One of the most common questions I get asked by people looking to purchase real estate is simply “how does this work, what do I need to do?” Whether you are buying a residential home, a lake cabin, or hunting land the basic steps are the same. There are of course differences between those property types that can make one more complicated or simple than the other but the stages of purchasing remain the same.
#1 – Financing
The first step often gets relegated to the later stages, but really it is pretty important to make it step one. Determining how you will pay for the property you ultimately will buy decides how much you can afford which will affect other factors such as location and size. If you know you have the money in the bank and will be paying cash then your pre-search work is pretty simple – decide how much of your nest egg you want to spend. If you are going to get a loan for your purchase then you will have to do the work of shopping for and finding a lender and getting pre-qualified. Talking with a lender or mortgage broker early on will save you time in the long run by finding the best lending program for your situation as well as finding out exactly how much you can afford and how much you will need to bring to closing.
#2 – Search
This is where most people start. Although it isn’t wrong to begin searching as your first step, you can waste a lot of time by not getting your financing figured out first. The vast majority of people begin their search on the internet by going to various websites which list properties for sale. The Town & Country Team website is built around this type of searching and you can find any listing currently available on the NorthStar MLS here. This encompasses most of Minnesota and Western Wisconsin. When conducting your search make sure to take advantage of the tools available to you on our site which will greatly simplify your efforts and will notify you by email when properties you are interested in come up for sale. This is especially important in today’s market where hot properties sell within hours of being listed.
Also, don’t forget about contacting a real estate agent directly to help you out with finding a property. Realtor’s can offer personalized service and advice to match your situation and needs. We can also provide more detailed search filtering for criteria that isn’t usually available on the internet.
#3 – Showing
Near the end of your search phase you will have come up with a short list of properties you are considering purchasing. Talk with your Realtor about setting up showings. Your Realtor will gather information on the properties that you will want to review while evaluating a property and will schedule the showings as close to your schedule as possible.
#4 – Offer
Once you have identified the property you want, it’s time to make your offer. At this stage your Realtor will put together the documents that will constitute your offer. There are also a multitude of options and contingencies that you will have to decide whether you want to include in your offer. Your Realtor will work with you here and will advise you on the different options and how they can benefit you and how they will help or detract from your offer.
Often included in the offer phase are counteroffers. This is a negotiation phase where the buyers and sellers come to an agreement on the various terms of the purchase contract. Usually the main term is price but other aspects of the transaction, such as closing date, can be negotiated as well.
#5 – Contingencies, Inspections, and Appraisals
Once a purchase agreement has been finalized and accepted by both parties, the transaction enters a phase where any contingencies that were agreed to in the purchase agreement need to be addressed. Contingencies are items listed in the purchase agreement that need to be satisfied in order for the purchase to close. Commonly these are inspections and financing milestones such as appraisals. Contingencies usually come with deadlines that they need to be satisfied by, so clocks start ticking the day the purchase agreement is signed.
#6 – Closing
Prior to the date set in the purchase agreement for closing, your transaction will be sent to a title company or attorney to handle the title work. Title work consists of searching the title history of the property to make sure no one else has a claim to the property and to ensure you are getting what you thought you were buying. They will also prepare the paperwork necessary for transferring the deed and taking title. They also facilitate the payment and will work with you to ensure your transaction is conducted safely and smoothly.
Once closing is completed, in most cases you are done. Whether you are buying land or a home the steps are the same. Land can be more streamlined as often times there are no contingencies involved, but getting to the closing table will take you through the same process.
If you need help getting started on your journey, let us know we can get you going and on your way to step 6. Give us a call at 651-362-0123.