towards closing costs unless you break the contract, then the Earnest Money goes to the Seller for breach of contract.
2. Hire a licensed home inspector. Ask your Realtor for recommendations or friends and family. If you are in Oklahoma, contact us and we can set up a home inspection with you. See my article on Home Inspections 101 for more information. Pay attention to the contract dates because you only have so many days to get the home inspection completed- usually within the first 10 days after the contract date. Most home inspectors prefer payment on the day of inspection, but some will allow you to bill to close.
3. Once the home inspection is completed, you can ask the seller to cover the costs or have them complete a TRR (Treatments, Repairs, or Replacements) request. If the seller refuses to correct issues, then you can back out of the contract without penalties. If the seller agrees to the TRR requests, then they have 7 days to get the TRR requests completed. You will then want to reinspect the work they had completed to be sure it was done properly.
4. Find an insurance company. You want to call several agents to get quotes from. Once you choose the insurance company you will let the Title Company know their contact information. They have work they have to do together with your lender. If the taxes and insurance will be rolled into your mortgage they will all work together to make sure that happens. Which is also best for you so you don’t get stuck having to pay a huge lump sum payment to the insurance company or the county for your property taxes. You should also make sure to get Replacement Cost NOT Actual Cash Value (ACV). Some insurance companies will sell you ACV to win you over by having lower initial premiums. This is not good for you though. If your new 2000 sq ft home burns down in a week and you paid $100,000 for it because it needed some work done, guess how much you get from insurance- $100,000. So unless you can find another fixer-upper home of the same quality for $100,000 you are kinda screwed with most new builds costing about $150 per square foot (psf) you are looking at $300,000 to build back what you had before- of course, it's new but do you have that kind of cash? Go for Replacement Cost Home Insurance so you can rebuild your home. With just $100,000 even on the low end of $100 psf, you would only get a 1,000 sq ft home built.
5. Complete surveys of land. If the property is acreage, you will want to get a pin stake survey completed so you know exactly where your land is and where the neighbor's land is. It would be terrible to spend thousands of dollars on new fencing and then find out you built it on your neighbor’s land.
6. Final Walkthrough. The day before or the day of, depending on what time you close, go through the property to ensure that everything is as it should be. Your sellers should be moved out of the house by this point unless they requested an extension for move-out day. Once you close there is no going back- you have accepted the property in its current condition. So it is on you to be sure everything is good. I do not recommend doing an extension, regardless of how nice the sellers are. We allowed the sellers to remain in our home for 2 weeks past the closing date. That was a mistake. When we took possession of the house, the yard had giant wheel marks from the moving truck, and the concrete and bricks were broken going up to the house from them driving on them. The hardwood floor was also damaged in the laundry room where they had left two refrigerators unplugged and thawing which we had to dispose of. Our exciting adventure became a nightmare money pit. Let our experience teach you so you don’t go through what we have gone through. Read our experience of rehabbing this 1930 Craftsman.
What Happens During Inspections, Appraisals, Surveys, and Title Work?
Inspections
Your home inspection can be very insightful and helpful to get to know your house better. Let your home inspector do their thing but be ready when they say, “Hey you should come to look at this” because chances are if they are stopping what they are doing- getting out of their groove- it’s something you will want to include on the TRR request. A good inspector will do a thorough walk-through of the home starting from the outside working their way inside from top to bottom. They will inspect from roof to foundation and everything in between. At the end of it all you get a full report of their findings. There should be pictures showing the good, the bad, and the bad.
Home inspectors are not looking for cosmetic issues- they may note them, but they are non-issues for them. They are looking for structural issues, systems issues, and potential failures. Their goal is to make sure the home you are buying is safe and structurally sound. Read Home Inspections 101 for more information.
Appraisals
Your lender will send out an appraiser to appraise the house. As long as your Realtor did their job, your house will appraise. An appraisal is conducted to see how much the house is worth. If your house does not appraise for the purchase price you have one of two options:
1. Make up the difference between the purchase price and the loan amount- which be adjusted according to the appraisal report.
