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Typically, the sale of a home encompasses a sequence of 8 key stages.
In the following, we’ll delve deeper into the particulars of each of these steps and outline your role in the process.
Your real estate buyer’s agent will serve as the leader of your home-buying team. It’s essential to understand that not all real estate agents share the same level of commitment to homebuyers. Consider the option of an exclusive buyer’s agent and invest the time in arranging an in-person meeting to interview a dedicated buyer’s agent.
Your buyer’s agent can provide insights on various loan programs, such as first-time homebuyer options, and connect you with a mortgage professional who can furnish a complimentary pre-approval letter for your mortgage loan. Additionally, your buyer’s agent can offer recommendations for a qualified real estate attorney to review contracts and address legal aspects. As you progress in the process, you may also seek referrals for a home inspector (as mentioned below) and an insurance agent.
Getting Pre-Approved for a Mortgage. Before a mortgage professional issues a pre-approval or pre-qualification letter, they will request financial information regarding your income, debts, and savings. The more comprehensive the information you provide upfront, the better prepared you will be when you eventually discover a home that aligns with your desires, requirements, and budget. The loan officer will also assess your credit score. At this stage, there’s no need to shop around for the best loan terms because you haven’t yet found a home, and a lender won’t lock in an interest rate until you have a property under contract. It’s important to note that you are not obligated to secure your loan from the lender that issued the pre-approval letter, but it’s advisable to allow that mortgage professional to compete for your business once you have identified a suitable home.
Beyond determining the extent of the home you can afford, the pre-approval process offers an opportunity to inquire about any additional documentation required prior to obtaining a loan commitment (see below). Furthermore, a pre-approval letter is essential for making an offer on a home.
Any licensed real estate agent should be capable of granting you access to the multiple listing service (MLS). The duration of the home search can vary among homebuyers. Some may discover a property they wish to make an offer on after viewing only a few houses, while others may explore 10 to 20 homes. Focusing on your preferred location and the type of home you desire will streamline and expedite the home-search process.
When you’ve identified a home you wish to make an offer on, your buyer agent should undertake a comparative market analysis, commonly referred to as a ‘CMA.’ During your initial meeting with a buyer agent, it’s advisable to inquire about their CMA process and the information they’ll provide, enabling you to make an informed assessment of the market value of the desired property.
Additionally, it’s essential to engage in a discussion about a negotiation strategy with your real estate agent. A strategy involving more than merely making an offer and waiting for a response is crucial for effective negotiation. Your initial offer should be crafted with your anticipated final offer in mind, as buyers with a well-defined negotiation strategy enhance their chances of a successful outcome.
A written offer is then submitted by your buyer agent to the listing agent, who represents the seller. This offer typically includes a copy of the initial deposit check, usually around $1,000, and a copy of your pre-approval letter. While the response timeframe can vary, it’s customary to grant the seller approximately 24 hours to reply to the offer. It’s important to note that a written and signed offer constitutes a legally binding contract.
It is a standard practice to have a window of seven to 10 days from the acceptance of an offer to finalize the home inspection. Your buyer agent can suggest a selection of experienced and meticulous home inspectors for you to consider, in addition to providing a checklist of other areas to investigate during the inspection period. Beyond the comprehensive home inspection, you might also want to consider additional assessments or tests, like a radon test.
Attendance at the home inspection is recommended for the buyer. Competent home inspectors not only identify potential issues within the property but also address any queries and provide guidance on the maintenance of your new home.
The Purchase and Sale Agreement (P&S) is a more comprehensive contract that outlines the terms between the buyer and the seller. Typically, the listing office prepares the ‘Standard Form Purchase and Sale Agreement,’ but it is advisable for the buyer to engage a real estate attorney to review the P&S. The buyer’s attorney is likely to include an addendum to the P&S, incorporating provisions that safeguard the buyer’s interests. The P&S also designates the deadline for the loan commitment (as mentioned below), which represents the final day for the buyer to withdraw from the home purchase without risking their deposits due to an inability to secure financing.
In Massachusetts, it is customary for the buyer to submit an additional deposit (with an initial deposit of $1,000 made at the time of the offer) when signing the P&S. Depending on the buyer’s chosen financing method, this additional deposit may equal the remaining 5 percent of the home’s price, but there may be variations in some cases. Both deposits are securely held in escrow by the listing office until the closing (as detailed below).
The buyer’s lender typically initiates a real estate property appraisal shortly after the signing of the P&S. In Massachusetts, appraisers are required to hold licenses. The lender’s appraisal serves the purpose of confirming that the property’s fair market value is at least equal to, if not greater than, the purchase price agreed upon by the buyer.
Typically, the closing occurs within a timeframe of four to eight weeks following the acceptance of an offer. The closing event generally transpires at the office of the closing attorney or the Registry of Deeds situated in the county where the property is located. Several legal documents await the buyer’s signature during the closing, with two of the most significant being the note (signifying a commitment to repay the loan) and the mortgage, granting the lender the legal authority to take possession of the property in the event of loan repayment default.
Furthermore, on the closing day or the day prior, the buyer should conduct a final walk-through to ensure the property remains in the anticipated condition and that any personal belongings not included in the sale have been removed.
If you wish to arrange a meeting with an exclusive buyer agent to discuss the intricacies of purchasing a house, condominium, or multi-family home, please don’t hesitate to reach out to us. At BuildEstate, we can provide comprehensive insights into the home-buying process, elucidate the benefits of utilizing an exclusive buyer agent, and clarify various terms pertinent to Massachusetts homebuyers.
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