This Is the Ultimate Guide for Home Buyers on How to Buy a House in WA in 2024
This video is the ultimate guide for homebuyers on how to buy a house in Washington State in 2024. Now, heads up, this video will be lengthy, but we will cover and educate you on every single step involved in purchasing a home. We will tell you how to get started, how to find and get a home under contract, and then everything that you can expect to encounter up until taking possession of the house on closing day.
My promise to you is that this video is value-packed, so if you're in market to buy a home and want to be successful, you must have a plan and follow these steps. Hey everyone, I'm Darius, your local Seattle realtor friend. Welcome to my channel where I drop videos weekly about the Seattle and Washington State real estate market and show you tours of the most exclusive real estate.
If you want the latest updates, be sure to subscribe to the channel, and now let's talk about how to buy a house. Step one, you want to get your finances in order. Unless you're going to be buying a home with cash, you'll need to qualify for a mortgage from a lender.
I always recommend that the best early step is for a buyer to chat with the mortgage broker. You don't have to get pre-approved at this stage of the process, but it will give you an indication of your current financial status, your credit rating, an answer to the not-so-simple question of whether you can afford to buy a house in Seattle or not, and the type of home that you can budget for. Also, are there any issues with your credit that you need to be cleared up to help improve your credit rating and hence the mortgage rate that you will qualify for? Also, approximately how much you'll need to save for down payment and money for closing costs, and advice about the Seattle first-time home buying mortgage programs that might be available.
It is good to take the step as early as possible and well ahead of when you intend to buy a house, so if there are any issues or if you need to save more money, you will know what to aim for. Step two, you want to save for a down payment and your closing costs. Many people who are looking to purchase a home think that they only need to come up with money for the down payment and are unaware of the additional costs associated with closing on a house.
The down payment is the amount of money that you put down when you purchase a home, with the rest of the money being provided by the lender by a mortgage. The size of the down payment will depend on what type of loan you're going to get. It'll also depend on how much you can afford to put down.
Now, the closing costs are one-off fees associated with buying a home and include fees such as title insurance, escrow, appraisal fees, and any additional costs that your lender might charge, such as loan origination or underwriting fees. These fees can add up quickly, so it's important to plan ahead of time and budget accordingly before making an offer on a home. Step three, you want to get a good mortgage broker, which is almost as important as a good realtor.
A good mortgage broker will ideally be local, be highly responsive, and have competitive rates and closing costs, and just as importantly, be willing to answer your calls and emails on the weekends. Real estate is not just a Monday through a Friday gig. If you're looking to make an offer in a hurry and need a pre-approval letter or have financing questions, don't expect big banks or credit unions to pick up the phone for you on weekends and holidays.
Do this up front, not right before you want to make an offer on a home. So, why and how to get pre-approved for a mortgage? There are three main reasons that you want to get pre-approved. One, you will want to know how much of a home you can afford.
Two, you have to be pre-approved to make an offer on a home. And three, it's unlikely that a good realtor will be willing to work with you if you're not pre-approved. Getting a pre-approval for mortgage is a critical step in a home buying process and involves you submitting various information, including your income, your debts, and assets to your mortgage broker, who can then run your credit.
The broker will let you know, A, if you qualify for a mortgage, and B, how much you qualify for. If you want to make an offer on a home, you will have to include a pre-approval letter from the lender to prove to the sellers that you can qualify for a mortgage. If you don't have that letter, they will never accept your offer.
Now, note that just because you're pre-approved for a mortgage does not guarantee that you will actually get a mortgage. A pre-approval just approves you for a hypothetical home. Once you have an offer accepted, now both you and the home have to go through approval and underwriting.
Step four, you want to find a great realtor. A good real estate agent can make a home buying process a lot more enjoyable and less stressful. A bad one can mean that you'll miss out on multiple homes or have a terrible experience.
Ask your friends for recommendations, who they worked with, and screen three different agents to find the one who feels like the best fit for you. Or just give me a call and I'll take care of you. Finding a responsive realtor is critical.
Before you choose who you're going to work with, test them with a few text messages, emails, and calls. If they are slow to respond, you may want to look elsewhere. The number one complaint about agents is tardiness in replying to calls and correspondence in general, which can be really frustrating for buyers.
So, don't end up with one of those realtors. Step five, identify what you really need versus what you would like to have in a home. When it comes to buying a house, it is important to differentiate between wants and needs.
Wants are features of a home that are desirable but not necessarily essential. These might include a large backyard or a luxurious kitchen or a home theater. Wants are often a reflection of a personal preference and lifestyle.
