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Buyer's Guide (Steps of the Buying Process)

These are the typical steps involved in making a real estate purchase. Not every transaction is the same, and unless you have sufficient experience in Real Estate transactions, you should select a Realtor to represent you in at least the final phases of a purchase transaction.
STEP 1: Estimate your Budget

First, use the HUB Purchase Calculator to help you determine your budget.  This uses your income, debts, and down payment to help you determine how much house you can afford.  Us the Advanced Tab of the calculator to estimate your property taxes and insurance as part of your monthly budget.

STEP 2: Find the Right Mortgage

If you are using the HUB Base Plan, complete the Pre-Qualification form for a pre-qualified estimate how much you can borrow from a lender.  When you are serious about buying a home, join one of our subscription plans and get a free Pre-Approval letter. 

STEP 3: Pre-Approval

If you have subscribed to a HUB Blended Plan or HUB Full Service Plan, you can request a free Pre-Approval for a mortgage.  In a competitive real estate market, having a Pre-Approval is a big advantage over buyers without it.  Some sellers won’t even consider offers without one. 

The Pre-Approval process also accurately estimates the amount of funds you can borrow, and your monthly payment options. The HUB Pre-Approval process also uses a special type of credit check that will calculate your FICO credit score without a negative impact to your credit rating. 

STEP 4: (Optional) Optimize your Credit Score

Your FICO credit score plays a big part in your mortgage rate and monthly payment amount.  Typically, the higher your FICO score, the lower your rate will be.  HUB Blended Plans and Full Service Plans provide access to special buyer services that analyze your current credit score and make specific recommendations for things you can do to quickly raise it (typically a 30-60-day period).  If you raise your score, you may receive a higher Pre-Approval amount and qualify for lower interest rates and lower monthly payments.

STEP 5: Select the Type of Home

Complete the HUB Buyer Profile form to help determine the type of home and location that are the best fit for you.  This information, combined with your pre-qualification/pre-approval results will be used in the next step, searching for your home.

STEP 6: Search for Homes

Using the information already saved in your HUB database, you can easily search for homes that meet your specific criteria.  Location, price, type (single-family/apartment/condo/townhome/duplex), number of bedrooms, number of bathrooms, local amenities, proximity to schools, and other key metrics are used as part of the search.

STEP 7: Home Selection

(Select a Realtor to complete this Step unless you have sufficient experience in Real Estate transactions.)  Narrow your prospects to just a few homes that best fit your needs.  At this stage you may either proceed on your own, or use the HUB Realtor Tool to select an experienced Realtor to guide you through the remainder of the process.  There are several big advantages to working with a Realtor at this stage:  Experienced Local Realtors know the neighborhoods well, and can help refine your search.  Realtors are bonded and insured, so if the seller misinforms you about the property you are purchasing, your Real Estate Buyer’s Agent has the tools, experience, and assets to help make things right.  Realtors have experience submitting offers and negotiating prices with Sellers’ Agents.)

STEP 8: Review Reports

Request copies of all existing reports on the property.  If you need a report that has not been provided, you can request the Seller to contract the report.  However, they are not obligated to do so and you may have to contract the inspection/report yourself.  There are several types of reports that are used in a home purchase.  The most popular option is to begin with a full Home inspection.  A good report will flag areas of concern for additional (more specialized) inspections, such as a roof inspection, geologic inspection, or termite inspection.

STEP 9: Present your Offer

(Unless you have sufficient experience in Real Estate transactions, select a Realtor to represent you)  Once you have found the right property, it’s time to present an offer to the Seller.  To do this there are standardized forms for Real Estate transactions.  The forms have provisions to list the offer price, a timeline respond the offer, a timeline to close the sale, and any other conditions that you choose to include:  Examples of conditions include but are not limited to: Seller completes all Section-1 termite repairs prior to sale; Seller removes all items from the home/grounds; Seller repairs driveways, or detached structures; Seller provides Buyer with a credit toward home repairs; Seller provides Buyer with a Credit toward closing costs…) Unless you have professional experience in contracts and real estate transactions, SELECT an experienced Realtor from the HUB Realtor Directory to represent you.

