Blog
How Many Days does the Average Homebuying Process Take?
April 8, 2024

One of the foremost questions that often arises is: how long does the process actually take? Understanding the timeline of the buying process is crucial for prospective buyers to plan effectively and manage expectations. According to the search results, the average home purchase process from making an offer to closing takes around 40-60 days once you are under contract. However, the total timeline can vary significantly depending on factors like the housing market, your financial readiness, and how long it takes to find the right home.

Here are the 12 steps to complete home buying process:

1. Start financial preparation for home buying process:

To start your financial preparation, you need to understand your budget, credit score, and affordability.

Understand your budget:

A budget serves as a crucial financial roadmap, detailing expected income and expenses over a set period, ensuring effective resource management. Income encompasses earnings from various sources, while expenses encompass expenditures on diverse items. To grasp your budget, meticulously track fixed expenses like rent or mortgage payments and variable expenses like utility bills, empowering informed decisions on spending and saving habits.

To create a budget, you should:

  • Identify your income: This includes your salary, as well as any other sources of income such as investments or rental income.
  • Identify your expenses: This includes both fixed expenses (such as rent or mortgage payments, utilities, and insurance) and variable expenses (such as groceries, entertainment, and transportation).
  • Compare your income to your expenses: If your expenses are greater than your income, you will need to make adjustments to your spending in order to avoid going into debt.
  • Set financial goals: These could include saving for a down payment on a house, paying off debt, or building an emergency fund.
  • Create a plan: Based on your income, expenses, and financial goals, create a plan for how you will allocate your money each month.

Understanding Your Credit Score:

A credit score offers insight into your likelihood of repaying a loan promptly, derived from data within your credit reports. It's a numeric representation of credit risk pivotal in decisions concerning mortgages, credit cards, and other financial products. Ranging typically from 300 to 850, a higher score facilitates loan qualification with preferable rates, influenced by factors like payment history, outstanding debt, and credit utilization.

To improve your credit score, you should:

  • Pay your bills on time: Late payments can have a negative impact on your credit score.
  • Keep your credit utilization low: This is the ratio of your outstanding credit card balances to your credit limits. A lower credit utilization is better for your credit score.
  • Limit the number of new credit applications: Each time you apply for credit, it can result in a hard inquiry on your credit report, which can lower your credit score.
  • Keep old credit accounts open: The length of your credit history is a factor in your credit score, so it can be helpful to keep old credit accounts open, even if you don't use them regularly.
  • Monitor your credit report: Regularly reviewing your credit report can help you to identify and correct any errors that could be hurting your credit score.

Understanding Affordability:

Affordability gauges your capacity to afford expenses without causing financial strain, a crucial aspect in financial planning. Assessing affordability involves analyzing income, expenses, and credit score to ascertain whether a significant purchase aligns with your financial situation. For instance, mortgage lenders evaluate credit score, debt-to-income ratio, and down payment to determine borrowing capacity, enabling prudent decisions and averting excessive debt burdens.

To assess your affordability, you should:

  • Calculate your debt-to-income ratio: This is the ratio of your monthly debt payments to your monthly income. A lower debt-to-income ratio is better, as it indicates that you have a greater ability to repay your debts.
  • Consider your other financial obligations: In addition to your debt payments, you should also consider your other financial obligations such as housing costs, transportation, and child care.
  • Create a budget: A budget can help you to understand how much money you have available each month to put towards your debt payments and other financial obligations.

2. Get to know your market: Research neighborhoods, price trends, and available homes.

Getting acquainted with your market is essential when diving into the home-purchase process. Begin your exploration by perusing for-sale listings on housing platforms, but don't stop there. Attend open houses in the local market atmosphere and fine-tune your preferences regarding home type, features, and location.

As you approach the 4-5 month mark before buying, intensify your efforts in market research and preparation:

  • Continue scouring online listings to refine your preferences.
  • Clearly delineate your must-haves and nice-to-haves in a property.
  • Secure the services of a competent real estate agent to facilitate your search.
  • Keep a vigilant eye on your spending habits and credit utilization to maintain financial stability and favorable borrowing prospects.