On the other hand, needs are features of a home that are essential for a comfortable life. These might include a certain number of bedrooms and bathrooms, adequate storage, good local schools, or easy access to public transportation. Needs often depend on the individual's life situation, such as the size of their family and the kind of lifestyle that they lead.
Many real estate brokers will ask the buyers to list their top five must-have items that they really want in a home. However, the reality is that the vast majority of buyers will not get all five of those and will need to compromise a little bit. If you end up with four of the five, you're doing really well.
Also, as you start looking at homes in person, it's likely that your wish list will change as soon as you see some features of the home or neighborhood that you may have not considered previously. Step six, start looking online and go actually see houses. Since you're looking to buy a house, you probably have already looked on Redfin or Zillow and have an idea of what homes are available in what neighborhoods.
Here's a quick explanation of what different listing statuses mean. Homes listed as active means that the sellers have not accepted an offer yet and are open to offers. Homes tagged as pending inspection means that homeowners have accepted an offer that's contingent on buyer doing an inspection.
These homes may or may not come back to market depending on what the buyer decides after they complete the inspection. Pending status means that a buyer has already completed an inspection or waived the inspection. However, the sale might still be contingent on appraisal.
About 95% of these will continue all the way through closing. Occasionally, you'll see a home that's tagged as contingent, which indicates that the seller has accepted an offer from a buyer contingent on the sale of the buyer's own house first. These sales make up a very small part of the overall market and even less so in a strong market.
Now, when you're ready to go out and start looking at homes, there are two main ways to get access to listings here in the Seattle area. The best way to go see a house with a private showing with your real estate agent. Pick a day and a time that works for you and your agent and they will reserve a time slot for you.
And you'll usually have the home for about 30 minutes to yourself, which will allow you to take a good look at the house. The other way to see homes is via open houses. And here you're reliant on the listing agent holding the home open.
If the home is popular, then you'll be butting elbows with other buyers and it can be hard to see the home where there's a lot of people in there. In case you didn't know already, the main reason the realtors like doing open houses is not to sell the home per se, even though homes do sell the open houses, but it's a way for them to grab new buyer clients. You'll notice that as soon as you walk in the front door of an open house, you're likely to be greeted by a listing agent, try to endear themselves to you in hopes of getting to work with you.
And you'll probably get a question. Are you working with the realtor Another word of warning, if you walk into an open house and you fall in love with the house, but haven't already signed up with your own agent, do not necessarily jump to make an offer with the listing agent. This is referred to as dual agency and it does happen and it doesn't necessarily have to be a bad thing.
But you must understand that in that scenario, the same agents representing you and the seller, so therefore the representation or the duties to you would be Step seven, you're ready to make an offer on a home become familiar and comfortable with the real estate contract paperwork and how it works is really important. If you're seeing a purchase contract for the first time, the day you want to write up an offer, it'll be overwhelming and you won't feel comfortable signing on the dotted line. So by going over the contract in advance, you can educate yourself on how to structure an offer to different situations based on how competitive the home may or may not be.
Once you've gone over the contract a couple of times, you will feel a lot more comfortable as to what you're agreeing to. Now, it's important to understand that depending on the prevailing housing market conditions, the listing price may not necessarily be the actual price that the home will sell for. There is no golden rule as to what to offer and you need to weigh up the individual factors for that particular house.
For example, is it a buyer's or a seller's market or how long has a home been on the market? Has it been sitting there for two months or did it just come on two days ago? Or if the seller has set an offer review deadline and the home is very popular, then you know that you will be competing for the home and likely will be paying more than the list price. Or if you know that the home is going to need a lot of repairs and the seller is not going to take care of them before closing, then just write an offer what you think the home is worth and be willing to walk. Or has the seller demonstrated that they're motivated to sell? Some sellers will cut the listing price if the home is not getting offers, while other delusional ones are happy sitting on the market for four months without cutting the price once.
The former will be open to negotiating, but the latter is less likely to be flexible. But it never hurts to try. And sometimes it comes down to just how badly do you want the home and what are you willing to do to get it.
If you have been outbid on other homes in the past, then it might dictate how you feel about going all-in on a particular house that you fall in love with. So when you make an offer, you'll have a purchase and sale agreement and the contingencies. Here in the Puget Sound area, when you make an offer on a home, everything must be in writing.
Verbal agreements are meaningless and they're not legally binding. Your offer will be submitted on standard forms that are used by all residential transactions in Washington state and will be written up by your real estate agent. As mentioned previously, it's important to familiarize yourself with a purchase contract well in advance of making an offer so you feel comfortable knowing what you're signing.
An offer on a home is made up of two main parts. The purchase and sale agreement and the contingencies. The purchase and sale agreement is a six-page form.
