How to Buy a House in Seven Steps: A Simple Guide for First-Time Homebuyers

Are you looking to buy your first home but not sure about the best place to start? You may be wondering: How much house can we afford? Do I need to hire a REALTOR® to buy a home or can we buy a home without a REALTOR® to save on buyer agent commissions? How much money do we need to put down to buy a house?

The process of buying a house can feel overwhelming, especially for first-time homebuyers. Here's some great news!  Sachs Realty is helping homebuyers understand the home buying process from start to finish. The following are 7 simple steps to help you go from dreaming about homeownership to holding the keys to your new front door.

Whether you’re looking to grow roots in a community, raise a family, or just desire to stop paying rent, Sachs Realty's step-by-step guide will make the home buying process simple for you. Let's get started!

Step 1: Evaluate Your Finances and Establish a Home Budget

Before you start browsing listings on sites like REALTOR.COM or Zillow, be realistic with your financial situation. This important step is where many first-time homebuyers set unrealistic expectations. Here’s what you should do:

• Order your credit reports and average your credit scores (the higher your average score, the better your loan options)

• Calculate your debt-to-income ratio (DTI) How much do you owe in consumer loans? Mortgage lenders typically look for a DTI to be less than 43%

• Figure out how much cash you have for a down payment, real estate agent fees, home inspection charges, lender costs, title company charges, and any other closing costs.

• Determine what you're comfortable paying every month for your total mortgage payment. 

Pro tip: Use a mortgage calculator to estimate monthly payments based on different home prices and interest rates.

Step 2: Get Pre-Qualified for a Mortgage

Getting pre-qualified will be required if you need a mortgage to buy a home (most first-time homebuyers do). Sellers won't want to entertain your offer without a pre-qualification or pre-approval. This important process will include evaluating your income, credit, debts, and cash required to get a mortgage.

Pro tip: You do not need to stick with the lender who pre-qualifies you. You have the right to shop rates and lender fees once you're under contract for a specific home.

Step 3: Determine to Either Represent Yourself or Hire a Real Estate Agent (REALTOR)

New National Association of REALTORS® rules as of August of 2024, require homebuyers to sign buyer agent contracts to be represented by a REALTOR® when buying a home. This includes negotiating any real estate agent fees and commissions that the homebuyer pays (established in writing).

• All buyer agent commissions and fees are negotiable and not set by law

• You do not need to be represented by a real estate agent to buy a home

• The listing agent may not be able to represent you when representing the seller, but they can write up your offer

• Attorney owned title companies can also write your contract to buy a home if you decide to save real estate commissions and represent yourself

Pro tip: If you do decide to hire a buyer's agent (which we do recommend), interview agents, check their reviews, and ask for referrals from past clients. We have a free list of questions to ask a buyer's agent during the interview process. 

Step 4: Start House Hunting

Now comes the exciting part! Create a list of must-haves and would be nice-to-haves. Consider:

• Location and neighborhood

• School districts

• Commute times

• Home size, layout, and condition

• Potential restrictions

Search consumer sites likes Zillow and REALTOR.COM and if you're looking for homes near you in Maryland, you can visit Sachs Realty's website of available homes for sale, set up your free online portal, and more.

Attend open houses and schedule private tours. Take notes and pictures to help compare properties.

Step 5: Make an Offer and Negotiate

Once you find the perfect home, it's time to ask the seller or listing agent any questions, obtain any seller disclosure forms and write your offer. It will include:

• Purchase price

• Contingencies (inspection, financing, appraisal)

• Closing date and earnest money deposit (EMD) 

Be prepared to negotiate! 

Pro tip: Sachs Realty's Broker & Real Estate Educator, Todd Sachs, recommends a maximum of 1% EMD to be presented with your offer. You can also book a 1-hr consultation with Todd for personalized home buying advice.

Step 6: Schedule Inspections and Appraisal

After your offer is accepted:

• Home Inspection: Uncovers potential issues like foundation problems, plumbing leaks, or roof damage.

• Home Appraisal: Confirms the home's value for your lender.

Pro tip: Make sure your offer allows that you can negotiate repairs or terminate the contract should unacceptable issues arise during your home inspections. 

Step 7: Close the Deal and Move In

Prepare for closing:

• Select a title company after contract acceptance
• Get homeowners insurance
• Schedule all utility providers
• Transfer cash to close to your title company
• Do a final walkthrough shortly before you settle
• Show up and sign your mortgage and legal documents
• Get your keys and move in

If you'd like to be the most educated homebuyer, get Todd's Simple Home Buying Course today! Unlock the secrets to the homebuying process and save potentially thousands of dollars! For a limited time, save 10% with the discount code TODD.