The 2023 Ultimate Guide to Buying a House [with costs] | 60+ Steps

This complete step-by-step guide to buying a house takes you through the entire homebuying process, start to finish.

Buying a house is likely one of the most involved decisions and largest investments you’ll make. There are lots of steps that go into purchasing a property, and no two home sale processes are the same. But with our Ultimate Guide to Buying a House in hand and the right real estate team on your side, you’ll be well-equipped for the task.

In this complete guide, we’ll take you through the process one step at a time and give you an idea of how much time, money, and energy you can expect to spend when purchasing a home.

Stage 1: Preparing to Buy a House

• Find your real estate expert: Don’t rush this crucial first step. Deciding on the best real estate agent, Realtor?, or broker to work with is a worthwhile process. Working with an expert you can trust to give you expert insights on the local area and market can be the key to making your big home investment with confidence and success.
• Understand buyer-broker agreements: When you work with a real estate professional, you’ll be asked to sign a buyer-broker agreement at some point. This legally binding document outlines the services the agent commits to providing and the compensation you’ll pay for their expertise. Remember: this agreement - like everything in real estate - is negotiable.

Quick tip: If you’re not sure you want to work with the representative long-term, don’t sign one for longer than 30 days. After the date specified in the buyer-broker agreement, you are free to find other representation if needed without penalty.

• Understand your loan options: Research what loan options are most applicable to you and your current financial situation. Lenders can provide great insights into the different requirements for eligibility, necessary credit scores, income limits, and required down payments for each.
• Decide if you are looking for a big-box lender or a local lender: Big box lenders or large banks tend to have streamlined application processes and extended call center hours. However, at CGP Real Estate we often recommend our clients go with a local lender with intimate knowledge of the local housing market who can help you close on your house more quickly.
• Interview lenders: Not all mortgage brokers or lenders will give you the same experience or loan, so it’s ok to shop around. Different loan companies offer different products, and you want to be sure you’re getting the best available rates.

Take note: Getting quotes from multiple lenders in a short period usually counts as just one hard inquiry on your credit. And of course, paying off a loan responsibly can boost your credit score!

• Get your finances in order: The loan pre-approval process will look at your tax returns, recent pay stubs, and credit report. Do what you can to make sure your credit score and debt-to-income ratio are satisfactory, and save up for a down payment.
• Get pre-qualified for a mortgage: Once you’ve completed your loan application, the loan officer will provide you with a pre-approval letter with a maximum loan amount. They can provide estimates of your monthly payments and let you know what to expect for costs at closing, which will help you nail down the price range of your future home.

Quick tip: Many sellers and agents choose not to work with homebuyers unless they have a pre-approval letter, so don’t skip this step unless you’re paying with cash!

Stage 2: Searching for Your Home

• Assess the current local market: With the help of your real estate agent, get a feel for the prices homes are selling for in your ideal neighborhoods. Drive or walk-through locations you think might interest you to help you make a confident decision when it’s time to make an offer.
• Decide what size and type of home you need: A great place to start is your goals for your new house. Is this your forever home, or a starter home you hope to rent out later? How many bedrooms will you absolutely need? Is a multi-family property something you’d consider? Separate your needs and wants for clarity.
• Explore neighborhoods and school districts: If you have children, school districts can be a major factor in deciding on a new house. Once you’ve chosen a general area, start to explore and research different neighborhoods that appeal to you.

Don’t miss our breakdown of all the school districts in Virginia Beach .

• Make a list of criteria and share it with your agent: If there are any properties you really want to see, tell your agent what appeals to you about them. Keep them posted on your dislikes, too, and how your criteria list evolves throughout the homebuying process.
• Create accounts on your favorite home search app and the MLS: Getting accurate and updated listing data is imperative when buying a home in a competitive market. An effective search tool will help you clear out the clutter, focus on what you want most, and make sure you don’t miss out on the home of your dreams.
• View properties and attend open houses: In a competitive market, you’ll want to make yourself available to view houses as soon as possible. Many listings require you to view the property with a qualified real estate professional, so it’s good to work with someone who can communicate and be flexible with you.