3. Get Pre-Approval: Obtain a pre-approval letter to solidify your buying power.

Obtaining pre-approval for a mortgage is an essential step when buying a home, typically taking anywhere from two days to two weeks. This letter from a bank outlines Obtaining pre-approval for a mortgage is an essential step when buying a home, typically taking anywhere from two days to two weeks. This letter from a bank outlines the maximum amount you're qualified to borrow, giving you a clear budget and demonstrating your financial stability to sellers. To expedite the process, ensure you have all necessary documents ready, such as recent pay stubs, tax returns, bank statements, credit score, employment proof, and residential history.

In today's competitive market, pre-approval has become the norm before making an offer. It signals to sellers your commitment and financial readiness to purchase. Agent Hilary Farnum-Fasth recommends accompanying your pre-approval with a proof of funds letter, indicating you have enough liquid cash for the down payment and expenses.

Pre-approval letters typically have a 30, 60, or 90-day expiration, with a 90-day term often preferable for added flexibility. The process usually takes one to five business days, but it's crucial to research various lenders and mortgage options for the best deal. Utilize resources to locate lenders and consult with real estate agents who may offer recommendations.

During the pre-approval process, gather necessary documents including tax returns, pay stubs, and credit information, particularly if purchasing jointly. Applying with multiple lenders can help you compare rates. Engage a lender or mortgage broker to guide you through financing and ensure a smooth pre-approval process. Once pre-approved, set up saved searches online to monitor new listings and schedule showings with your agent, typically beginning around two to three months before buying.

4. Finding an Agent: Select a trusted real estate agent to guide you.

Finding the right real estate agent is a crucial step in the home purchase process, and it's worth taking the time to ensure you're working with someone you trust and who understands your needs. Typically, this process takes about one to two weeks, but it's essential not to rush it. Start by reaching out to friends, family, or colleagues who have recently purchased a home for recommendations. Within about a week, you should be able to gather enough referrals to start contacting agents.

While it may be tempting to sign with the first agent you come across, it's wise to do some research first. Look into their specialties, customer reviews, and overall reputation in the industry. You want an agent who not only knows the market but also communicates well and makes you feel comfortable throughout the process.

Interviewing multiple agents is recommended by experts, as each one brings different strengths and specialties to the table. Consider factors such as their experience with your type of purchase, their technology skills, and their communication style. For example, an agent who can utilize tools like FaceTime or video calls to show you properties remotely can be a significant advantage in a fast-paced market.

Finding the right agent is about finding someone who aligns with your preferences and can guide you through the complexities of buying a home. Take the time to ask questions, assess their expertise, and ensure they're the best fit for your needs.

5. House Hunting: Actively search for properties that fit your needs and budget

House hunting typically spans over a 4-5 month period, although this can vary based on individual circumstances such as urgency and market conditions. According to Zillow, this timeline can be influenced by factors like the time of year, financing needs, preferred home type, desired features, and the availability of homes on the market.

During this phase, prospective buyers often attend open houses to gain familiarity with the local market and refine their preferences regarding home type, amenities, and location. Additionally, their real estate agent arranges private viewings of selected properties.

The process of making an offer on a home can vary significantly depending on the competitiveness of the market. In some cases, offers may be accepted on the same day they are made, while in other instances, buyers may find themselves engaged in bidding wars or needing to refine their negotiation skills to secure a property.

Statistics highlight the challenges faced by buyers in finding homes in their desired locations, with a notable portion reporting difficulty in doing so. As of March 2024, the real estate market in the United States has been characterized by intense competition, with a significant percentage of home offers nationwide facing competition from multiple bids.

Once the initial research and exploration phase is complete, the next step involves visiting potential homes. This phase can take anywhere from one week to several months, depending on factors such as market conditions and the availability of suitable properties. In some areas, buyers may find themselves making offers on homes shortly after viewing them, while in others, the process may entail a longer wait or repeated bidding attempts before success is achieved.

6. Make an offer: Submit an offer with your agent's help.

Making an offer on your dream home typically involves a process lasting 1 to 2 days, during which you and the seller come to an agreement. This step follows your discovery of the perfect house, where you're now prepared to take the next step toward ownership.