A California residential real estate purchase agreement, also known as a purchase and sale agreement, is a written document that outlines the terms of a real estate transaction between a buyer and seller of real property. This agreement includes crucial details such as:

  1. Purchase Price: The agreed-upon amount the buyer will pay for the property.
  2. Property Address: The location of the real estate being sold.
  3. Closing Date: The date when the transaction will be finalized.
  4. Contingencies: Conditions that must be met for the sale to proceed. These are the seven most common contingencies to include in an offer:
       Financing Terms
       Seller Assist
       Who Pays Specific Closing Costs
       Home Inspection
       Property Repairs
       Fixtures and Appliances
       Closing Date
       Sale of Existing Home
  5. Seller Disclosures: Required information about the property’s condition and any material defects.

In most states, sellers are legally obligated to disclose certain information to buyers. These disclosures cover aspects such as structural integrity, hazardous materials, fire detector compliance, lead-based paint, natural hazards, pest control, and water heater safety. The purchase agreement serves as a binding contract, ensuring transparency and protecting the interests of both parties during the real estate transaction.

STEP 10: Seller Response to Offer

When an offer is received by a Seller, they typically have three options available.  1) Reject the offer.  2) Accept the offer.  3) Reply with a counter-offer.

1- Rejections can come in the form of a response from the Seller’s Agent about why the offer was not accepted, or they may simply not respond within the given timeline.  You may want to follow-up with the Seller’s Agent in case there is still an opportunity to present a modified version of the offer.

2- Accepting the offer usually initiates a series of tasks for both parties to move forward with the purchase/sale process.  This usually includes the buyer providing good-faith money in an escrow account.

3- Counter-offers are typical in the industry.  This is where the seller replies to the buyer’s offer with a proposed modifiaiton to the agreement.  This can range from asking for a higher price, to a change in the timeline to complete the purchase. 

Upon acceptance of an offer, the Buyer is traditionally required to put a good-faith deposit down on the property.  The Buyer’s lender also orders an appraisal of the property to ensure there is adequate value in the property.  Buyers, usually incude contingencies in the agreement that need to be completed/removed prior to closing the sale.  Common contingencies include getting an appraisal that supports the purchase price, selling and existing home, and securing Buyer financing.)

Good Faith Money

Upon accepting the purchase terms, the Buyer is traditionally required to put a good-faith deposit down on the property.  These funds are usually called “Good Faith Money” or “Earnest Money”, and are held in a neutral Escrow account until the sale is completed, or the sales agreement is terminated. Good faith money acts as a security deposit toward completing a purchase.

  • When the seller wants to both qualify and motivate a buyer, the deposit amount asked for will be larger
  • This payment is usually nonrefundable but credited towards the final purchase price
  • Depending on the supply and demand, good faith money amounts can vary as a percentage of the final price
  • Both seller and buyer should specify good faith money terms in writing.
STEP 12: Removal of Contingencies

This is typically the final act that commits a buyer to purchasing a property.  If a contingency cannot be removed or resolved, then the buyer usually has the option to back-out of the purchase and have their good-faith money returned from the escrow account.  Typical contingences include:

   Financing Terms
   Seller Assist
   Who Pays Specific Closing Costs
   Home Inspection
   Property Repairs
   Fixtures and Appliances
   Closing Date
   Sale of Existing Home

STEP 13: Completing the Purchase Contract

Once you have progressed through the prior steps, including securing financing and removing all contingencies, you are ready to complete the purchase.  Closing the purchase requires reviewing and executing several agreement sections, providing the funds due at closing, coordinating insurance coverage, providing the balance of payment to the seller (usually through financing the balance of the purchase), and transferring the Title of the property into your name.

All of these tasks are typically completed in one meeting, either at a selected Title Company office, or at another location with the assistance of a Certified Notary.  You should have your Realtor present to help answer questions you may have while completing the purchase documents.  At the “Closing” you will also receive a detailed report of all closing and financing costs, prepared by the Title Company.  Typical closing costs include escrow fees, title search fees, title insurance, notary fees, recording fees, and transfer tax.

STEP 14: Collect Your Keys

Unless you have provisioned to take possession at a later date, collect your house keys and enjoy your new home!