Quick tip: Reach out today if you want CGP to hook you up with free MLS notifications in the Virginia Beach area –or if you’d like a local expert to walk you through this whole process.

And, if you plan to use your new house as an investment property…

• Check out rental laws, if applicable: If you are purchasing this home to operate a short-term rental now or later, make sure that you’ve accounted for any local short-term rental laws or other regulations in your area.
• Determine the best use of a prospective property: Is it definitely a single-family home, or could it house multiple families? Would letting it as a long-term rental or short-term rental be a better choice ?
• Analyze the potential cash flow: Even before you buy a rental property, you can do a bit of number-crunching to estimate what type of income it is likely to bring in. Consider all factors that will affect your short-term rental cash flow or use a yearly rental profits calculator .

Stage 3: Making an Offer on a House

• Prepare your offer: You’ve found a home you love! Now it’s time to craft your offer. While there is standard purchase agreement paperwork, you decide on certain variables in your offer. The following are some decisions you’ll need to make before submitting your offer on this house.

Take note: This list may not be exhaustive, but we cover all of the key decisions you’ll make when preparing an offer on a home in Hampton Roads.

• Decide on an offer price: How much you propose to buy the house for can depend on several factors, including your total budget and the state of the housing market. You don’t have to offer the price it’s listed for – make sure you get your Realtor? or agent’s advice!
• Decide on your desired financing and down payment: If you’re using a loan, you’ll be pre-approved by this point for a certain type of loan up to a set amount. Your agent and lender will help you communicate to the seller your desired down payment amount and the necessary details of how you plan to finance the purchase.

Take note: It’s a common home-buying myth that you absolutely have to put at least 20% down on a home. However, smaller down payments could mean you need private mortgage insurance in addition to your other costs.

• Show the seller you’re serious with an earnest money deposit: An earnest money deposit (EMD) is cash you’ll put into an escrow account once your offer is accepted to strengthen your offer. This money will be used toward your payments at closing, but if you default on the contract, the seller could have a right to keep it. Decide what amount feels comfortable to you – but more money in escrow can show the seller your offer is a serious one.

Take note: Average EMD amounts vary by location and property type. They can be a dollar-amount range or a small percentage of the purchase price. In Hampton Roads, the typical EMD ranges from $1000-$5000.

• Request items to be conveyed: The purchase agreement will spell out any items that will be included in the sale of the house. As the buyer, you can ask for other items to be included as well. (Think: appliances, curtains or blinds, furniture, ceiling fans, landscaping or pool equipment, etc.)
• List your contingencies: Contingencies are certain conditions that you add to your offer, saying you’ll purchase the home if these conditions are met. Some common examples are completing a home inspection, selling your own house first, reviewing HOA documents, or financing being solidified. Here’s a quick guide to home sale contingencies .
• Indicate if you’d like a survey done: Want to add a pool or new fence once you own the home? Having an updated survey will confirm the property lines so you can plan these additions confidently, knowing you won’t be crossing into your neighbor’s property.
• Decide if you need a special inspection: Some other inspection options include a sewer-line camera inspection, termite inspection, or pool inspection. Your real estate professional can help you determine if requesting one of these in your offer is your best move for that house.
• Propose a closing date: Once the bid is accepted by the seller, the closing date can’t be changed unless both parties agree in writing. (Note: standard contracts often allow for additional time to extend closing for loan or title issues. However, additions can be made – or these exceptions can be crossed out!)
• Carefully read all the disclosures and addendums: Before signing your offer on a house, pay attention to all the disclosures that the home seller provides. Some common disclosure topics include lead paint, radon, military air zones, and termite or moisture damage disclosures. If you have questions, rely on your real estate agent to explain what disclosures are required by law and what they mean for you.

Disclosures are one of the four key parts of an offer you make on a home - read about each essential purchase agreement element here .

• Take a moment to be sure: Before you sign, take a breath and review. If the seller accepts and signs the purchase agreement, you’re under contract and it’s a binding legal agreement.
• Sign your offer: If all of the above are complete, it’s time to sign! In Hampton Roads, the standard purchase agreement is 16 pages long – not including the addendums and disclosures. (But don’t worry – a great real estate agent will help you understand and negotiate the contract as necessary – so just make sure you’re working with someone you trust!)
• Include proof of your funds: Don’t forget to include a copy of your pre-approval letter (or bank statement if you’re using cash).

