When Should I Start Looking for a House? How Long Does it Take?
Choosing a home can be a timely process that many people try to rush through. A home purchase is one of life's biggest purchases, so it should never be taken lightly. As you decide that you want to buy a home, you need to ask yourself if you want to look into the resale or new construction market. We have taken the time to outline the process for both, because everyone is looking for something different.
I Am Looking for a Resale Home
General Home Buying Phases
- Choose a Mortgage Lender
- Get pre-approved for a mortgage
- Hire a Real Estate Agent
- Make a list of needs and start browsing
- Make An Offer
General Timeline Considerations
- Mortgage application: 1 hour
- Loan processing: 3–4 weeks
- Appraisal: Up to 1 week
- Inspection: Up to 1 week
6 Months Out
Before you dive right in and start picking out your favorite homes and setting the wrong expectations, you need to assess your situation and sort out your finances. The first step when planning to buy a home is to determine how much you want to spend, but more importantly how much you can afford. Many have enough saved for a down payment, but you also need to prepare for other costs along the way such as taxes, closing costs, insurance, and any random unforeseen circumstances and expenses that may come up when buying a home. Because we are talking about money and finances, you also want to check up on your credit and taxes. Make sure your score is in good condition and pay off any remaining expenses you may have built up in months past. You also need to ensure your taxes have been filed and that a paper trail can be tracked of all your recent major financial transactions.
The next step to help prepare you for buying a home is to get pre-approved and to find a mortgage lender. Doing so is important before you begin home hunting, as it shows sellers that you are qualified to buy a home which likely means you are a serious buyer. It will also help you understand your home buying options because you do not want to overspend to avoid financial trouble. You want to look around at different banks, not necessarily your current one. Find the best rate to help determine which mortgage lender fits your needs. Make sure you know when your pre-approval letter expires in case you need to apply again later on for an extension.
3 Months Out
The next step is finding a buyer’s agent. A buyer’s agent is a licensed real estate professional who will be your personal representation during the home buying process. Choosing a great buyer’s agent is critical, so be sure to shop around and find someone who can fit your needs. They are the expert, so you’ll want someone who is familiar with the area and other local agents.
Now is also the time to begin a preliminary hunt for your home! It is also a perfect time to ask questions to yourself to narrow down your search. Are you looking for homes in New Hampshire or Massachusetts? Are you looking for a home in a certain type of neighborhood or do your preferences vary? How much room do you need? Are you downsizing? By how much? How many rooms are you looking for? Are you looking for a townhouse or maybe a condo? Asking these questions sets yourself up for success as you go into the hunt with your expectations set.
As you begin to find homes, look for tours and open houses. The more homes you tour, the more comfortable you will get with various features homes may offer that others may not. Utilize your buyer’s agent as much as possible. Remember they are there for you and your representation, so the more you ask them the more they’ll understand what type of home you see yourself buying.
Home Search: 1 to 10 Week Timeline
Now that you are prepared and ready to begin your official home hunt, and you have a pre-approval letter in-hand, it’s time to have a little fun. About 10 weeks out from when you plan to move in is the time to officially start looking at listings with your buyer’s agent. The difficult part here to judge is how long it will take to find a home. Depending on the market and its timing, and where you are looking, the amount of homes available will vary. You could get lucky and find the perfect home the week you really start looking, or you could be touring dozens of homes over several months trying to find the perfect fit. The 10 weeks out is a generalization, and not everyone follows the same timeline when purchasing a home. Typically, according to The National Association of Realtors' 2020 Generational Trends Report, homebuyers look at about nine listings over ten weeks before they choose their perfect one.
Next you will want to submit or resubmit your pre-approval application. If you were fully prepared, this would have been completed, but if not now would be the time to get a pre-approval letter. They last about 60-90 days, but can be reapplied for after expiration.
With your pre-approval letter at the ready, and the home you want chosen, now is the time to make an offer on the home you want to call yours. As soon as you know that is the house you want, submit an offer! In a competitive market, you do not want to hesitate on the home of your choosing or you may miss out! Utilize your buyer’s agent and talk about the deals’ terms and any competition you may be up against so you can come up with a fair offer price and terms to submit to the seller’s agent.
After submitting your offer, you’ll likely come across a counter-offer. This is generally expected, and oftentimes includes proposed changes to the closing date, price, and even purchase contract contingencies. Work with your buyer’s agent and the seller’s agent until you both come to terms on an offer that you agree on.
Once you and the seller come to terms on an agreement, you will enter the closing process. This is typically a 30 to 45 day period where you will be in close contact with your agent, lender, and title company to ensure everything is transitioning smoothly.
1 Month Out
Now that you are reaching the home stretch, it is time to deposit earnest money. After the seller has accepted the offer, the earnest money is deposited into an escrow account usually held by one of the real estate brokerages participating in the transaction. That way when the sale of the home has finally been completed, the earnest money is used and applied towards the closing costs and/or down payment on the loan. This is also the time that you order and receive a title policy. After you reach a mutual acceptance offer, you have a preliminary title report from a title company until the final title policy arrives once the transaction closes.
