Buying a House: A 10 Step Guide

So you’re thinking of buying a house. You saw a house on Zillow, so you can have it, right? You checked out a few Open Houses & have a decent job so you are ready, right? It’s an exciting time, but make sure you really prepare yourself for what to expect when buying a house!

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Many people get WAY ahead of themselves in this part…the “fantasy” part. You may not be ready to buy a house just because you have some money and found a pretty house on the internet – unless you are a cash buyer I suppose! Of course it’s fun to look at houses and imagine yourself living the life, but it can be long bumpy road to get there.

In this step by step guide, I will explain everything that needs to happen in order for you to REALLY be ready to buy a house, and what needs to happen to get you to that closing table. Soon you’ll have your new key in your hand, ready to take on the next chapter of your life.

Step #1. Figure out your finances

When buying a house, your finances are the most essential part of this whole process. Looking at houses is completely pointless if you don’t know what your purchasing power is. What you can afford will tell you whether you need to wait a while and keep saving up, or if you’re close to ready. Hopefully you have held down the same job for a few years, make a decent amount, and don’t live above your means. Meet with a mortgage lender or just have a phone conversation with them. Have them lead you in the right direction. They will give you a much better idea of your what you can really afford.

Related: Your Mortgage Price: The Determining Factors

Check your credit. You should know your credit score, you are an adult. There are plenty of credit checking apps and websites out there. Check it out if you don’t know. Hopefully you have been paying bills on time, saving money, not overspending on credit cards, etc. When it’s time to talk with someone about your finances, make sure you find someone that you trust, and be open and honest with them. They can help you build your credit and advise you on what to do and what not to do when preparing to buy a house.

Don’t hide anything – it WILL come out at some point.

I had a client that never told their lender about monthly child support payments. Once the lender found out, it dropped their spending abilities by thousands and put them in a totally different category than they had thought they were in. It completely changed what kind of houses they were able to look at & they were very disappointed. Make sure you lay it all out there so nothing pops up down the road.

Speak with your lender about different loan options, down payment options, etc. There are so many different and creative options that are possible now for buying a house, there should be something that will work for you and your situation. Also, make sure to have proof of where your down payment is coming from. Is it a gift? Do you have it in savings? Are you borrowing from somewhere? Be very clear and up front with all of this and you will be fine.

Also, an important thing to consider is whether your market is currently in a buyer’s market. This is the best time to buy, and will allow you to possibly get more house for your money.

The lender will issue you a pre-approval letter, stating a price point that you can go up to. While other factors (such as taxes and interest rates) can change this number slightly, you need to have it. It helps your Realtor and sellers know that you are a serious buyer, looking in the right price range, and ready to act if you find the right house.

Just MAKE SURE that if you are trying to buy a house, you KEEP DOING what your mortgage person tells you to do. Get your documents to them in a timely manner. Don’t go out and co-sign for another loan, buy a car, a boat, or furniture for your new house. Check with your adviser before you do anything involving spending!

Step #2. Narrow down where you’d like to buy a house

This can be hard for many people, and simple for some. Some people can say, I want to live in the same area that I grew up in, I can afford it, and it’s conveniently near my job. Wow! Magical! For most of us, it takes a bit more work than that to figure out where to buy a house.

While you are working with a mortgage lender, start thinking about what kind of home you’d like to own. Are you looking for a condo? A Coop? What about a multi family house for investment purposes? Maybe a single family house is what you’ve always dreamed of – or even a bungalow by the lake. What kind of home you want will help narrow down where you should be looking.

Related: What to Look for When Buying a House

Not sure if you a ready to settle down in one spot just yet? Thinking about sticking to renting or need more time to save up some cash? Check out renting vs. buying to see the pros and cons of each. It may just help you make your decision!

Depending on what kind of home you are pursuing, can change what towns you have as options.

Take a look online and see what you can get in different towns at different prices. How are the school systems in the towns you like? Where do you work and what kind of commute are you willing to take on? What towns do you think you can afford? How are the taxes? Are you thinking of buying turn-key or a fixer upper? Do you need to sell your current house? What is your time-frame for buying? All of these questions need to be taken into consideration.