Quick tip: Ask your lender to contact the listing agent once your offer is submitted to confirm your good financial standing. Sellers love to know they don’t have to worry about it falling through at the last minute!

• Submit your offer: Once you’ve triple-checked all of your disclosures, addendums, and offer details, it’s time to submit! You or your agent will send the offer to the listing agent with fingers crossed.
• Negotiate counteroffers: If the home seller counters your offer, you can accept it, but you aren’t legally bound to do so. In fact, a counter-offer means they have rejected your initial offer, and you are now in the position to accept or reject their new one – or counter again with another offer of your own.

If you’re bidding on a house that likely has received multiple offers, this article has helped thousands of homebuyers make an offer that comes out on top .

Stage 4a: Dealing with a Rejected Home Offer :(

• Submit another offer: If your offer was declined but the house isn’t yet under contract, you can make another offer on the same property if you wish. Talk with your agent to see which parts of the previous offer could be strengthened the most. They may have insights on why it was rejected in the first place.
• OR leave your offer open as a back-up for the seller: If the seller chose to accept another offer instead, they are technically under contract with that buyer. You can, however, ask the seller to hold your offer as a backup in case the offer they accepted falls through. This would leave your offer open, though, so you’ll need to rescind it if you want to bid on another home.
• OR start Stage 3 over with a new listing: Your other option is, of course, to move on. Find another house that you would like to bid on and restart the Making an Offer stage. Just remember to rescind any offers you may have left open on previous houses first!

Stage 4b: Going Under Contract on a House (with costs!)

• Your offer has been accepted! Congratulations! Here’s what happens when you are considered “under contract” on a house – and some costs you can expect at this stage.
• Put your promised earnest money deposit into an escrow account ($1,000 - $5,000): This amount is decided when you make your offer. As soon as the seller accepts, you’ll be responsible for immediately depositing that amount into its escrow account, where it will stay until closing if the contract stands.
• Provide documentation to and receive final estimates from your lender: As soon as you’re under contract, your lender can give you pretty accurate estimates of closing costs. Underwriting will begin, so you’ll be asked for more documentation proving your financial status throughout this stage. Talk to your lender about locking in an interest rate so you can get a strong estimate on your monthly payments as well.
• Choose your settlement company: Whether you use a traditional title company or a real estate attorney, your closing (or settlement) company will be responsible for handling the administrative and legal parts of the sale. They will prepare and review all closing documents, disburse funds, record the new house deed, and double-check all legal requirements. They will also set up title insurance to protect you from any post-sale issues with the title.
• Get a home inspection ($400-$700, varying by size and location): Unless waived, your purchase agreement will more than likely be contingent on a home inspection. This allows you to have a professional take a closer look at the house you’re buying – and the chance to back out of the deal without penalty. Whenever possible, our team recommends buyers attend the inspection personally to ask questions and see the findings directly.

Here’s a full breakdown of what to expect when you get a home inspection .

• Get any additional inspections done: If your purchase agreement allows for any additional inspections, schedule those as well and get them done during this stage.
• Shop for homeowners insurance: Your lender will require you to set up homeowners insurance before funding your loan. Now that you’re under contract, it’s time to shop around and set it up to begin on closing day. This insurance protects your home from damage or loss of the property.

Take note: In some locations, your lender may require supplemental insurance as well – like the flood insurance required in areas such as Virginia Beach.

• Review your budget (again): With the new information from your lender and a home inspection report, you’ll now have a better idea of your bottom line in this investment. You’ll have estimates of your total monthly payments, your down payment, and your closing costs (see Stage 5). Factor in any repairs or renovations the house will need, HOA or condo fees, estimated monthly utilities, furnishing costs, and commuting costs.
• Request repairs from the seller: Your purchase agreement will note a certain number of days you have to get a home inspection and request repairs (or ask to be released from your contract). If you request repairs, the seller has a few more days to negotiate their concessions. If an agreement isn’t reached during that time, both buyer and seller have the right to terminate the contract without penalty. (Having a real estate professional on your side who knows how to leverage inspection reports and negotiate well is imperative here!)

