Before you embark on your next real estate adventure, knowing how long it takes to buy a house will help you set your goals and reduce stress. One thing is certain: purchasing a home is not an activity that real estate agents can tell you is designed to provide immediate gratification. Purchasing a home is a lengthy process. It’s satisfying and enjoyable, but it takes time.
Now let’s take a closer look at each, including examples of issues that may arise and cause the time it takes to close on a home to be extended.
Loan Pre-approval (pre-approval): Period : 1–5 days
You may wish to purchase a house, but are you able to do so? If that’s the case, what’s your budget? Before going out to look at houses in person, you must first answer these questions. If you intend to pay in full, the lender can determine how much you can afford based on your financial situation. They’ll examine your revenue, properties, debts, and credit score before sending you a pre-approval letter outlining the amount of money they’re willing to lend.
Lenders want your company, so they should issue a pre-approval letter quickly. Since you’ll need to connect your pre-approval letter to any deal you make, it’s better to contact your bank to get pre-approved sooner rather than later in the process. Being pre-approved helps you to know exactly how much you will spend right away. Your time is valuable; don’t waste it by looking at houses you can’t afford!
Research in the Neighborhood: Period : 3–30 days
Most home buyers have a mental image of the type of home they want to purchase before they start looking. You can now get very detailed about what communities and homes will suit your budget now that you have your loan pre-approval.
Here’s what you’ll be doing now:
- What is the maximum distance I am able to travel to work?
- Do I want to live in a deed-restricted neighborhood?
- Do I want to live in an attached (condominium or loft) or detached (single-family home) home?
- In what neighborhoods will I find the type of home I want at a price I can afford?
- Do I have a preferred school district?
These are normal questions to ask, and they’re crucial to answer early in the home-buying process. As a result, you’ll be able to begin your home quest with a laser-like emphasis.
Since everyone is different, there is such a wide range of estimates for this phase. A third-time home buyer in a market where they’ve lived for twenty years, for example, is likely to make decisions more quickly than a first-time home buyer in a new area. Each individual takes a different amount of time to complete this step.
Also Read: How to Get Your Home Ready for Renters?
Choosing an Agent: Period: 1–5 days
Hiring a real estate agent is a no-brainer because it will cost you nothing and will provide you with a slew of advantages. This does not, however, imply that you can hire the first agent you come across. You should devote some time to finding an experienced and competent agent who can effectively serve your interests.
Some clients prefer to communicate with an agent via emails or phone calls. It should only take a few days to complete this phase.
Personal Home Tours: Variable
Now it’s time to have some fun! You can begin touring homes on the market that meet your criteria once you have your budget, priorities, and proper representation.
The length of time it takes to find a home is influenced by market conditions. Low inventory is common in a hot real estate market, with some homes attracting several offers shortly after being classified in the Multiple Listing Service (MLS). This will lengthen your quest because it will be far more difficult to find homes, let alone get your offer accepted. Similarly, if you have your heart set on a particular neighborhood, it can take some time before a home in that area becomes accessible.
Furthermore, the events in your life will have an effect on how long you spend looking at houses. People who are approaching a big life event such as a new job have a greater need for a home. Others may not be in a hurry and are willing to wait a long time before a home that perfectly suits their needs becomes available.
What is the average amount of time spent looking for a home? According to a report, the average buyer actively searches for 10 to 12 weeks and looks at a total of 10 properties.” However, for some people, this process could take months.
Contract Negotiation: Period : 1–5 days
You’ve found a home you want and want to make a bid! Your real estate agent will draft an offer that includes the price and contingencies you want. Any of these contingencies can cause the purchase of your home to be delayed. The home sale contingency, for example, stipulates that if your current home does not sell, the closing of your new home will be postponed.
Also Read: How to Buy Your First Rental Property?
Following the receipt of your contract by the seller, several days of negotiations will ensue in which both parties try to negotiate an agreement. If there is an ongoing bidding war, you might even be competing with other buyers.
Contract to be Signed: 30-60 days
When the seller accepts your bid, you are legally under contract. The length of time the house is under contract before you close on it is specified in your bid. The way you pay for it would have a significant impact on how long it takes to close the deal.
Your bid would provide a funding contingency if you want to finance your future home with a mortgage. Since your lender requires time to underwrite, adding a funding contingency will result in a longer contract to close duration.
Based on the form of loan, below are some estimates:
- FHA loans take 46 days to complete.
- VA loans take 46 days to process.
- Conventional loans take 43 days to complete.
Remember that these are just projections. A buyer with bad credit and uncertain sources of income may require 60-90 days to close on a house. However, you can speak with your loan officer about the number of days they prescribe. It might be tempting to extend your deadline to make your bid more attractive, but doing so puts your earnest money at risk.
Cash buyers, on the other hand, are not bound by these restrictions. They will close even more quickly, often in just a few days.
Duration of Escrow Time estimate: 7-21 days (while under contract)
The escrow period starts after the seller approves your offer. Various tasks will be scheduled by your agent, including:
- Valuation: The lender may need an appraisal to determine the home’s fair market value. If the property appraises for less than what was agreed upon in the contract, you will need to renegotiate the price with the seller. These negotiations could take several days and cause your closing date to be pushed back.
- Survey: If the valuation reveals problems with the property’s borders, the lender could involve further investigation of the lot and its neighbors.
- Inspection: As soon as possible, a general home inspection must be scheduled. The home inspection could reveal flaws that would necessitate additional, specialized inspections (termites, mold, etc.)
- Request for Repairs: Inspections that reveal items that need repair can result in a new round of negotiations requiring the seller to either repair the items or change the price to represent the cost of th
e repairs after the sale closes. Some repairs (for example, a roof) can take weeks to complete, delaying your closing date.
- Final Underwriting: Your lender will need detailed documentation about your current financial condition after the pre-approval to ensure you haven’t recently blown money on a new car, in addition to copies of the valuation, inspection, and survey. It’s important to include any paperwork needed by your lender as soon as possible to prevent any unnecessary delays.
Closing and Final Walkthrough: a few hours
You’ll do a final walkthrough of the property with the listing agent within 24 hours of closing. Walkthroughs enable you to double-check that the repairs you ordered have been completed and that the property’s condition hasn’t changed significantly since the first display.
After that, you’ll sign a slew of papers to take ownership of your new home, you’ve made it all the way to the top! The pleasure you will receive from your new home will, ideally, outweigh any tension you may have experienced during this period.
So, what is the average time it takes to buy a home? For the most part, it’ll be a few months. However, for others, it could be six months or longer. It is determined by a number of factors and varies from person to person. Staying on top of deadlines and being informed about the measures involved, on the other hand, will help you prevent unnecessary delays.