By Bettina Siochi
How does a real estate agent help their client buy a home?
You get the idea of how it all works: agent meets buyer, buyer meets home, dreams are made, and you get paid!
But, when you zoom in on the process, what’s really going on? How does it all come together?
Here’s a step-by-step rundown of the home buying process to help you close that deal.
Step 1: Getting a Pre-Approval Letter
Your client’s pre-approval letter is your ticket.
The pre-approval letter, also known as a prequalified letter, determines how much of a mortgage loan the homebuyer is qualified for.
This will determine your client’s price range. As an agent, this is important information to have because it will help you narrow the parameters during the next step.
Step 2: Finding the Best Property
This is when the search begins. To find the perfect home for your buyer, you must use two qualifications to narrow your search.
The first qualification is that it must fit within your client’s budget. Based on the pre-approval letter, go to MLS and search for listings that are within the budget. The second qualification is that it is a property that your clients might be interested in.
Once you have found 5 to 6 properties, it’s time to showcase them to your client.
Step 3: Previewing Homes
Previewing properties with your client will give them a chance to interact and see themself in the house. To set up a preview, go through your list of properties and contact the listing agents for a showing.
Once your client are there it is important for you to observe how they react towards the property. Take note of every comment that they have. Whether it’d be something they like or dislike. This is valuable information.
This is where you actually see if the property fits their lifestyle. Based on this information, you can adjust your parameters to find the perfect home.
It will also give your client an opportunity to check out the condition of the home as well as the surrounding area.
Step 4: Making an Offer on a Home
Time for negotiation.
After you and your client found the perfect home, you have to make an offer on it. You will use the Residential Purchase Agreement (RPA) to pitch your offer. The RPA is a contractual agreement between the buyer and seller on an agreed upon price of the home.
In the State of California, the RPA is always utilized when making an offer. So, discuss with your client about what the right offer should be. Based on the economy and the real estate market, what is a reasonable offer for that home?
Use this opportunity to consult with your client and share your thoughts. You’re the real estate expert!
Step 5: Opening Escrow
When the offer is accepted – it’s a great day! Escrow opens and you’re off to the races.
Opening escrow starts the exchange of money. This is where money is deposited into an escrow account, inspections and appraisals start, and other payments are made. An escrow company holds the money in a secure location to ensure that the seller gets paid and the buyer receives their home at the end of the transaction.
Step 6: Inspections, Appraisals, and Disclosures
Here’s one of the most important steps in the home buying process. The next step is for the homebuyer to do their inspections, lenders to perform appraisals, and to review the disclosures. In California, the buyers have 17 days to finish these tasks – so time is of the essence!
The buyer will hire the inspector, which you can recommend to them. This will help identify problems with the property before they become disasters. Property issues will also be noted in the disclosures.
In California, real estate agents are required to disclose defects on a property. But, sometimes, they go unnoticed. That’s why hiring an inspector is vital to ensure your client isn’t about to invest their money into a house of cards.
Also, the lending company will send an appraiser to value the property of the home. The buyer often finances the appraisal. By doing so, they will get an updated price on the property. Sometimes, the buyer might find out that the home is actually undervalued.
Step 7: The Final Walkthrough
Once the inspections are done, appraisals are made, and disclosures are sent, it’s time for one, final step: the final walkthrough!
This is where you and your client confirm that the property is in great condition. You’d want your clients to sign the Verification Property Condition (VP.) This document states that the client agrees that the property condition meets their standard.
Always schedule the final walkthrough at the end of the transaction. Here’s why:
The final walkthrough confirms the status of the property. If the final walkthrough is conducted before inspections are made, appraisals conducted, or disclosures are sent, then your client can sign off on a property that has unforeseen problems.
The final walkthrough lets the buyer give the “green light” on sealing the deal. That’s why you need to be absolutely sure that the property is in the buyer’s preferred condition before the final walkthrough.
Step 8: Moving Funds
This is the step where the bank gets involved. The bank will go ahead and verify that the appraisal looks good. This is where the bank now wires the money to either the title or the escrow company. Funding is a great day in the home buying process!
Step 9: Recording the Purchase
This is where the county declares that the ownership of the property has been transferred to your client. Congrats – the deal is done! The seller gets their money, the buyer gets their home, and you get your commission check. It also signifies the end of escrow.
Step 10: Ask for Real Estate Referrals
What separates the newbie agents from the pros is this final step.
You helped your client buy their dream home, you made the process as easy as possible, and everyone had an incredible experience. At this point, emotions are high and the rewards are amazing.
The relationships you make in this career are your lifeline. They help you get more business so you can help people and get paid for it. That’s why you should always ask for referrals or, the very least, a review.
A referral to a friend is all you need to get your next client. If the client had a great experience with you, then they will have no issues recommending you to the next person they know who is buying or selling a home.
Final Thoughts on the Home Buying Process
Working with homebuyers is an exciting experience. You help people’s dreams come true! With high stakes and high reward comes responsibility.
The home buying process has many steps and it’s easy to get lost along the way or do something out of order. That’s why this process exists. Not only will it help you understand what needs to be done and by when, but it will also help you ensure the best quality experience for your client.
At the end of the day, isn’t that the goal?