Imagine trying to win a basketball game without knowing the rules.
You'd be out in the field not knowing the difference between a straight up good defense versus a flagrant foul (clotheslining, eye poking, grabbing of jerseys etc).
It wouldn't matter if you were 6'5 and 230 pounds. If you didn't know how the game was played, even a elementary school player could beat you.
Real estate is similar. Buying a home is not like buying anything else. It has procedures, which in most cases are rigorously followed. For many the process may seem daunting as vacationing in Paraguay.
But it's not rocket science. You just have to know what to expect so you won't be lost in the mire of unmet expectations (or the lack of).
In quickstep, here are the 12 procedural motions you'll want to go through in making a purchase:
1. Pre-approval--you decide you want to buy (or at least you want to look) and get pre-approved.
2. Agent--along the way you can talk with one or more agents who will show you properties.
3. Offer-- you find the home of your dreams and make a written offer on a document called a purchase agreement, usually for less than the sellers are asking. (verbal offers aren't illegal, just unenforceable.)
4. Counteroffer--if the sellers don't accept, they may make a counteroffer, which you may in turn accept or decline, in which case you may then counter.
5. Acceptance--the sellers eventually accept your offer, or one of your counters. (if the sellers don't accept, start over with Step 1)
6. Escrow--your agent or you open escrow. Used today in most states, it is a licensed and bonded company that acts as a neutral third party. The escrow holder receives all funds, makes sure that all documents are properly executed, and when all the conditions of the sales agreement (and the lender) have been met, transfers title to you, records the mortgage in favor of the lender, and gives the sellers their funds. Escrow typically lasts 30 to 60 days.
7. Financing--you secure your financing (if you haven't already) from the lender who pre - approved you, or some other lender.
8. Approvals--you approve (or disapprove) a home inspection. You approve ( or disapprove) the seller's disclosure about defects in the home. If you disapprove, you may negotiate a lower price, get sellers to fix the problem, or get out of the deal, depending on how your purchase agreement was worded.
9. Contingencies--you fulfill any other obligations you're committed to as part of the sales agreement, such as putting extra cash into the deposit or approving a contingency. The sellers do likewise, such as providing termite clearance, obtaining clear title, and clearing any contingencies they may have.
10. Funding--your lender agrees to fund your mortgage.
11. Walk-through--you have a final "walk through" inspection of the property. Then you sign the final documents (mostly loan papers); the escrow records the documents and transfers the funds.
12. Possession--you get possession and the key!
*Thanks to Rober Irwin for making this topic even more clear to me.
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