Suppose the town you have your heart set on is way out of your price range. You need to be open to either a fixer upper in that town, or a completely different town. Considering a fixer upper? Read Home Renovation – What You Need to Know to be sure you know what you’re getting into.

As you get farther away from big cities, you tend to get more house and land for your money. It may be a farther drive, but definitely something to consider. My husband doesn’t have the best commute, but it’s totally worth it for us. When he gets home and away from the noise and traffic of the city, it’s like our own country oasis, with a small town feel and friendly people.

On the other hand, if you are looking to buying a house right in the middle of a city, walking distance to your favorite restaurants and stores, and near your work & transportation, that’s great too! But, you will pay for that convenience. You will have less square footage and much less yard, for more money – but maybe that’s what works for you. Not everyone wants to maintain a yard, or needs a lot of space.

Think about what will work best for your situation and your family.

A great way to get a feel for a town that you don’t know much about but may be interested in is it to go check it out! Drive around one day, get a feel for the people and the town. Go into some stores, have lunch. Ask a friendly local a few questions. I have gone to different “town days” where the town sets up a big event with usually a street fair, maybe fireworks, etc. It’s a great way to see what the town is about and what they have to offer.

Also check out town websites. They can give you a lot of information on the town. They will have school information, town schedules & events, laws & codes, etc. Do a little digging and you will have a much better picture of each town & if it would be a place you would consider buying a house.

Step #3. Start actively searching for houses with a Realtor

Once you have you finances under control and you have a better idea of a realistic budget, start looking. You need to get out there and see for yourself, in person, what there is. Start with Open Houses in towns you are interested in. It’s also a great way to meet a Realtor that you may want to work with. Or, jump over here to see what to look for in a Realtor and how to find the best one for your journey.

Expectations of what you want and what you see will be different…so be prepared.

On-line pictures can be VERY deceiving. Usually houses look much better in pictures, rooms look larger, you can’t tell it’s on a main road, or that there are 100 steps to get up or down. However, I have had listings that look WAY better in person, and the pictures did not do it justice. Just keep this in mind when you are looking to buy a house. Be open to checking out different houses if they are in the right areas and check most of your boxes. You could be pleasantly surprised. Or you could be disappointed!

Make sure to keep the showings to a few at a time. Most realtors will do 3-5 showings in a day. That is comfortable. Too many showings and you start to mix up which house had what, what you liked and didn’t like, etc. So take your time. I like to do 3 houses in a day. It gives you time to really check out each house and be able to remember and compare. Make sure you know what you are looking for, too. Just because a house is pretty, doesn’t mean it’s turn key and doesn’t have it’s own problems. What to consider when buying a house will help guide you on what you really need to pay attention to when looking at houses.

Step #4. Make an Offer/Negotiations

Once you have found a home that you would like to purchase, a few things need to happen. You and your Realtor will need to discuss the current market and what a reasonable offer would be. Are there any other offers on the house? How long has it been on the market? Are there any contingencies? Has there recently been a price drop? How much do you want this house? What are the comps? Who else is involved in the financing? If your parents are co-signing the loan, or you are going in on the house with another family member, make sure they see if first – before you put an offer in. I had a deal fall apart during attorney review once because the parents went to check it out, and decided it wasn’t up to their standards.

Be sure to check out how to write an amazing offer on a house where you’ll find tips on how to come in at your best, even in a multiple offer situation!

Get an updated pre-approval.

Contact your lender once you have arrived at a number that everyone is happy with (whoever is part of the purchase and your Realtor). Get an updated pre-approval for the purchase price to go along with your offer, and then you will sign the necessary documents. Most everything can be e-signed online these days, so as long as you have internet and an e-mail address, you can easily sign from wherever you may be. Make sure in your offer you include any appliances that you want included, a reasonable closing date, and any seller’s concessions (if that is normal for your market).