It's the most important part of the contract. It's always present in contracts and serves the following purposes. One, it identifies the buyer and the seller and the property that's being sold.
Two, it identifies the purchase price and when the home will close. Three, it will cover what appliances and other items that stay with the house. Four, details of what happens in the event of one party defaulting on the contract.
Five, identifies the title and the escrow companies that will be used. Six, how much earnest money the buyer is putting down. Seven, identifies the listing agent and the buyer's agent.
Eight, contains a list of contingencies that are included in the contract. Now, these contingencies are your friend as a buyer. They're conditions under which a buyer is willing to buy the home.
In general, the way the process is designed to work is that the contract is there to protect the buyer via these contingencies. So, here are the most common contingencies found in homes here in Washington state. First, the financing contingency which states that the buyer is purchasing a home by a mortgage and that the purchase is contingent on one, being approved for the loan and two, the home passing an appraisal.
Two, there's an inspection contingency which gives the buyer the right to conduct an inspection of the property which may also include the sewer line. Next, there's a title contingency which states that the buyer is buying a home contingent on reviewing the title report to the property and a guarantee that the buyer will be delivering a clean and a marketable title. And four, HOA review or homeowner association review which applies to the condos and other homes that are part of the HOA.
The buyer's offers contingent on reviewing the resale certificate and other documentation associated with the community that they're buying into. In an ideal scenario, the buyer's offer will contain all of these and other contingencies so the buyer has optimal protection. However, the reality is that the market dictates the type of offers that buyers might have to submit to get into a home.
If it's a slower buyer's market, then the buyer has a lot more leverage and can usually include all of these addenda. However, in a competitive market like we have here in Seattle where lots of buyers are interested in the same home, then the buyer is likely going to have to remove some of the contingencies to win that house. Now, when making an offer in a competitive situation, if you want to make an offer on a home but you know that it's going to generate a lot of interest and you're not going to be the only offer, then you have a decision to make.
If you come in with a standard offer with all the contingencies in place, it's likely that your offer will be at the bottom of the offer pile. For example, if your offer is contingent on doing an inspection and three other buyers have done pre-inspections of the home, then your offer will be a lot less competitive. Likewise, if other buyers are waiving the appraisal and your offer is contingent on the appraisal, that may also weaken your offer.
You will become familiar with the market through your personal experience, maybe missing out on a couple of homes, and through that, you will learn to become more familiar with the types of offers that win these listings. Your agent will likely tell you that what's needed to win in a competitive situation, but sometimes you need to experience for yourself to realize that there are rules of the game in those situations. And sometimes, especially if you found the perfect house, you might just want to go all in early with the bully offer and try to get rid of the competition.
Step 8. Congratulations! Your offer was accepted, so now what? If you, the buyer, and the seller come to an agreement and both parties sign the offer, you now have what's called mutual acceptance. First-time buyers often worry that sellers can continue to market the property and entertain other offers, but no need to fear, once you have mutual acceptance, the owner cannot accept any other offers and bump you out of the contract. The one exception is buying a home contingent on the sale of your home, but most buyers don't have to worry about that.
Getting your offer accepted is just one stage of the whole process, and you've only cleared the first hurdle, but it's a great first step. And now, the clock starts ticking, and you need to become really focused on doing your due diligence and completing them on time. Most contingencies have a time limit, which you need to complete the task, and if you fail to do so on time, then you forfeit your right to do that part of the contract.
Here are the main things that most buyers will need to focus on once their offer is accepted. First, you want to apply for that mortgage for that particular house. Wait, I thought you applied for a mortgage? No, you were just pre-approved, and when you were pre-approved for that loan, it's just based on a hypothetical home in the greater Seattle area.
However, once you have an offer accepted on a home, the lender will now want to delve into your credit rating a bit more, and also want to look at the home that you're buying to make sure that it's worth the money that they're giving you. Your listing agent will send a copy of the contract to your mortgage broker, and your broker should reach out to you immediately to get the process started. You'll usually have five business days after mutual acceptance to start the process of applying for a mortgage.
During this period, you can shop around for a different mortgage broker, but you cannot change the type of the loan that you're putting down or the amount that you're putting down without written consent from the seller. Next, you're going to deposit your earnest money. One of the first steps after having an offer accepted is to deposit your earnest money.
Earnest money is a statement of your serious intent to buy that house, and sometimes referred to as a good faith deposit. According to the purchase contract, it's the money that you're willing to forfeit in the event that you break the contract without any recourse. In general, the earnest money is anywhere at one to five percent of the purchase price, and you usually have three business days to deposit it to escrow.