A home inspection will come next, a critical step in the homebuying process. While many tend to try to push them off so they can be in the home sooner, a home inspection is crucial for identifying any material defects or potential repairs the home may need. While the showings and open houses show the home at its best, there may be some problems you may not have seen. If there is an inspection contingency, the seller may be held responsible for certain repairs or you as the buyer may want to back out of the sale if there are too many problems you were unaware of. Before you buy a home, you should ensure it is structurally sound.
If the inspection goes smoothly and you and the seller are in agreement on any potential repairs or misconceptions, you are ready to finalize the home sale! It is signing time! Complete your mortgage application and book your appraisal. Even though you have been pre-approved, you will want to meet with your lender to finalize your mortgage application and have them request an appraisal. An appraisal determines if the purchase price of the home is in line with the market value. If the value is determined to be below the selling price, a renegotiation with the seller and lender will be needed, which may delay the time it takes until you are moved in.
I Am Looking for a New Construction Home
How Long Does It Take To Build a House?
Due to pandemic related labor and supply chain delays, most homes are currently taking 6-12 months to build (or longer), with the majority falling in the 9+/- month range. So you should start looking at least a year before you want to move to cater towards the new system. Typically the more expensive the house, the longer the build time as the home may be larger in size, more intricate in details, or include more specialty products that have longer lead times for delivery..
How Should I Prepare?
Like buying a resale home, before you begin your home hunt, you need to get your finances in order. This will help you figure out how much you should spend on your new home. Make sure you can afford new construction, and if you can, how much are you looking to spend? With a new construction home there may be additional costs beyond the sales price, such as purchasing appliances or lighting, that you will need to account for. The preparation for a new construction home is generally more condensed compared to a pre-existing home. Once you find your new home and sign a contract, the build time is the longest portion of the home buying process.
What Are My New Home Options?
You need to look into your new construction options. Are you looking to buy a new home in a community? Are you looking to buy land and bring in your own builder? Are you tearing your old home down to build a new one? Are you downsizing or upsizing? Do you want a fully custom home or a spec-home? These are all things you need to consider when going into the new construction market. Looking around at the area's real estate agencies to see who offers new construction and how they offer it is a smart move to set yourself up for success.
Once you answer your questions to determine what kind of new construction home you want, it is time to start looking! Sign up for community mailings, look into new land options, or hire your builder of choice. There are plenty of new construction offerings, so be sure to find one that suits your needs and financial requirements. Once you decide on a plan and building begins, you will have about 6-12 months wait time while your home is being built.
If you choose to buy in a new construction community, you will have the option to build a new custom home or choose from available spec homes. Choosing an available spec home is usually less expensive as it limits customization, and will save you a lot of time. So, if you want a new home and do not want to wait over 6 months, then buy a spec home. They offer the convenience of a new home for a price point sometimes far cheaper than a fully customized one. That being said, if you are willing to wait and you want more say in the home's customization, then go for it.
What to Expect During the Home Building Process
Stage 1: Foundation Complete
Stage 2: Frame Complete
Stage 3: Roof Complete and Windows and Doors Installed
Stage 4: Insulation and Rough Plumbing and Electrical Complete
Stage 5: Drywall Complete
Stage 6: Hardwood and Tile Installed
Stage 7: Interior Trim and Doors Complete
Stage 8: Kitchen and Vanity Tops Installed
Stage 9: Carpets Installed
Stage 10: Builder Completes the Home
Stage 11: Inspection
Stage 12: Walk-Through/Review
What Are the Factors That Affect Building Time?
Building a home typically takes about 20 weeks, however this number can change based on multiple factors such as weather, shipping delays, price increases, etc. A good builder will communicate with the listing agent to keep you informed on their progress. This way you stay up to date on any delays that your new home may be incurring. Many delays are currently happening as COVID-19 takes a major toll on the supply chain. There are also limited options when it comes to certain features like paint color or style of cabinets. Something you may have chosen during the selection process may no longer be in stock. The construction process is a domino effect, and if things are pushed back due to shipping, then the whole time frame of the new construction home will be delayed.
Once the builder finally completes the home, it will need to be inspected by the town’s building inspector to make sure everything is up to code. A certificate of occupancy will be issued once the home inspection is successfully completed and the home is deemed safe for occupancy.
Move-In Time?
The final walk-through is essentially a tour given by the builder to you as the new homeowner. They will show you the features of the home and how to use them, as well as give you an opportunity to inspect the home to make sure you are getting your money's worth. You want to check for defects or damage, even if the house is new! Mistakes can be made, so you want to look for them and have them fixed if there are any. This is the time to assure yourself that you are completely satisfied.
All that's left is closing! Get your new set of keys and enjoy your new home! Happy moving day!
