From Offer to Closing – 5 Home Buying Steps to Know

What we'll cover

• Make an offer and set terms
  
• Get the home inspected for any necessary repairs
• Secure your full loan approval
• Get ready for closing
• Perform a final walk-through

Finding a house you want to buy deserves a celebration – Part 1 is done! But there’s a little bit of work for you and the seller to do before the place is officially yours. The first step may feel basic: You need to make an offer. But there’s more to it than stepping forward with a payment in hand. (Who knew?) Ahead, we’ll cover what an offer is as well as a few additional steps to know about and prepare for.

1. Make an offer and set terms

The price the seller is asking for could be what you’re willing to pay, but there could also be some wiggle room to pay a less. And in a competitive market … you could also end up paying more.

Regardless, offers, which your real estate agent can help you negotiate, could include:

• Purchase price: The purchase price is what you’re willing to pay to buy the home. If you want a better idea of how much you should offer, you can consult your agent or research comparable properties in the area, also known as “comps,” that have recently sold.
• Earnest money: Earnest money is a deposit that you submit with your purchase offer. It isn’t legally required, but it is pretty common and shows sellers you’re acting in earnest and serious about moving forward. Ask your realtor and the selling agent beforehand about how much the home seller may expect in earnest money. You will also want to ask your agent about what will happen to your earnest money if the deal falls through; it’s possible to get the money back, but it will depend on the contract.

For example, a contract could say that the seller gets to keep the money if the buyer changes their mind for reasons other than the seller’s refusal to make improvements needed after a home inspection. The contract could also protect the buyer, and require the seller to return the money under certain conditions. If the sale does go through, the earnest money is usually applied to the closings costs or down payment.

• Contingencies: These are conditions that should be met before the transaction can continue. For example, you could stipulate that the offer is contingent on your ability to secure full loan approval or that the property must pass all home inspections.  

In addition to these highlights, you’ll also want to read the fine print of any homebuying offer and contract. Ask a real estate attorney or your realtor to walk you through any unfamiliar terms. 

If the seller accepts your offer (great news!), then you’ll enter into a contract to buy the home. 

2. Get the home inspected for any necessary repairs

Once you're under contract, it's time to carry on with property inspections. You may feel like you want to skip this, and the seller may even say the house is being sold as-is and they won’t make any changes. However, it could be worth pausing and considering having one done because an inspection can give you an understanding of the home's overall condition, which could help you identify any potentially costly changes you or the seller will have to make. 

Some of the things inspectors will be looking for (there could be more):

• Health and safety concerns like asbestos and lead paint 
• Visible signs of damage or defects including water damage, structural issues, roof damage, plumbing or electrical problems 
• HVAC condition

If the inspector finds problems – big or small – then you have the opportunity to ask the seller to pay for or repair them. You’ll be able to cancel the contract to buy the home if you have an inspection contingency in your purchase contract and the seller doesn’t agree to address issues. 

Your real estate agent may be able to recommend a home inspector and you could also check online reviews for home inspectors in your area. Not all states require inspectors to be licensed, so it's smart to do some research before hiring one to ensure they have the proper training and expertise.

3. Secure your full loan approval

As your inspections are taking place, work with your lender to secure financing for your new home loan. (Yes, there's a lot of multitasking that happens when buying a home.)

During this process, you'll usually be asked for items like pay stubs, employment history, W-2s, and bank and savings statements, so begin to prepare these documents as early as possible. Submit all the requested information to your lender as they're requested to ensure your loan stays on track.

4. Get ready for closing

After you’ve secured a full loan approval, it’s the home stretch! You can get ready for closing day. 

Before you pop the champagne, here are some dates to keep in mind:

About a week before closing

Contact your lender or closing agent to find out how you will receive your Closing Disclosure. This will lay out your final loan terms and payments. It will also detail the funds you owe on closing day for the down payment and closing costs.

Talk to your closing team to find out how you'll need to pay for these – typically, a certified check is required, though a wire transfer may be acceptable. Take the time to read the Closing Disclosure closely and ask your lender, personal real estate attorney or agent any questions you have.

At least three business days before closing 

By law, you should receive the Closing Disclosure at least three business days before closing.

5. Perform a final walk-through 

There’s just one last step before you sign on the dotted line: Complete a final walk-through of the property. This is to confirm that any agreed-upon repairs have been made and that any items that you negotiated in the purchase contract for the seller to leave (such as appliances, window coverings and light fixtures) are still in place.

A tip we’ve seen: Bring your real estate agent. They can be a witness to the walk-through and answer any questions that might arise. If something is off, they'll be able to contact the listing agent to get it settled before you close on the home.

Good to go? Take a victory lap.

Then, make plans to change those locks.