Make sure that you have the money available in cash in your checking account. If the sale proceeds all the way to closing, then the earnest money will be part of your down payment on the home. In the event that you walk away from the contract, say for example, you disapprove the inspection, then you'll get your earnest money back.
The only way you can lose your money is by walking out on the contract when you do not have the right to do so, and in that situation, the seller gets to keep that deposit. Next, you'll do a home inspection. If your offer is contingent on doing an inspection of the property, then you will need to schedule that as soon as possible to ensure that you complete it within the allocated time.
You'll hire a licensed home inspector who will go through the home with you and give you their two cents on the needed repairs or any potential major issues with the home. If the home is on a sewer line, you also want to make sure you get a sewer scope done. If it's on a septic system, then the home seller is required to schedule and pay for an inspection of the system.
The great thing about having inspection contingency from the buyer's perspective is that it's contingent on buyer's subjective satisfaction of the property, which means that the buyer is completely within their right to walk away from the sale if they don't like what they see or even if they find nothing wrong with the property. If the buyer does not want to continue in the sale, then they have the number of options including buying the home as is or negotiating for a price drop or repairs. Depending on the size and the type of the home, the property inspection can range anywhere from $400 up to $700, and the sewer scope will be anywhere $250 to $300, but it's money well spent if you want to make sure you buy a good house.
Next, you will have an appraisal. If you're purchasing a home using a mortgage, then part of that process will involve a lender sending an appraiser to the home to determine the home's current market value. The lender wants to ensure that in the event that you default on the mortgage, they'll be able to repossess the home and sell it and get their money back.
Ideally, you want to schedule the appraisal after completing the home inspection because you do not want to waste $700 on an appraisal if the home is not going to pass an inspection in the first place. Nine times out of ten, the appraisal will pass and you're good to go, but if the appraisal does come in below the sale price, then you're going to have to negotiate with the seller to drop the price, and if the seller is not willing to budge, you'll have an option to decide between bringing extra cash to closing to make up the difference or walking on the sale and getting your earnest money back. You'll also have a title review period.
The seller is required to provide you with a copy of the title report for the property, and you will have that around five days to review that document. The title report covers the history of ownership of the property and lists if there's any current issues with the property, including unpaid liens or taxes. There's also HOA and a resale certificate review.
If you buy a home that's part of an HOA, like or a condo or a townhouse, then the seller must provide you with a copy of the resale certificate within 10 days of mutual acceptance. The resale certificate contains all the information that you need to make an informed decision as to whether to buy a home into that community. It'll contain information on the association's finances, if there are any current special assessments, their financial reserves, plus the list of rules and regulations for living in that community.
This is a critical document and one that should be reviewed very thoroughly. Now, what is title and escrow when you buy a house? Another player that you'll encounter on the path to purchasing a home is an escrow company. Escrow is a neutral third party that essentially operates as a traffic cop, directing the transaction and ensuring that everything goes smoothly all the way to closing.
Escrow companies are responsible for collecting and distributing funds from the buyer and holding them until agreed upon conditions have been satisfied. This can include payments such as earnest money deposit, down payment, and final mortgage payments. Once all conditions are met, the escrow company will transfer the funds to appropriate parties and close out the deal.
Escrow professionals also provide extra layer of protection throughout the process to ensure that everything remains fair for both sides of the transaction. You'll have to pay a one-off escrow fee as part of the closing costs, which can be anywhere from $1,000 to $2,000 range. Now, what are the title and title insurance when you're buying a house? A title is effectively a legal ownership of your property.
It contains the description of the property, the names of all owners, and other documents related to any problems or liens on that property. Before a Seattle home seller puts their home on the market, they will usually order a copy of the title report from a title insurance company. The title report will provide information about the legal owners of the property, any liens which may be placed on your property, and if there's any unpaid taxes owed on it.
And there's also other items such as rights of way, easements, and so on. Title insurance is the type of insurance that protects the buyer, the lender, and sometimes the seller from defects if the property's titled. When you purchase a property, you assume ownership of all rights to it.
That includes any legal issues caused by previous owners that may cloud your title. The title insurance can protect you from financial loss in the case of hidden risks such as undisclosed liens, bankruptcies, judgments against past owners, false impersonation of an owner, and more. It also typically covers certain costs associated with defending your claims in court and attorney fees.
Title insurance is part of your closing costs and is a one-time fee. You do not need to renew it annually. It's not cheap.
It'll cost you an average of $1,000 to $2,000. Now, can you as a buyer get out of a contract if you have mutual acceptance? Sometimes buyers get cold feet and sometimes the home is not as good as the buyers expected when they submitted an offer and after they completed their inspection. As mentioned previously, the more contingencies the contract has, the greater the buyer protection and hence the easier it is for the buyer to get out of the contract.
