What First-Time Homebuyers Ought to Know About Getting an Offer Accepted

Well, it happened. Ben and I put an offer on our first home!

It’s been a little less than a month after we started the process, and we’ve had a crazy ride so far. We’ve seen 42 places, almost put an offer on two homes before now (and subsequently fought over why we didn’t), and finally put an offer on this place 30 minutes after we saw it.

Our current place received two other offers after ours, so we were told to put in our highest offer with the best terms. After several anxiety filled hours, our realtor called and let us know that we got it.

That’s when even more craziness began. Since this was our first home purchase, we had no idea what to expect. And for you other first-time buyers out there, I wanted to outline what happens after you get an offer accepted.

  1. Begin Escrow – Once the seller accepted our price, we were under contract. At that point, the seller took the property off the market, and we began escrow.  Escrow is the process by which a third party verifies that the buyers and sellers meet all of our respective requirements for sale. In other words, the sale becomes contingent on us jumping through several hoops to complete the transaction. Those hoops involve inspection, attorney review, and obtaining financing for the purchase. The other interesting and somewhat reassuring aspect of the process is that we have five business days to rescind our offer, without consequence, if we change our mind and decide we don’t want the place.
  2. Schedule a Home Inspection – An independent, licensed, and insured inspector needs to go through the property to look for problems.  Scheduling the inspection scared me the most because we had such a short time frame to get it done. Luckily, we have several friends who have bought property and who could recommend good inspectors. After reading reviews and figuring out the prospective inspectors’ availability, we went with one recommend to us by one of Ben’s coworkers. We’ve also been told to ask a lot of questions, write down or record everything that needs to be addressed, and get an estimate on how much it will cost to make any repairs. If the costs are significant, we will have our agent negotiate who should pay for the repairs.
  3. Secure Financing  – As I said previously, we went through the preapproval process with two lenders. And until the day after the offer was accepted, both were in contention for financing our purchase. We got the interest rates and loan options from both, compared them in a spreadsheet (an amazing one I might add), and then picked one. Since the rates were about the same, we again went with the recommendation of one of Ben’s coworkers.  And I think we made a really good choice. She’s easy to talk with and also willing to take us step by step through each process. We’ve now locked in an interest rate and are ready to submit the loan application for approval.
  4. Attorney Review: Like the other professions, we got our attorney via a recommendation; this time from our realtor. Our realtor suggested getting someone who just practices real estate. And while I know other attorneys who have done closings, I wanted to make sure we went someone who our realtor knows does a good job. With 5% of the purchase price in earnest money on the line, we definitely need someone who won’t make any huge mistakes. He’s already reviewed the contract and made great modifications. He’s also ordering the homeowners association documents – board of directors meeting minutes and notes, financial statements, state disclosures, reserve study, bank condominium certification, HOA unit demand statement, etc. He also files the required documents should we need any more time.
  5. Property and Liability insurance: One thing Ben and I still need to do is find homeowners insurance. Our lender said we needed to at least have a quote before we could close. We will definitely shop the rate and find someone that offers quality insurance and a good price.
  6. Sign Documents, Fund Down Payment, Verify GPE – Our realtor has warned us that this first week is pretty crazy, but afterwards things slow down as we come to the end of the escrow process. We will eventually be ready to sign documents, fund the rest of the down payment (we get a credit for the earnest money already paid), and verify the lender costs match the good faith estimate we were given. You should keep in mind that the process involves sending a lot of documents back and forth. So make sure to keep everything organized.
  7. Close Escrow – After we fund our down payment, the bank will fund the mortgage loan, the escrow and title company will prepare all documents, properly account for all the funds. Once that’s done, we can record our purchase documents at the county courthouse.

One last thought on recommendations for all of these things. It was important for us to get a wide array of recommendations, not just use the ones from one friend or our realtor. It’s easier to avoid conflict of interest that way. And it also forced us to really research who we wanted to use.

Everyday I get more and more excited about the house. Hopefully the inspection goes well, and we come to an agreement on the information we need to. Fingers crossed!