Then…you wait!! That’s the worst part of buying a house. There’s a lot of waiting. They may get back to you quickly, they may not. Maybe they need to think about it, or maybe they are hoping more offers will come in. Generally by the next day or 2 you will hear something. They will most likely counter unless you offered close to asking, asking, or over asking. Then you will negotiate back and forth a little bit until (hopefully) both parties can reach a number that they like. Your Realtors will handle the back and forth negotiation. It’s never a good idea to take it upon yourself to contact the seller – so don’t do that!

Step #5. Enter Attorney Review

Once both parties have agreed on a price, you will then enter attorney review. This is literally when your attorney is reviewing the contract and so is theirs. If you do not know of a great real estate attorney, ask your Realtor for recommendations. Make sure you go with a REAL ESTATE ATTORNEY when buying a house! They will be taking care of a whole lot of important stuff, including title. Expect to pay anywhere from $1100-$1500 for their services. This will be in with your closing costs. Not all attorneys know enough about real estate to represent you efficiently, so please use a real estate attorney!

Attorney review can last 1 day. Or 2. Sometimes 14. Or more.

Now, I always have people that think there is a time limit on attorney review. Nope! You have 3 days to get into attorney review after a fully executed contract is created. People always think that attorney review lasts 3 days. No. It can, yes. But it can also last 1 day. Or 2. Sometimes 14. Or more. It just depends on how long it takes for the attorneys to get back to each other and for everyone to agree on what the attorneys change. (Because the attorneys will absolutely change things).

During this time, most people also hold their breath. Buying a house is stressful. The seller can keep showing the house until it’s under contract – unless agreed to in the contract. Either side can back out for any reason during the attorney review period. Maybe the buyers get cold feet. Or the sellers get a better offer. Or one side doesn’t like some of the attorney’s changes and you can’t come to an agreement. If this happens, the house goes back on the market, and you just keep looking.

Step #6. Get Under Contract

If everyone can agree on everything brought up in attorney review, then everyone will sign and the attorneys will conclude the review. Congrats, you are buying a house! You are then Under Contract and the listing agent updates the house as UC on the multiple listing services and stops showing. It’s much harder for either side to back out at this point, too. You will have a tentative closing date, and an end in sight. You are not out of the woods yet though! Now you need to make appointments for your inspections…and see how that goes. You will start hearing from your lender more often too, as they work on your mortgage commitment.

It’s also important to keep your paperwork handy. Most will be through e-mails, but it’s important to refer back to the changes made and agreed to in attorney review, as these have the time line of events. It will say when your deposit needs to be in by (usually 10 days from the conclusion of attorney review), how much time you have for inspections, your mortgage commitment (usually within 30 – 45 days), and your closing date.

Step #7. Inspections/Negotiations

Oh inspections. You will need to schedule an inspection between 7-10 days after the conclusion of attorney review. The sooner the better. If the house is no good, you can move on looking and the sellers can get it back on the market. Even if you are buying the house “as is”, I would still recommend getting an inspection for your own knowledge – you should know what you are getting yourself into when buying a house.

There will always be a home inspection. If there is a septic system, there will also be a septic inspection. A well would need to get checked out too- and you have the option of doing a tank sweep. This is when a company comes and checks the property for any underground storage tanks. Many times you can schedule everything to happen on the same day and hopefully the same time. Inspections generally take a few hours, so bring a snack! It can feel long and overwhelming.

During the home inspection, you and your Realtor will be present with the inspector. Some inspectors like to do their own thing and just let you know if there is a problem. Others will go over each item with you step by step. Your Realtor can give you information for who to use.

The inspector will be checking and testing the main systems of the home, checking for leaks, water damage, rotten wood, termites, mold, structure, etc. They will run the appliances, go in the attic, basement, all over. There should also be a radon test. These tests & inspections are important to do. Keep in mind, it will also run you between $500-$1000 before you even know for sure that you want to continue on with the purchase.

The inspector will let you know of any concerns.

