There are whole libraries of books on the home buying process that deal with many of the issues we’ll address here in great detail. You’ll find a lot of information on the web as well. On the web site of Freddie Mac, for example, you’ll find a simple but useful description of the home buying process.
Our discussion here is intended to supplement these kinds of resources by focusing on how the process typically plays out in our local housing markets. It is important to remember that there are vast differences in real estate practices across the country. There are some areas of the country that don’t have the MLS systems, the databases of home for sale that are so central how are markets function here. The processes involved in marketing and closing real estate sales (and loans) in California are significantly different from those involved in Colorado, and they’re a constant source of confusion to buyers moving from from California to Colorado. In some areas of the country, the state requires that the buyer and seller have attorneys to represent them at key points in the process. In Colorado, attorneys often don’t play any role at all. And, of course, the dynamics of the negotiation process will vary dramatically depending on whether you’re working in a “buyer’s market” or “seller’s market.” In sum, buyers who have purchased homes in other states, or who have read descriptions of the home buying process as it occurs in other areas, are often more confused by the process than they would be if they came into the process with little or no knowledge of real estate practices. Our goal in this section is to give you a firm foundation for beginning your home search in our local area, which includes the major communities in Boulder County, the city of Broomfield in Broomfield County, and the cities of Arvada and Westminster in Jefferson County.
What’s Covered in the Section of the Site
We’ve broken down our outline of this process in the following sections:
- Getting Started Perspectives on how to get moving in the right direction.
- Finding a Home Strategies for conducting the search for you home.
- Making an Offer What’s involved in formulating an offer and negotiating a contract?
- Under Contract Working through inspections, loan issues, and so on.
- Preparing to Close Things to watch for in preparing for a smooth closing.
- The Closing What goes on in the final hour before you own your home?
- Key Documents Sample of some of the paperwork you’ll encounter.
Putting the Home Buying Process in Perspective
In many respects, the process of buying a home is comparable to that of buying a car. Deciding what you want in a home and matching this up with what you can afford to pay is similar to what you go through when you buy a car. The work of deciding between various loan — or lease — options is also quite comparable as well. In both cases, you’ll find that what you can afford will depend on what types of financing you are able to qualify for or willing to accept. In both cases, you are wise to have a professional inspection to insure that you are making a smart purchase. And in both cases, there are legally sanctioned means of recording and transferring legal title to the property.
In fact, some people buy homes putting little more thought, care or effort into the process than they do when they buy a car. Many of these people come out just fine. However, if you read my review of the issues that you should look into when evaluating your new home (see Risks and Pitfalls) and compare this with the process of having a mechanic inspect a used car, you’ll see that a higher standard of care is warranted when you’re buying a home.
In part, this simply reflects the different levels of monetary investment involved. Many home buyers will spend 10-20 times as much on their home as they do on their car. But the money isn’t the only difference, and it probably isn’t the most important. For most of us, the primary reason that home buying decisions are so critical is that they have such wide ranging impacts on other aspects of our lives. The home we buy, and where we buy it, will affect the social contacts we make and the way we spend our leisure time. It will affect what schools our children go to and who their friends are. And it will inevitably make an impression on friends and family that means a lot to them and to us. Further, the home we buy is commonly viewed as one of the most important financial investments we make in our lifetimes. While we think of cars in terms of how much they will cost over time, we think of homes in terms of how much we are likely to make on them as an investment. For all of these reasons, the purchase of a home should be approached with more knowledge, more assistance and more care than the purchase of a car.