Buying a house step by step

[Ben Firstenberg]

Hello all, 

For all the great content on here, I sometimes feel there could be more information about what happens between making an offer and closing. So here's a quick overview:

After the offer is accepted, due diligence begins. Due diligence is when you conduct your inspection and invite any contractors to the property to quote repairs/renovations. The buyer pays for the inspection and it typically costs $400 or so. If the inspector discovers major issues, you may want to ask a contractor to quote those repairs. Due diligence lasts for as long as stipulated in your offer. In the state of Georgia, a buyer can back out of the sale for any reason without penalty as long as it's during due diligence. 

If you discover problems during due diligence, you may renegotiate with the seller and ask for a price reduction to compensate you for the issues. Most homes have at least a handful of minor issues, so don't expect to get reductions for every little thing. Focus on the big things: roof, HVAC and foundation. Most homes (especially investment properties) are sold "as is", so it's typically a win to get any reduction at all. 

After due diligence comes the financing and appraisal contingencies. The lender will be underwriting your loan, checking your credit and ordering a property appraisal. Your agent will be coordinating with the lender to make sure everything is going smoothly. There isn't much for the buyer to do during this period, but you may be asked to provide information to the lender. Make sure to get them this information as quickly as you can. Brandon Turner has a rule that information requested by the lender is top priority. 

Lastly, throughout all of this, the closing attorneys will be preparing the deed and verifying the property's title. Their job is to make sure ownership is properly conveyed from the previous owner to you, the buyer. They will also prepare the legal documents that set up your mortgage. Again, make sure to provide them whatever information they request. 

One thing I learned the hard way: make sure to make it very clear to your agent, the lender and the attorneys that you will be purchasing the property in an LLC, if you choose to do so. They will likely assume you are putting it in your name unless you specify.

Hope this helps someone out there. Happy to go into greater detail