Buying a house in Delaware is as easy as finding one you like, making an offer, and coming up with the money for it, right? In a nutshell, maybe. But the home-buying process at large is complicated and time-consuming, and many buyers are surprised at the amount of work it takes to find and purchase a home.
It’s essential to do your homework before you begin your home buying journey. Knowing what to expect can help to remove much of the guesswork of buying a home and make the transaction smoother from start to finish.
In this guide, we’ve broken down the process into eight simplified steps you need to know before you dive in.
Step 1: Evaluate Your Current Financial Situation
While you may feel ready to take on the responsibilities of homeownership, your finances may say otherwise. Before you start searching for your dream home, it’s important to make sure your financial situation will allow you to buy and maintain a house.
For starters, you’ll need enough money in the bank for a down payment on your home, as well as a good credit score. Lenders will look at your credit history, credit score, savings, and other assets when determining whether to lend you money.
Also, you’ll need to explore the various financing options available and what they will ultimately cost you in the long-term. The better your financial profile, the better chance you have of getting an attractive interest rate. Some loans will consider lower credit scores, but you’ll be paying more in interest, which will result in a higher overall purchase price in the long run.
In addition, you need to think about whether you can handle the ongoing costs of homeownership. As the owner, you will have new bills that you didn’t have as a renter, including homeowner’s insurance, maintenance costs, and annual property taxes. You’ll also need to be in a place to accept the commitment of owning a home. If you don’t have a stable job or aren’t planning to stay in the same place for a while, buying a home might not make the most sense.
Step 2: Find a Great Delaware Real Estate Agent
If you’re ready to pursue your home goals, finding the right Delaware real estate agent is invaluable. Your best bet is to find an experience, top-rated real estate agent that knows the local market and can help you get the best deal on a home. And since the buyer’s agent’s commission fee is paid for by the seller, you effectively get their services for free.
Clever Partner Agents will offer a $1,000 Home Buyer Rebate to buyers in qualifying stages to help cover closing costs or other related expenses.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
If you’re buying a home in Delaware, the time of year can have a major impact on the inventory you have to choose from and how much you end up spending.
If you’re looking for the best inventory, you may want to start searching in the spring or summer. The spring tends to see the largest number of listings in Delaware, but this also means that you’ll be competing with more buyers. If you’re looking to score the best deal, you may want to wait until cooler months, as the market tends to slow down in the fall and winter. There aren’t as many people looking to buy, which means sellers aren’t receiving as many showings or offers.
Right now, Delaware is experiencing a seller’s market, which means that inventory isn’t keeping up with the demand for houses. In a seller’s market, buyers will benefit from knowing exactly what they want in a home and be ready to pull the trigger before someone else can make an offer.
There are many factors that impact local market conditions. Unemployment rates, current events, job growth, and economic outlook can all factor into whether your area will be a buyer’s market or a seller’s market. It’s helpful to forecast these trends and know if you’re better off buying now or waiting a few months or years to make your move.
Since these factors can also fluctuate on a local or regional level, it’s helpful to work with an agent with experience in your area who can help you time your purchase to get the best possible price.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved for a Mortgage
A mortgage pre-approval can a valuable tool in the home search. This means a lender has checked your credit and verified other documentation to greenlight a specific loan amount.
To get a pre-approval, you’ll need to complete an official mortgage application so the lender can look into your credit history. The lender will then give you a conditional loan amount and interest rate in writing. Many lenders will charge a fee for a pre-approval, so make sure you ask before filling out any paperwork.
Getting pre-approved for a mortgage can be a major time-saver. For starters, it helps you to set a price range when looking for a home. You wouldn’t want to waste time looking at properties you have no chance of buying. It also shows the sellers that you likely won’t have any issue coming up with the money to purchase the home, which may help to tilt the scales in your favor if they receive multiple offers.
Mortgage pre-approvals shouldn’t be confused with pre-qualification. A mortgage pre-qualification is a surface-level examination of your financial profile to see how much you might be able to borrow. The pre-approval is the next step, which looks deeper into your financial history. The pre-approval carries more weight than the pre-qualification, and you can skip the pre-qualification altogether to save even more time.
Step 5: Start House Hunting
When you’re ready to start looking at properties, it’s helpful to have an idea in mind of what you’re looking for in a home. Make lists of your needs and wants and know how to prioritize them. Set a budget and make sure you stick to it. Share all of this information with your real estate agent so he or she can start looking for homes that meet your criteria and set up showings.
You can also utilize online tools like Zillow or Trulia to locate properties in the Delaware market, learn more about neighborhoods in your area, and check local market conditions. For example, Zillow Research can help you find areas with median home values that reflect your budget or have strong market outlooks.
Working with a local real estate agent can bring a lot of value to this process. Agents do all of the above on a regular basis and can usually find the information you need quickly.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
Making an offer on your home doesn’t automatically mean the buyer will say yes, especially if you’re offering less money than the listing price. Work with your real estate agent to compose an official offer, which your agent will present to the seller’s agent.
In the offer, you will include the price you’re offering as well as any contingencies, such as requesting the seller to make certain repairs pending inspection. The seller has the opportunity to make a counteroffer, at which point you can either accept or make a new offer.
Your agent handles this process on your behalf and can offer guidance on which contingencies to include in your offer. Remember, your agent is working for you, not the seller, and want to get the best possible price just as much as you do.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
Home inspections are not required in Delaware, but it’s a good idea to schedule one anyway to uncover potential issues. Pending the results of an inspection, you may find that the home has more problems than you initially thought and isn’t a good investment.
The seller disclosures aren’t enough to go by since sellers are only required to share the problems they are aware of. There could be underlying issues that they don’t know about, which will usually turn up in a home inspection.
During a home inspection, the inspector will examine the home inside and out and document their findings. They will look at the home’s foundation, major systems, windows, doors, the roof, appliances, and other components to ensure everything is in working order. They will share their findings with you, as well as furnish an official report. The buyer usually picks up the cost of the home inspection.
After you receive the results of the inspection, you may want to renegotiate the terms of the home sale. Asking the seller to fix certain issues is common, but the seller isn’t obligated to comply. Experienced real estate agents are expert negotiators and know what to look for and how much to push back to help you reach a desirable agreement.
Step 8: It’s Closing Time!
The final step of buying a Delaware home is the closing process, along with paying the associated closing costs. Buyers and sellers alike will have to pay specific costs at the time of closing, but buyers may be able to negotiate some or all of these costs with the seller.
In general, the buyer will pay origination fees charged by their lender, along with third-party fees like attorney fees, credit report, appraisal fees, escrow fees, prepaid interest, and flood certification, among many others.
According to a Bankrate study, closing costs average about $2,358 in Delaware. However, the study didn’t account for variable costs, like taxes, title search, and discount points. Typically, the true cost is usually between 2% and 5% of the home’s selling price, so keep this in mind when setting your budget.
For example, the median home sale price in Delaware is $240,000, which means that closing costs could range from $4,800 to $12,000. These costs can vary from market to market, which makes it harder to pin down an exact figure. Working with an experienced real estate agent can help you set accurate expectations in terms of what fees to expect at closing time.
If you’re ready to start your journey into the Delaware real estate market, connect with a Clever Partner Agent that can help you navigate the complexities of buying a home.