Get it in writing! Some states (like Virginia) are “buyer-beware” states. If you close on a home without a written promise from the seller to complete a repair, you have no recourse to pursue them after the fact.

• Order an appraisal ($400 - $600): Your lender will require a clean appraisal of the property before funding your loan. The lender typically orders this, though the buyer generally pays for it out-of-pocket. A professional appraiser will come in and determine the value of the property.

Here’s our guide to home appraisals, what they entail, and what to do if they don’t match the sales price.

• Communicate with your settlement company: Make sure that you’re both on track with the process and everything is in order for closing day.
• Meet all other contingencies: Have you completed your inspections and agreed on the repairs? Have you read any required POA or condo documents? If your offer was contingent on anything else – including the possible “seller’s sale contingency ” – make sure all of the conditions are met and communicated within the time frames set in the contract.
• Do a final walk-through with your agent: Once all contingencies are met, and the appraisal cleared, you’ll do a walk-through to make sure everything is in the same condition as when you completed the home inspection. This is when you’ll check on any repairs the seller has agreed to complete. If something seems off, your best option may be to delay closing until it’s worked out.

Stage 4c: Terminating Your Contract on a House

Hopefully everything goes smoothly once you go under contract, but there are occasions where real estate contracts are canceled. We always recommend consulting a real estate attorney or lawyer in these cases. Here are the most common situations:

• Terminate the contract according to its agreed terms: Your purchase agreement will spell out any opportunities for you to walk away from the deal without penalty, usually surrounding any agreed-upon contingencies. This is often after the home inspection comes back with surprises – one reason we never recommend waiving the inspection contingency even in a competitive market.
• Decline negotiated offers during the inspection period: If you ask the seller to make repairs to the home after the home inspection, they may try to counter your requests during the due diligence period. If you cannot come to an agreement with the seller on repairs, you can walk away with your EMD.
• Request to be released from the contract: If for some reason you need an out that isn’t easily provided by the terms of your contract, you can ask the seller to release you from the contract. You’ll both need to agree on what happens to the earnest money deposit and to terminate the deal. Again, consult legal representation.
• Breach the contract: Technically, you can terminate a contract at any time. However, there is always the possibility that the seller will want to take legal action against you for doing so if it’s a breach of the contract. This is a great reason to have a real estate attorney on your team to consult if you want to walk away.

Stage 5: Closing on Your New Home

• Review your preliminary closing disclosure: If you are using a loan to buy a home, your lender is legally required to provide you with this disclosure at least three days before closing. It will break down your final projected closing costs so you know the total amount of cash you need to bring to the closing table.
• Make sure you have everything needed for closing: When you meet to officially sign the paperwork to become a homeowner, you’ll need to bring a few things along to the closing table. You will need:
• A valid ID
• A certified check for total costs you owe to close (down payment + closing costs)
• Power of Attorney paperwork (if applicable)
• Your Realtor?, agent, and lender (if desired)
• Pay your down payment (anywhere from 0-20+%, depending on loan type): Your down payment will be included in the certified check or cashier’s check you’re using to close.
• Pay your closing costs (typically between 2-5%): Many times, some of these fees will be rolled into the mortgage, so you might be paying them over the life of the loan rather than upfront. Additionally, the seller may be responsible for covering some of the closing costs if you negotiated that. The finalized costs will be broken down for you to review in an HUD-1 Settlement Statement that you will sign at closing, including:
• Appraisal fee: if your lender didn’t make you pay out-of-pocket at the time of the appraisal, this will be charged at closing
• Loan origination fees: charged by the lender for processing the mortgage loan application
• Title search fees and insurance: charged by the title company to search the property’s title history and make sure that there are no outstanding liens or other issues that would legally prevent the sale
• Local and state taxes: recordation taxes are paid to both the state and local municipalities, varying by location
• Survey fee: depending on your agreement with the seller, you may have had the property surveyed to confirm its boundaries and location
• Attorney fees: also known as “closing fees” or “settlement fees,” these are charged by the closing company or attorney for handling the closing paperwork and disbursing funds

Our friends at First Heritage Mortgage helped us put together this quick explanation of closing costs .

