A few weeks ago, we wrote about the importance of obtaining a pre-approval letter before shopping for a home, as this will give you a better idea of how much house you can afford, and signal to sellers that you’re serious about buying a home. Once you have a pre-approval letter in hand, you can begin shopping for homes in your newly identified price range. This is often easier said than done, so we’ve put together a guide to help you through the process, including how to find a real estate agent you can trust, finding the perfect home, and making an offer and signing a purchase agreement.  

Related: The 6 Steps to the Mortgage Approval Process

Step 1: Home Shopping

Before shopping for a home, it’s important to determine your needs in a home, as well as the size and location. Here are just a few questions you can ask yourself before you start your home search:  

  • Are you planning on having (more) children? If so, how many? This decision could affect how many bedrooms and bathrooms you’ll want in the house, as well as whether you want a yard. Your location may also affect what public school district your children can attend.
  • Where is your ideal location? Do you prefer living in a rural or urban area? How about in a suburb or an HOA community? Would you like to live close to work? These questions will help you nail down specific locations in your town or city so you aren’t overwhelmed with too many options.
  • Does your job require relocation or are you in the military? If there is a chance you’ll be moving in the next 2-3 years, it might be wise to wait on purchasing a home. However, you can always talk to your employer about what the likelihood of relocation is and continue saving toward a down payment before making a decision either way.

Finding a Real Estate Agent You Can Trust

Though there are several resources available to find homes online, such as Zillow, Trulia, and your local Multiple Listing Service, we recommend first-time home buyers work with a real estate agent, as they will have a better understanding of the current market. Agents can also advise you on which neighborhoods fit your needs, filter out homes that won’t work for you, help you understand HOAs, liens, and the like, and most importantly, will assist you in the offer and purchase of your new home.

When searching for a real estate agent, keep these five tips in mind to find an agent you can trust:

  1. Look for an agent who’s a local expert. An agent who knows the area like the back of their hand and who stays on top of the market means they are more likely to find you the best deal.
  2. Look at the agent’s current listings. Research if the agent’s listings are similar to the property you’d like to purchase, and if they are in the same area or similar price range.
  3. Evaluate their availability. Purchasing a home requires time and focus. Ensure your agent can dedicate adequate time to finding you the perfect home within your budget.
  4. Find an agent with the right focus. An agent who is only interested in their commission is not someone who will work with your best interests in mind. Find an agent who truly listens to your needs in a home and demonstrates they understand what you’re looking for.
  5. Do your research. Performing a simple online search can help you find references, how long an agent has been licensed, or if they have ever been fined.

Tip: Dual agency is legal in Wisconsin only with informed written consent of both parties. This means that one agent can represent both the buyer and seller in a transaction. If you’re uncomfortable working with the seller’s agent, also known as the listing agent, hire a buyer’s agent.

Step 2: Making an Offer & Signing the Purchase Agreement

Once you’ve found the perfect home, your real estate agent will assist you in the purchase and will guide you through how much to offer, and how to structure a purchase agreement to your advantage.

The purchase agreement, or real estate contract, typically includes a description and condition of the property, what fixtures and appliances are included, the prospective closing date, itemized closing costs and who is responsible for paying them, the amount of the earnest money deposit, and any contingencies that must be met before the sale can go through.

Contingencies protect the buyer and allow them the chance to back out of the purchase with their full deposit. Some common contingencies we recommend to consider:

  • Financing Contingency. We recommend using this contingency if you’re planning to finance your new home. This allows for you to back out of the deal if your mortgage application is denied during the underwriting process and your financing falls through.
  • Inspection Contingency. This allows you to bring in a professional to inspect the property and provide you with a report of the findings. You may negotiate with the seller on how to handle any necessary repairs, or you can back out of the deal if an agreement cannot be made or the repairs are too extensive.
  • Appraisal Contingency. Be aware that if you’re obtaining financing for your home from a mortgage lender, your lender may require an appraisal to determine to value of the home. If the appraised value of the home comes in lower than the negotiated sale price, you can either renegotiate with the seller or back out of the deal if an agreement cannot be made.

Keep in mind, a seller may receive several bids for the home, especially in a seller’s market, so be prepared to work with your agent to make several offers, if necessary. Once the seller has accepted your offer and you’ve mutually agreed upon the terms, put down an earnest money deposit. This is a deposit made to the seller that represents your good faith to buy the home. Once the funds are deposited, they are typically held in an escrow account until closing, at which time the money can be used toward your down payment or closing costs.

At long last, it’s time to sign. If you’re unsure of any terms or language in the purchase agreement, ask your agent or attorney. Remember, it’s easy to sign your name, but hard to break a contract.

Are you ready to purchase and make an offer on a new home? Reach out to our team if you have any questions, or head online to fill in our online application to begin the pre-approval process today!