You will also receive a very lengthy report a few days later, showing any concerns and a descriptions of those concerns, including pictures. Just remember, that even in a great house, the inspector will find something to report on. Their reports are very thorough too – usually 20-30 pages. From there, you will discuss with your agent a course of action.

With minimal concerns, you may be happy. If some things need to be fixed, request that the seller fixes the problems before closing, with proof, by a professional. Looking at major problems, you then have an opportunity to walk away, request repairs by the seller, or ask for a credit. A credit means that instead of repair, they will give you a credit at closing for you to take care of the necessary repairs.

You may request a repair or credit.

There will be negotiations, and hopefully the sellers will be open to repairing or giving a credit. Keep in mind, it is a request. I have had sellers that do not want to do anything, and so my buyers had to decide if they wanted to purchase a house with these issues and pay to take care of them themselves, or walk away. I have also been on the selling side, where the buyers had crazy requests. Try to be reasonable. And remember that the sellers do not need to upgrade anything. If it’s currently in working order, that is how you are buying it.

Step#8. The Appraisal

When buying a house with financing, there must be an appraisal. Your lender will set up a time for your Realtor to meet with the appraiser at the house you intend to buy. It’s pretty quick, most appraisers are in and out in under half an hour. They look around, write down a few things, and hopefully have a chat with the agent. I like to bring a folder with a few comps to show that the purchase price is validated, plus a copy of the signed contract to show what purchase price has been agreed upon.

Many times, the appraiser has their own comps as well. Hopefully it is an appraiser that is familiar with the town, so they can give it an appropriate value. Knock on wood – I haven’t had any issues with things coming in under appraised, but I have heard stories! You sometimes run into this when there are multiple offers, and people over pay to win the house. If the appraisal comes back too low, that means that the bank does not believe that the house is worth how much you have offered to pay. They believe it is only work X amount, and will only help you with financing up to that amount. Yikes! So then you need to either come up with the difference out of pocket, or the seller needs to come down in price, or you can meet somewhere in the middle.

Step #9. Change of Address/Movers

If you have made it to the point that the inspection negotiations are agreed upon and satisfied and your appraisal has come back fine, you can start to breathe again. Keep working with your lender to get your mortgage commitment. If that’s looking good, start packing! You do not want to leave it for the week before. You can start with things that you don’t use as much. It’s also a great time to get rid of some things!

A couple weeks before your closing date, start deciding how the move will go. Renting a truck? Shop around and compare prices. Hiring a moving company? Check out some reviews and ask for recommendations from friends. Have friends with pick – up trucks that you can pay in beer and pizza? Perfect, make sure they will be available. You can also start the paperwork for your change of address. It can be done simply on-line or at a local post office. Be ready to receive some great coupons in the mail at your new house, too!

Step #10. Final Walk-through & Closing

Within 24 hours of the closing time, you should do a final walk-through of the home with your Realtor. The home should be in broom swept condition. Make sure that the agreed upon included appliances are still there, make sure they have taken what was agreed upon, and make sure there are no surprises. I know of someone that was purchasing a vacant house. They went to the walk-thru, only to find out that the pipes had burst and the house was ruined. Unfortunately they were not able to then purchase the house, but thank goodness they had done the walk-through! If they left garbage or furniture, have your agent contact the other agent to ensure it gets taken care of prior to closing.

Phew. You made it!! You’ve done all the steps of buying a house!

It is a very exciting day when all of the hard work pays off and you get the keys to your new home. You will meet at your attorney’s office to sign a WHOLE BUNCH of paperwork. The sellers may be there, or may not depending on if they signed and mailed everything. Your Realtor should be there to make sure everything goes according to plan. Either way, your keys will be there and once you are done signing, you get go home to your new house. That’s it. It’s yours. A responsibility like no other – but also an amazing reward that you have worked very hard for. Enjoy it!!

The home buying process can be a different experience for everyone. It can be a easy and quick, or you can run into a lot of problems. To give you a better idea on the average amount of time it takes to buy a house, check out How long does it take to buy a house? There is not right or wrong amount of time though – it’s however long it will take you to find the right house for your needs.