The Home Buying Process

Contract to Close

Budget Exploration

Before looking at properties it is best to be approved by a reputable lender to determine your budget. After reviewing your loan application and finances, your lender will help you set budget parameters and provide you with a preapproval letter. The California market is very strong; submitting a preapproval letter with an offer is comforting to sellers and suggests that the financing will progress smoothly.

Choose an Agent You Connect With

BHG is committed to making sure our clients are heard and that each client receives the highest quality of service. It is important to choose an experienced agent that you feel understands your needs.

The Search

The home search has the most variable timeline in the process. You may fall madly in love with the first house you see, or it may take a little while to find just the right fit. Your BHG agent will shorten this time as much as possible by only showing you properties that genuinely fit your wants and needs.

The Offer

Once you’ve found a home you like, you and your agent will discuss the terms of the agreement in detail. Your agent will then write the offer and review it with you before submitting it to the sellers. The seller will usually counter and negotiations can go back as forth and many times as necessary for both parties to come to an agreement. If an agreement cannot be reached, the offer is void with no financial repercussions to the buyer.

Acceptance

Once both parties have agreed to the terms of the offer, by initialing and signing it, the contract is now considered “executed”. The buyer’s agent then delivers the earnest money (generally three percent of the sales price) and contract to the title company where it is held in an escrow account and the closing process begins. The option money must be delivered to the sellers within 48 hours of executed contract for the option period to be valid.

Title Company

Once the contract is receipted, the title company will send the executed contract to the buyers, sellers, and agents involved. From this point on, the title company will serve as a liaison between the involved parties— collecting information, ordering the survey, maintaining the escrow account, etc. The title company also ensures that the title to a property has no claims against it and can be freely transferred

The Option Period

The option period is a time for you to do your due diligence, have the property inspected, and negotiate any potential repairs. During this time, buyers reserve the unrestricted right to cancel the contract. Typically, option periods are between 5 and 7 days. The fee can range from $300 – $1000 and up depending on the asking price and current market conditions. In most cases, the option fee is credited to the buyer at closing. If for any reason the buyer chooses to terminate the contract within the option period, the option fee is forfeited, however, the earnest money will be refunded.

Inspection

The inspection should be scheduled with the inspector of their choice upon acceptance. Inspections typically take two to four hours to complete depending on the square footage of the property and reports are typically furnished within 24 hours. The cost of an inspection varies but is usually between $450-800; it is paid for by the buyer and is not refundable if the contract is terminated. Depending on the inspector’s findings, you may elect to have a specialist look at any areas of particular concern to determine the potential cost of repairs. We also highly recommend a Wood Destroying Insect (WDI) inspection which is an additional $75-100.

You and your agent will review the inspection and determine what, if any, items need repair. Inspection reports may seem intimidating at first, but a good agent will help you determine what is significant and what is merely cosmetic. Please note that repairs are negotiable and need to be agreed upon by both buyer and seller. Additional documentation will be signed and executed if any agreements are made.

Appraisal

After the option period, the lender-required appraisal will be ordered on your behalf. The buyer is responsible for the cost – $550 plus or minus – which should be included in the loan estimate.

Loan Processing

During this time, you will be in frequent contact with the lender. Providing all of the required documents as quickly as possible will keep the process moving forward smoothly. Files may flow back and forth several times – requiring additional information or detail – before the loan is considered to meet underwriting approval.

Clear to Close

When the underwriter is satisfied with your information, the lender issues a “clear to close”, sends the documents to the title company, and delivers the Closing Disclosure to all parties at least three days prior to closing.

Final Walk-through

Within 24 hours of closing your agent will schedule a final walk-through of the property to ensure that any negotiated repairs have been made and the home is in satisfactory condition.

Closing

Once the title company receives the necessary documentation from the lender, they will set appointments with the seller and buyer to sign documents. These generally happen on the same day, but not generally at the same time. The seller’s appointment often takes 30 minutes or less. The buyer’s appointment takes about an hour. After everything is signed, the lender must still approve funding before the buyer gets the keys. This usually occurs on the same day. The title company will send all the documents to the lender for final approval. Once the lender has issued final approval the transaction is considered “funded.” Keys are then released to the buyer and proceeds are disbursed to the seller.

Celebrate!

Breathe easy and smile as you start a new chapter in your life!