Whether you're a first-time homebuyer or purchasing your 15th home, the path to homeownership can be confusing. Here's a summary of the process, including recent industry changes.
(Note: The following tips are for buyers in Chicago and the suburbs on Chicago's North Shore, including Evanston, Deerfield, Highland Park, Lake Forest, Highwood, Glencoe, Northbrook, Wilmette, Winnetka, Kenilworth, Skokie, Northfield, Buffalo Grove, Glenview and more. Local customs, rules and laws may vary for other areas in Illinois and in other states.)
1. Meet with a Realtor. Homebuying is not only a big financial commitment, it's also an emotional one. So, you'll want to find someone who you can relate to. You'll learn about the homebuying process, discuss your budget, and review your wish list. Do you want a single family home, condo, or townhome? 2 bedrooms or 5? Large lot or small backyard? Urban neighborhood, quiet suburb or out in the country? Your realtor will help you narrow down your choices. As of August 2024, all Realtors® across the United States are required to have a signed Buyer Representation Agreement before they are allowed to show buyers any properties. For more information on this, see the Illinois Realtors website.
2. Get Pre-Approved. If you aren't making a cash purchase, work with a lender to get pre-approved for a mortgage. You'll need a pre-approval letter before you start touring. Once you apply for a mortgage, make sure you consult your lender before you make any large purchases, move your money around, apply for new credit, or close any credit accounts.
3. Search for Homes and Tour. The fun part! At Karp Residential we use a search app with our buyers called Zenlist, which gives you access to both public and private listings (which you won't find on Zillow and other online sites). You can search, save properties, and send tour requests for properties you want to see. Keep in mind that you may not find a house that has everything you want. Focus on the features that are most important to you and let go of the minor items on your list. And remember that in addition to the physical aspects of the house itself, don't forget to consider other key things such as area amenities, location, noise, etc. that may have a big impact on what it's like to live there.
4. Submit an Offer. Work with your Realtor to prepare an offer based on the price and terms you choose. The seller may return with a counter-offer, which you can accept, reject, or make another counter-offer. Negotiation is definitely part of the real estate process, but trying to "win" by getting an extra-low price may lose you the home you love. Be aware of market dynamics when you make your offer. For example, if it is a seller's market (which is what we've been experiencing since the COVID pandemic, where demand for homes exceeds supply) a low-ball offer won't get you anywhere. We also make it a point to reach out to the seller's broker to find out if there are any terms that are important to them so that we can incorporate them into our offer. Some examples include closing date, lease back, or specific items to include or exclude.
5. Contract. Once you and the seller agree to all terms and sign the offer, it becomes a contract. You'll have a timeline to obtain financing, inspect the home, and for your attorney to review the contract and propose modifications.
6. Home Inspection. You will hire an inspector who will give you an idea of the overall condition of the home, and you'll learn about home maintenance items that may need attention in the first months or years you own the home. The contracts used in Chicago and on the North Shore typically provide for you to have your inspection within 5 business days after the contract is signed. If you need more time, that can usually be negotiated.
7. Attorney Review. Based on the contract we use in Chicago and on the North Shore, your attorney has 5 business days after the contract is accepted and signed to propose changes, including any issues that come up during the inspection. Then the parties have another 5 business days to negotiate and finalize the deal.
8. Preparing to Close. Once your loan is approved (or after attorney review if you are a cash buyer) the attorneys will reserve a day/time for the closing at a local title company. You'll get instructions for the transfer of funds and your realtor will schedule a final walk-through before closing. Your lender may have you sign some of the required documents electronically, prior to the closing.
9. Home Ownership! Bring your ID to the closing and be prepared to spend some time signing documents. Congratulations … you're a homeowner!
