Home Buying

The 9 Stages of Buying a Home

9 stages of buying a home.png


You’ve decided you want to buy a home. Maybe your family is growing, you got a big raise, or you just want more space. Once you have decided you want to buy, you probably ask, “Where do I start?” or, “How does a real estate transaction work?”. You are not alone. The majority of home buyers really have no idea how the process works. It’s not something you do more than a few times usually in your life.


There are a lot of components involved in real estate but a lot of the work is done by others. The only work you have to do is prepare financial documents, get pre-approved, find a home you like, make an offer, and sign a contract. Okay, there may be a few extra steps, so let’s look at what’s involved…


1. Get your finances in order

It’s always a good idea to be financially responsible and pay your bills. Yes, your parents were right when they told you to save 10% of your paychecks. The moment you are thinking of buying a home it’s important to make sure your finances are in order.


So, what does this mean? Well, start with your credit report. If you are like the majority of home owners, you will need a home loan to make home ownership a reality. Lenders will not loan you money if your credit score indicates you are a high-risk customer, or they’ll lend you the money at a higher interest rate which could prevent you from buying the home you love.


Start saving for a down payment. The industry standard is 20% down on a home. That can be nearly impossible for a lot of people, especially first time home buyers who are new to the work force and carry a large amount of student debt. Don’t fret! There are programs out there where you can bundle your down payment into an additional loan, but you may pay higher PMI insurance.


We recently created a blog post to help you understand your credit report and prepare your finances here.


2. Make a home wish list 

This may be more of a natural step for many. If you are anything like my wife, you have a Pinterest board of all the home styles you love and have each board organized by the different rooms in the house. If you are more like me, your wish list is pretty small – man cave. Whether you are buying a home on your own, or with a partner, start coming up with the must have features and understand what you are willing to live without.


Consider the lifestyle you want to live and what the home needs to have. For example, if you love having people over, is the space big enough for family gatherings? Where will guests park? Having a good understanding about what you want before you ever search for a home will make the searching more efficient and less overwhelming.


To learn more about how to create a wish list for your home, check out our recent blog post here.


3. Get Pre-Approved

Thankfully, your finances are in order and your credit rating is great, because now it’s time to get pre-approved. This step is essential and is usually the first question out of a home seller (or their agents) mouth when they talk to you. Home sellers will take you seriously and are more likely to engage knowing that obtaining finances will not be an issue to close on the home.


In order to get pre-approved, you will need to provide financial documents (W-2 statements, pay stubs, bank account statements) to the lender for their review. They will be looking at your income and liabilities to determine what loan amount they are comfortable loaning to you. You can also be pre-qualified; however, it doesn’t carry the same amount of trust that you can close on a home from the sellers stand point. To learn the difference, you can view our blog here.


When meeting with a lender to get pre-approved, it’s a good idea to start to learn about the different types of loan programs that would work for you. Choosing the right loan could be the difference in thousands of dollars over the course of the loan. Understand the difference here


4. Research homes and neighborhoods

In recent decades, real estate information was hard to find. It was controlled by agents forcing you to call or meet with an agent to learn about a home and the surrounding neighborhood. Lucky for you, it’s 2017 and all this data is made public by sites like Zillow and Trulia.


Previously, the first action you would take to find a home is contacting an agent. However, just like a car buyer researching cars online first, home buyers now are going to the internet first to learn all they can on their own terms.


When deciding on a place to live, nothing beats traveling to the location to learn first-hand what the community is like, what your future commute will be, and where to get the best coffee in town.


Once you have investigated the neighborhood, happy with the local coffee scene, and found a house that matches your budget and needs, you are ready to make an offer.


5. Make an offer

This is the part of the process that is most exciting in a real estate transaction. Making an offer for a home is likely one of the largest purchases you will ever make and determines your future. Only make an offer once you have fully investigated the home and the area and you are confident in purchasing the home.


If you have an agent your offer will have to consider their commission, which is typically 3%, but may fluctuate depending on the market. The buyers and sellers commission is usually baked into the MLS listing price.


Since the majority of the work was done on your own you can save yourself the 3% commission when you use Faira Offer Assist program. With this program, once you find a home, you contact a Faira licensed agent to write up your offer and provide guidance on negotiations. If your offer is accepted, you pay a 0.5% platform fee, then you receive the entire buyer’s agent commission at closing, typically around 3%. For a $500,000 home, that would mean you receive $15,000 minus the platform fee for a total savings of $12,500. 


6. Get a home inspection

When buying a home you will typically be required to get a home inspection. Some markets do not require this and buyers will often waive inspection in order to get their offer approved.


A home inspection is conducted by a licensed inspector a few days after the offer is accepted. The inspector will change for structural damages that may require a lofty amount of money to fix in order to make the home habitable. In a sense, an inspection is a safety net for you where your offer can be contingent on the home inspection. You also have the opportunity to renegotiate your offer if the report shows damages.


Both you and the seller will receive the report so you can determine what needs to be fixed prior to closing the deal. You will also be able to walk through the house to view it once more before you move into closing.


7. Home Appraisal 

A home appraisal will be ordered by your lender you have chosen. The appraiser is a third party company that is not directly associated with the lender. The purpose of an appraisal is to provide the bank confidence that the value of the home is approximately equal or higher to the amount of the loan they are providing. If you were to default on the loan and the home value was a lesser amount than the loan, they would not be able to recuperate their losses. 


8. Title report and paperwork

When transferring the ownership from one individual to another, there is a lot of paperwork. However, most of this is done and completed by your lender, title company, and agent. A title report will be arranged by your lender to ensure the seller is the rightful owner of the home you are buying, there are no liens on the title, and that the title can rightfully transfer to you upon purchase.


9. Close on the home

Your lender will provide a closing date where you will sign all the required documents to make the sale final. Usually, the funds are provided within 24-48 hours of closing. Once the check is delivered to the seller, you get the keys and you can move into your new home.


If you used Faira Offer Assist, you will get the entire buyer’s agent commission at closing time. This money will be great for home improvements, paying down the principal, going on vacation, or paying your student loans off!


Interested in buying a home but don't know where to start? Download the First Time Home Buyers Step-by-Step Guide today! 

Get the Buyers Guide 

Brenden Martin

Written by Brenden Martin

Brenden Martin is a Marketing Strategist at after working as a Realtor in Texas and launching multiple tech startups.