Missouri is a beautiful state with a wide variety of terrain, cities, and activities. Whether you’re interested in living in St. Louis and rooting for the Cardinals or finding a place in Columbia where you can enjoy the excellent schools, museums, and libraries, you’re sure to enjoy the Show-Me State.
But what does it take to buy a house there? Just like anywhere else in the country, buying a house in Missouri can be a long complex process. You definitely don’t want to rush it, or you might end up buying a property you regret.
Instead, work with a local buyer’s agent and use their advice and expertise to walk through the eight steps to buying a home in Missouri.
Step 1: Evaluate Your Current Financial Situation
The first step, before you decide to buy a home, is to review your financial situation. You already know that you need a down payment saved, but what about closing costs? Do you have money set aside to afford a move?
The other thing to think about is that the cost of a home isn’t just about the mortgage. You will need to pay home insurance and property taxes as well. You also need to budget for home maintenance. Because Missouri has snow and ice every year, your home may endure more wear and tear here than in other parts of the country.
Finally, if you are a first-time home buyer think about the things you might need as a homeowner that you didn’t need as a renter. Things like a lawn mower, snow blower, and even additional furniture can really add up.
Step 2: Find a Great Missouri Real Estate Agent
Having a buyer’s agent on your side will give you significant help in both finding the right home and negotiating a great price. A buyer’s agent understands the market where you’re looking to buy and can help you find the right neighborhood.
Remember, the seller generally covers the realtor commissions, so a full-service buyer’s agent is essentially free. There’s no reason not to take advantage of a professional to help you find your dream home in Missouri.
Working with a Clever Partner Agent is even better. Not only do you get to work with a highly-rated local agent, but you also gain the advantage of having on-demand showings that fit your schedule.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
How’s the real estate market in the city you want to live in? The chances are you don’t know yet, and it’s important to find out. Of course, your realtor will have a lot of expertise and be able to give you great advice.
Right now the median home value in Missouri is $161,800, and the market is hot. It’s a seller’s market, meaning that there are fewer homes available than there are buyers. As a result, you may face a lot of competition when home shopping and may have to pay more than you expect. Homes are likely to sell fast, so you’ll have to put in an offer quickly to get a house.
In Missouri, the harsh winters mean that the best time to buy a home is usually in the spring and summer. That’s when the most homes are available, but also when you’ll pay the highest price. If you’re willing to home shop in winter, you may be able to get a great deal. Home sellers are more motivated and there are fewer buyers, so a seller may settle for a lower price.
Of course, all of these factors will depend on the specific city and neighborhood you’re looking at, so be sure to rely on your realtor’s expertise.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved For a Mortgage
You might be eager to start house hunting, but a serious home buyer starts their journey in the banker’s office. You will need to get pre-approved for a mortgage so that you’re aware of what your exact budget is. The pre-approval letter is also an important part of your home offer.
A pre-approval is different than a pre-qualification. To prequalify, the lender will ask you questions about your income, debt, and credit score. They will take your verbal answers and give you an estimate of how much you might be approved for if those facts are true. However, it’s not a commitment.
Instead, you need to provide the lender with documentation proving your income, employment, and other debt obligations. They will also check your credit so that they can give you a specific mortgage offer. In the end, you’ll have a written pre-approval letter that shows a seller you’re serious about moving forward on the home.
Step 5: Start House Hunting
At last, the good part begins! House hunting can be a lot of fun, but it’s a lot better when both you and your realtor know exactly what you’re looking for. What are your non-negotiables? What would simply be nice to have?
From the number of bedrooms and bathrooms to what you’re looking for in terms of a yard or basement, work with your realtor so that you can get as much of what you want as possible within your budget.
Your realtor will have ideas for homes to look at, but you can do your own research as well. Look at online property listings that are in neighborhoods that meet your needs. Remember, you want to be safe and if you have kids a good school is a priority as well.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
Once you find a property you love, it’s time to make an offer. You’ll have to move quickly in most Missouri markets.
Your offer includes the price you’re willing to pay, but it also includes contingencies and other conditions as well. For instance, you should make the offer contingent on an inspection. If you’re selling your home in order to move, you may need to make the offer contingent on the sale of your house.
An offer also includes the closing date, an amount of earnest money, and what you expect from the seller through the rest of the process. Your realtor will be very valuable in helping you understand all the details and make a strong offer.
A seller may decide to counter-offer rather than accept what you send over. Your realtor can help you negotiate the differences so that you get what you need for a great price.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
Once a seller accepts your offer, the home goes under contract. Congratulations! Just a couple more steps and you’re ready to move in.
First, you’ll need to order and pay for the inspection for the home. An inspector looks over the visible and accessible parts of the home to let you know the condition of the property. They can tell you if the roof is in good shape, if the furnace will need to be replaced soon, and more.
If there are concerns during the inspection process, you may need to renegotiate your offer. You might ask the seller to fix specific items or allow you the money from the sale price to fix it yourself. This is why you need to work with a realtor who is a great negotiator!
You should also be aware that there are very few disclosures that a Missouri home seller has to make to you about the house. As a result, it’s worthwhile to take the time to carefully investigate before you close the sale.
Step 8: It’s Closing Time!
In Missouri both the buyer and seller meet at a single table to close the transaction, usually at an attorney’s or banker’s office. The closing agent and both realtors will be present as well. Both sides sign all closing documents. The buyer will pay their closing costs and take possession of the keys and the property.
What closing costs can you expect in Missouri? The lender has to give you a good faith estimate when they do the mortgage pre-approval.
Some of the costs you may have in addition to your down payment include:
- Loan fees and private mortgage insurance (PMI)
- Appraisal fees
- Escrow for homeowner’s insurance and property tax if they are being paid with the mortgage
- Deed recording fees
- Title insurance and survey fees
- Prorated utility costs the seller has already paid
Nationally, closing costs for buyers are around 3% of the home price. For a home at Missouri’s median value of $161,800, that’s around $4,854 in addition to your down payment.
Your realtor will be able to help you understand the closing process and closing costs in the specific area where you plan to buy a home.