Thinking about Buying a Home?

Buying a home can be one of the most rewarding experiences of your life—and also one of the most stressful. A mortgage is often the largest contract you’ll ever sign, and the unfamiliar terminology and stacks of legal documents can feel overwhelming. But it doesn’t have to be stressful. With some preparation and the right approach, buying a home can even be enjoyable.

The Cast of Characters

Get to know the key players in the home-buying process. While they’re here to help, they also have a business to run. So who are these professionals, and how do they fit into your home purchase? Meet the cast and learn how to choose the best team to guide you.

How do I find an Agent?

Angela, The Real Estate Agent

You’ll often find Angela showing homes to buyers whenever she can—her income depends on selling houses. Real estate agents are professionals whose job is to help you buy or sell a home. However, it’s important to understand that different types of agents have different duties and interests. For example, an agent who brings a potential buyer to a property may not be acting as the buyer’s agent. Instead, they could be a subagent of the seller’s agent, meaning their loyalty is to the seller, not you.

If you want an agent to represent you exclusively as a buyer, look for a buyer’s broker. A buyer’s broker is obligated to keep your information confidential, negotiate on your behalf, and can put the terms of your relationship in writing. Before signing any agreements, it may be wise to consult an attorney to explore your options.

The fees you pay a real estate agent are often included in the home’s purchase price. When a home is listed for sale, the listing agent typically shares the agreed-upon commission with the agent who brings the buyer. Commissions are usually a percentage of the sale price, which gives agents a financial incentive to sell a higher-priced home.

You can search for a home on your own, but if you plan to work with an agent, start by asking friends, family, or coworkers for recommendations. Interview several agents to find someone you feel comfortable with. Here are some questions to ask potential agents:

  • How long have you been in the real estate business? What training and designations do you have?
  • Can I have a list of references?
  • How many homes have you listed or sold in the past year?
  • How well do you know the area that I am interested in looking at?
  • What fees will I pay for your services? Many agents may suggest that their commission is fixed, but by law, all fees are negotiable.

Agents may ask you to sign either an exclusive or a nonexclusive representation agreement. An exclusive agreement commits you to one agent for the duration of the contract, while a nonexclusive agreement allows you to work with multiple agents. Keep in mind that an agent under an exclusive agreement may be more motivated to work diligently on your behalf. If you choose an exclusive agreement, be sure to negotiate its length so you aren’t locked in for an unreasonable period—typically no shorter than 60 days and no longer than six months.

Laurie, The Loan Officer or Mortgage Broker

You’ll know Laurie by her tireless number-crunching. Introduce yourself to her early in the home-buying process—she’s the one who determines if you qualify for a home loan and helps you understand what you can afford. She also collects and verifies your credit, employment, and other income information. Laurie is the first of three key people you need to impress to secure a loan, followed by the loan processor and underwriter.

Paul, The Loan Processor

You may never meet Paul in person, but you’ll cover his work through your closing costs. Paul reviews all the financial and employment information your loan officer collects. If he determines you’re a solid credit risk, he forwards your paperwork to the underwriter.

Ulysses, The Underwriter

This character appears later in the process but plays a crucial role: the underwriter gives the final approval for your loan. They review your records to ensure you are a solid credit risk before the loan is finalized.

Alfonso, The Appraiser

Alfonso provides your loan officer with an independent assessment of the home’s value. He visits the property, compares it to similar homes that have recently sold nearby, and determines a fair market value. His appraisal may show that the home’s actual value is higher or lower than your offer. For FHA or VA loans, you must use an appraiser certified by the respective agency.

Alyssa, The Attorney

Everyone wants an Alyssa on their side. Her role is to protect your rights, safeguard your interests, and anticipate potential legal issues. A lawyer can be especially helpful in complex home purchases. For instance, if the home has been in foreclosure or is part of a contested will, she can clarify purchase terms or help you negotiate better ones.

A lawyer is also valuable when buying a For Sale By Owner (FSBO) property—where the seller isn’t using a real estate agent—or if you’re dealing with a seller-financed mortgage or a “Contract for Deed,” where you make payments directly to the owner acting as the lender. Additionally, she can review your purchase agreement, ensure the seller provides all necessary documents at closing, and convey a marketable title.

Attorney fees can be high, so decide in advance how much service you need and negotiate a fee agreement upfront.

How can I find the right home

01

Visit Open Houses

Visiting open houses is easy, fun, and a great way to get an overview of the market. No appointments are needed—just stop by and walk in.

Misconceptions About Open Houses: Only a small percentage of homes are actually sold through open houses. They may be hosted by the seller or the seller’s agent, and some agents use them as a way to meet potential new clients. Keep in mind, the agent hosting the open house is loyal to the seller.

If you’re working with a buyer’s agent, they may advise against attending open houses on your own. Signing in without disclosing your agent could create complications later, and hiring an agent you meet at an open house while already working with another agent could lead to commission disputes.

02

Multiple Listing Service (MLS)

The Multiple Listing Service (MLS) is the primary tool real estate agents use to find homes that match your needs. Consumers can often access much of the MLS data and may list a property using a fixed-fee service. The MLS is a constantly updated computerized database showing homes for sale by neighborhood, price, and features.

Many agents who subscribe to the MLS also offer virtual tours, allowing you to explore homes from the comfort of your own home. You can also browse listings online at sites like www.agencyrealestate.com, or directly on individual realty company websites.

03

The Home Inspection

After buying a home, repairs can quickly become costly, turning your dream home into a “money pit.” Even relatively new homes can have issues like wet basements, unstable foundations, or damaged roofs. A thorough home inspection before you buy can help you avoid unexpected expenses. It’s important to hire an inspector whose loyalty is to you, the buyer.

04

Making an Offer

Some buyers fall in love with a home within seconds of walking in. Even the most experienced buyers can’t ignore their emotions - the garden with the bay window, a cozy fireplace, or a luxurious master suite can all pull at your heartstrings. While it’s natural to feel this way, try to keep your emotions in check when making an offer. Rely on your business sense to guide you toward a smart, informed decision.

05

Understanding the Purchase Agreement

The purchase agreement is the key contract in buying a home. It’s submitted when you make an offer and becomes a legally binding contract once the seller accepts it. If you change your mind after your offer has been accepted, be prepared for a challenge. The purchase agreement legally commits you to buying the home, and attempting to back out could result in costly legal fees—and you may still be obligated to complete the purchase.

Read the purchase agreement carefully. If any provisions are unclear, consider having a real estate attorney review it before you sign. A real estate agent may try to rush you if another buyer is interested in the same home, but don’t feel pressured. Make sure you fully understand the agreement before signing.