2. Ask the sellers to reduce the purchase price to the appraised amount.
In a market with lots of cash buyers the first option might seem like a good idea, just remember that if you do this you have negative equity in the property- not a good idea. The 2nd option is the better route to take. The sellers won’t be able to sell to anyone else who has a lender at the price they are asking anyways, so they either reduce the price or wait for a cash buyer to pay the amount they want.
Surveys
This is only necessary if you are buying a property with acreage. You will ask a surveyor to perform a pin-stake survey of the property. Read Land Surveying for more information on the process and hiring a surveyor. There are not a lot of land surveyors because they require a college degree. They command a pretty steep price- set aside $1000-$3000 to pay your land surveyor. If they come in cheaper- yay! But if not, then at least you planned for the expense. Not a bad day’s work unless of course, you hate the outdoors.
Title Work
The Title Company you choose to close at will be diligently making sure everything is getting done to close on time and issuing you a warranty deed. You do not want a quit claim deed. Those do not come with a guarantee that no one else can lay claim to your land. Sometimes properties have this if a couple of divorces or they inherit the property and no money exchanged hands upon transfer of title. But for you- get a warranty deed. The Title Company insures the deed to your land and will handle all disputes that could arise to later claims to the property. It doesn’t happen often, but you want to be protected in case it does.
Show love to your Title Company workers! They are what make everything work in the end.
What Happens at Closing?
You and your Realtor will come to closing at the Title Company. My favorite Title Companies are the Old Republic and American Eagle Title Company. They are always friendly and pleasant to work with.
You will be greeted by, hopefully, happy smiling faces. Your assigned closing agent will have a big pile of papers for you to sign. They will go over all of the most important details with you. The selling agent will give them the keys to your new house which you will receive upon the end of closing.
Make sure you have a cashier’s check from your bank for the down payment and closing costs to give the title company. You may also choose to wire the funds to the closing company, but this may cost you a fee from your bank, schedule ahead of time so everything goes smoothly on closing day.
Usually, unless otherwise stipulated in your contract, you will take possession of your new home as soon as closing ends. Congrats!
How Should I Plan for Move-In Day?
As a Realtor, I try to close on Thursday or Friday morning so that I can send in a house cleaner so that when my buyers move in on Saturday morning the house is nice, fresh, and clean.
Have you ever moved? Usually, when people move, the last thing on their mind is to clean the place they are leaving since they can’t wait to get into their new place of residence. I don’t want my new buyers to move into a dirty house or have to clean up someone else’s mess. If your Realtor is not sending in a house cleaner then you should plan a day for that to happen- whether it’s a professional or you doing the cleaning. It is easier to clean with nothing in the home.
Local move? Skip the moving truck if you are tight on money. Ask your friends and family members who have trucks to come to help you move your furniture to your new home. If you have been living in an apartment to this point, you probably don’t have a lot you even want going into your new home, time to ditch the card table and folding chairs as a dining set.
Register online as soon as you go under contract and let all of your family and friends know when closing day is. They can purchase your housewarming gifts and have them sent to your new home if you like- just like that you have a new dining set!
If you are moving to a new city or state, you will want to budget for a moving truck. When we moved from Oklahoma to Virginia (and then back to Oklahoma a year later) we spent about $800 on a moving truck that we drove each way. When we moved to Italy, we gave away nearly everything, only keeping the clothing that we could take with us and leaving some toys and board games at the grandparents. If you are like we were when we moved back to the States, we had to buy all new stuff so moving day was super easy! We had nothing but clothes and some toys and board games. We ordered new furniture from Wayfair and assembled it when it arrived.
You also need to schedule the utilities to be put in your name on the day of closing.
Utilities to contact:
Water, sewage, trash (ours is all the same bill)
Electric
Natural Gas or Propane
Cable, internet, home alarm company, landline (if you need one)
Conclusion
Who knew buying a home entailed so many steps? Lots of work goes into getting you the home of your dreams. Be sure to thank your Realtor, Home Inspector, Surveyor, Lender, and Title Company Closing Agent because without them your new dream would not be a reality. Looking for a Realtor to buy, sell, or invest in Oklahoma? Contact Realtor Rebecca Pittman today!