There are a number of ways the buyer can walk from the purchase and sale agreement and get their earnest money back, but it'll be a case-by-case basis depending on the purchase agreement. And now we're almost there. So, what happens in the week before closing? Once your loan has been approved by the lender's underwriter, you're 95% of the way to getting that house.
You've cleared all the hurdles and now it's mostly a case of taking care of the small clerical stuff. First, you want to review a settlement statement. A few days before closing, the lender will send you a document called the settlement statement.
It provides an itemized list of all the costs associated with buying that house including your closing costs, your prepaids, how much money you need to bring to closing. It's also known as a closing disclosure or HUD-1 form and the buyer must be given a minimum of three days to review it for any errors. Buyers should carefully review the settlement statement to ensure that all amounts are accurate and match what was agreed upon during the negotiation.
Any discrepancies or errors should be addressed with the lender before closing. In fact, call your mortgage broker and have them review it with you so you know exactly what you're signing. Then, you have a signing appointment.
After the buyer has approved the settlement statement, the lender will send the loan documents to escrow. Escrow will prepare the signing documents and escrow will call you to schedule an appointment to come into their office and sign all of the paperwork confirming the purchase of the home. These typically include a deed, a promissory note, mortgage loan agreement, trust and lending statement, and miscellaneous forms required by your lender and state laws.
Before the appointment, escrow will inform you of the exact amount of funds that you need to bring to closing. This includes your down payment minus your earnest money plus all of your closing costs. In the Seattle area, most buyers are able to simply wire the funds to escrow or bring a check.
The signing appointment usually takes place the day or two before closing. You will be signing a lot of forms, but escrow officers should explain each of them before you sign it. The most important form is the note, which details the terms of your loan including the rate.
Make sure you review that carefully. And once you've signed all the forms, make sure to ask for a copy before you leave. Note that if you're too busy to get into the escrow's office, they can arrange for a mobile notary to come to your home or your workplace.
Now right before closing, you're going to want to do a pre-closing walkthrough. The purchase contract allows you to do a final walkthrough of the home before closing and make sure you do this. It might have been three weeks since you were last in the home and you want to make sure that you're getting the home in the same condition as it was when your offer was accepted.
You want to ensure that the seller has completed any repairs they agreed to and that they have removed all of their personal possessions. You also want to make sure there's no new issues that have popped up that need to be addressed before closing. The buyer and the agent do the walkthrough a day or two before closing and ideally the sellers have moved out of the house completely by then.
Then you'll want to contact the utility companies. Before moving into your new home, it's important to ensure that all of your utilities are set up and ready to go. Your purchase agreement will have utilities addendum that lists all of the utility companies that service your home including water, sewer, electricity, gas, and garbage collection.
You'll want to contact each of these individually and provide them with your move-in date so there's no interruption in service. Note that one of vesco's responsibilities is to ensure that all of the seller's utility bills are paid up to the day of closing. That way, when you move in and you're starting with a clean slate and all bills are paid off.
And finally, what happens on closing day? Okay, so the big day has arrived. You've been very patient but now it's again a case of just give me the keys. On closing day, the buyer is not required to do anything besides wait till about five o'clock usually.
Usually in the morning of the closing day, escrow will send out an email stating that funds have been released which means that the buyer's lender released money to escrow to fund the loan. Then around midday, escrow will send out a second update saying that the file has been released to record. This means that escrow has sent the electronic notification to the county where the sale will be recorded.
And then later in the day, usually around 5 p.m, escrow will send out a final notice saying that the sale has been recorded and officially closed. Then you just get to take possession of the property. So once you get that magic third email from escrow and home is all yours, you can run over to meet your realtor to get the keys to the house.
Note that in Washington state, the seller has until 9 p.m on closing day to vacate the property. But in vast majority of the cases, the sellers will have already moved out before closing so you can just get the keys directly after the official closing is recorded. And that's it.
You've done it. You've completed all of the steps and enjoy your new house. So if you've watched the video all the way through the end, I want to applaud you for taking the time to educate yourself about every single step in a home buying process.
And if you watched the whole video, you're probably pretty serious about buying a house. And if that's the case and you're looking here in Washington state, in King County specifically, I would love to be a resource for you. So don't hesitate.
Reach out should you have any questions or you want to interview me to be a realtor. I'd love to help. I love getting those calls.
And if not, thank you for taking the time to watch this. Please be sure to like the video and subscribe to the channel and I'll catch you on the next video.
