Personal Finance Essentials
The Home Buying and Selling Process
Your Roadmap to
Buying and Selling a Home
Getting Pre-Approved Before Shopping
Before you look at a single home, get pre-approved for a mortgage. Pre-approval means the lender has reviewed your finances and committed to a loan amount. There are three strong reasons to do this first. It prevents disappointment: knowing your limit before you shop keeps your search focused. The loan process can move forward while you search, potentially shortening the time to closing. And a pre-approval letter is a serious negotiating tool — if two buyers bid on the same home, the seller almost always prefers the buyer whose financing is already confirmed. Always talk to a mortgage lender first, then hire a real estate agent.
Understanding Real Estate Agent Representation
In many states, the agent you hire to help you buy a home is legally working for the seller. Everything you share — your top price, your urgency, your reasons for buying — can be used against you in negotiations. Most buyers do not realize this. The solution is to specifically hire a buyer-broker: an agent who signs a legal agreement to represent you and your interests alone. While commissions are technically paid by the seller, sellers factor this cost into their asking price. Having a buyer-broker who negotiates aggressively on your behalf can save you more than the commission costs.
Should You Buy Before You Sell?
If you already own a home and are looking to move, the answer is almost always: sell first, then buy. Making an offer on a new home contingent on selling your existing home is a weak negotiating position. Sellers with two offers — one at full asking price with a contingency, one slightly lower but certain — typically take the lower, certain offer. Sell first, then shop with the confidence and speed of a non-contingent buyer.
What Gets Written into the Contract
The contract governs everything. If an item is not explicitly stated in the purchase contract as conveying with the home, the seller can take it. Curtains, light fixtures, built-in shelving — if you assume it stays but the contract does not say so, you may arrive at closing to an empty house. Write every specific item you expect to remain into the contract before signing.
The Settlement Process
Settlement — also called closing — happens in three phases. Before settlement, the settlement agent orders a survey and title report and prepares a commitment for title insurance. At settlement, documents are reviewed and signed, funds are collected, any existing mortgage on the property is paid off and keys change hands. After settlement, the agent records all documents with the court, makes disbursements to all parties, and issues title insurance policies. Closing costs typically run 3% to 4% of the purchase price, in addition to any points and prepaid taxes.