• Pay your prepaid costs: These costs, also called impounds or escrows, are separate from closing costs and will be spelled out for you in your Loan Estimate and Closing Disclosure. Your loan servicer or lender will put money for these things in an escrow account, where they will be paid out when they are technically “due.”
• Escrow deposit: typically equivalent to two months of your mortgage payment, this acts as a “cushion” in your account
• Homeowners insurance payment: a full year’s payment is due to the insurance company at closing, and the lender will add three months’ worth of payments to your prepaid escrow
• Property taxes
• Make your first mortgage interest payment: At closing, you’ll also pay your lender the prorated interest for the remainder of the month – plus the next month’s interest payment. Your first mortgage payment usually isn’t due until 30 days after the last day of the month in which you closed.

Take note: Usually, you only need to bring one certified check to closing that will total the combined cost for your down payment, closing costs, prepaids, and mortgage payment as outlined above.

• Close remotely (if needed): Unable to make it in-person to the closing table? Most closing companies have a standard process for helping you close on a home even if you’re out of town. You’ll need a mobile notary to come to you to have the closing documents signed and overnight the original copies back to your closing company.
• Sign all the closing documents: If closing in person, you’ll sign on the dotted line at your closing company’s office. This process typically takes less than an hour, but it’s extremely important as it’s the last major step before becoming a homeowner. Once the documents are signed, the closing company processes them and records the deed with the city where the property is located.
• You’re a homeowner! Congratulations! If you’re making a very detailed budget , add in the price of your favorite bottle of champagne or a nice dinner to celebrate!
• Brag about your amazing new home: It’s practically a requirement to take a corny photo in front of your home (bonus points for a jumping shot) and blast it on social media to celebrate.
• Write glowing reviews for your agent and lender: If you had a great experience with your agent and/or your lender, do them a quick courtesy and write them a review to let others know they are the best.

Stage 6: Moving into Your New Home

• Download your moving-in checklist : Before immediately dumping all your possessions in your new home, download our free checklist of everything you should do before moving in (designed to make this process a LOT easier).
• Start an emergency fund: Being a homeowner is so exciting! But it’s definitely a responsibility. Start an emergency fund right away so you’re ready when any costs of homeownership surprise you.
• Update your estate plan: You’ve purchased a beautiful new asset! This is a good time to update any will or estate plan you have - or plan to create. The goal of an estate plan is to avoid leaving it intestate. Connect with your legal representation to get their advice on how to set this up securely.

Using your new property as a rental home? Consider putting it in the name of an LLC for asset protection and tax purposes. Again, consult your legal or estate planning rep!

• Create a maintenance plan: Strategize how you will maintain the value of your new investment. If your inspection revealed any upcoming major expenses, it’s best to plan now for when you’ll replace that roof or HVAC. Consider signing up for routine maintenance services for your major systems or for routine pest control to avoid unexpected repairs in the future.
• Avoid homebuyers remorse by tuning out the housing market: This is a time for celebrating your new home! Don’t let the “grass is always greener” syndrome sneak in – turn off those MLS notifications and delete the apps and enjoy the fruits of your labor.
• Turn your property into a rental property paradise: If you bought your home as an investment property, get started turning it into the type of place renters crave .
• Create a property management plan: Another important step if your new house is a rental property - check out your management solutions. If you want to be totally hands off, make sure you know how to interview a property manager . Also explore flat-fee options like KOTI if you want to save money with a hybrid rental home solution.

THE BOTTOM LINE

Purchasing a property is one of the most involved processes you’ll likely ever go through, and for good reason. You want your investment to be safe and to provide for you. Start where it matters most – by getting a real estate expert on your side who knows your local market intimately. They will walk you through the steps outlined in this guide to make the process more straightforward.

We know - there are a whole lot of steps involved in buying a house. But with our Ultimate Homebuyers Guide in hand and a great professional team, we hope that you feel empowered to make a confident investment!