Like most things in life, the process of purchasing a home follows a series of sequential steps. Understanding those steps and which phase of the process should come first can help you to understand what to anticipate throughout the transaction but also ensure that everything culminates in the end the way you want.

The basic steps of purchasing a home involve executing a purchase contract with the seller, followed by opening an escrow with a deposit of funds. After this, it is time to schedule inspections and follow through to make certain they are completed on time. Financing must also be obtained. At the end of the transaction, everything is recorded, the escrow closes and all of the funds are appropriately disbursed.

While all of this sounds fairly cut and dried, as you probably know, it is not always that simple or that easy. This is precisely one of the reasons why escrow is used in the process with a third party that is neutral handling the transaction to be certain that everything is handled smoothly. Due to the fact that a large amount of money is typically involved in the purchase of a home, a third party is an excellent way to make sure that the buyer as well as the seller is protected.

The entire process begins with you identifying a property that you would like to purchase. Once that happens, you can speak with your real estate agent and ask them to draw up a purchase contract. This is a legally binding contract that explains the price at which you are going to purchase the property. The contract also details the length of time for the escrow while also identifying the escrow and title companies the seller will be using.

After your purchase has been presented to the seller by the real estate agent, the seller will have a certain amount of time in which to respond in order for the contract to be legally valid. In most instances, the contract will stipulate between one to three days. It is important to keep in mind that there are three options available to the seller once the purchase contract has been presented. The seller may choose to accept the terms of your offer or they may reject the offer outright. The third option is to submit a counteroffer. For example, if you offer $100,000 on a home listed at $125,000 then the sellers could come back with a counteroffer of $115,000. If that is the case, you as the buyer will usually have a certain amount of time to respond to that counteroffer, deciding to accept it, reject it or present another offer of your own. If the seller should decide to accept your offer, at that point an escrow will be opened and a certain percentage of the sales price will be placed into escrow. The amount that will be deposited in escrow may vary according to where you live, but 3% is fairly common.

After escrow has been opened, the home inspections will usually need to be completed within a certain amount of time. The amount of time that is allotted for the home inspections to be performed will vary based upon a variety of factors, including current market conditions. For instance, if the market happens to be hot, the buyer will usually have less time to complete the inspections while in an average market the average amount of time will range between ten and fourteen days. Such home inspections may include a pest inspection or a major system inspection.

It should be kept in mind that in many instances an offer will not be accepted by the seller if the buyer has not taken the time to become pre-approve or they are not able to demonstrate they can close the transaction in cash. Even if you have been pre-approved, you will still need to complete the financing process. This can take up to 60 days, so you should be prepared ahead of time.

After the inspections have been completed and all other terms of the contract have been satisfied, the purchase transaction can then be completed. The remaining funds will be placed in escrow, with the lender wiring the necessary funds into escrow. The seller will execute all of the remaining documents, including the grant deed.

While the process does seem fairly simple, remember that unexpected events can take place, which is why it is critical for both the buyer as well as the seller to be prepared for possible unforeseen circumstances to interfere.