Your real estate agent will guide you through the intricacies of making an offer, which usually includes deciding on the offering price and providing 1% earnest money. However, in competitive markets, offering 3% to 6% earnest money can demonstrate your seriousness. Additionally, crafting a personalized letter expressing your admiration for the home can enhance your offer's appeal.

Once your offer is submitted, you enter a negotiation phase lasting 3 to 5 days. Your agent will assist in drafting the offer, after which you await the seller's response. This could be a straightforward acceptance, rejection, or a counteroffer, leading to further negotiation rounds.

The duration of this process can vary widely, ranging from a speedy acceptance for foreclosures to prolonged waiting periods in seller's markets. Typically, sellers have 24 to 48 hours to respond, but multiple offers might extend this timeline.

To increase the attractiveness of your offer, offering additional earnest money can demonstrate your commitment. This deposit, typically ranging from 1% to 3% of the home's value, is held in escrow and applied towards closing costs upon the deal's completion.

Preparing for potential counteroffers is crucial. Knowing your financial limits and willingness to waive contingencies can streamline negotiations. Responding promptly to counteroffers, preferably within 72 hours, can expedite the process and impress sellers.

Once your offer is accepted, the property proceeds to contract within days, marking a significant step towards homeownership.

7. Schedule a home inspection: Hire an inspector to assess the property's condition.

During the process, one crucial step is conducting a thorough inspection of the property to ensure everything is in order. Ideally scheduled within the first week after going under contract, the inspection typically takes only two to three hours. However, it may take an additional two days to receive the inspection results.

The due diligence period, triggered upon entering the contract, allows buyers to assess the property's condition. This period often involves a home inspection, where a certified inspector meticulously examines the property for any potential issues. Usually completed within 10 days, the inspection report can take up to 24 hours to obtain. Depending on the findings, negotiations regarding repairs or price adjustments may extend this period by a week or more.

In some cases, buyers opt for a "walk-and-talk consultation" instead of a traditional inspection, expediting the due diligence process to three or five days. During this consultation, the inspector focuses on major structural concerns such as foundation issues or roofing problems. While some buyers may even consider waiving the inspection contingency to make their offer more appealing, this move is not without risks and is generally not recommended by real estate agents.

In today's fast-paced market, buyers seeking efficiency might explore owned homes, already evaluated and updated, or choose expedited inspection options. However, regardless of the approach, ensuring the property's condition is sound remains paramount in any real estate transaction.

8. Set up the home appraisal: Your lender will arrange for an appraisal.

Setting up the home appraisal is a crucial step in the home purchase process. Once you've reached this stage, your lender will arrange for a professional appraiser to evaluate your prospective property's value. Typically, the appraisal appointment is scheduled within a week, with the report expected to arrive within three days thereafter. During this time, you'll simply need to wait anxiously for the results, hoping that the assessed value aligns with or surpasses the negotiated price. Should the appraisal fall short, you might need to consider increasing your down payment or reopening negotiations with the seller.

An appraisal entails a thorough assessment by a certified appraiser to determine the fair market value of the property. This involves an inspection of the home, coupled with extensive research into various factors such as structural integrity, size, and comparable properties in the neighborhood. The significance of the appraisal lies in its potential impact on your loan terms; if the appraised value is lower than the agreed-upon price, your lender may hesitate to proceed with the existing loan conditions.

When faced with a low appraisal, there are essentially two avenues to explore: increasing your down payment to reduce the loan amount or renegotiating the selling price with the seller. However, both options may lead to additional delays in the overall purchase process.

In certain real estate markets, such as Northwest Florida, appraisal delays have become a common issue due to a backlog of appraisers. To mitigate this challenge, some buyers opt to expedite the process by paying extra for a rush appraisal service, which can yield results in just a few days. Agent Hilary Farnum-Fasth has observed this trend in her area, where buyers are willing to invest in faster appraisal services to streamline the purchase process.

9. Getting a Mortgage: Finalize your loan terms and secure your financing.

Congratulations on having your offer accepted! This marks the beginning of the mortgage acquisition process. Now, with the lender of your choice, it's time to initiate the necessary steps to secure your mortgage. It will take approximately 21 days. While your lender can lock in your interest rate, there are several hoops to navigate and a plethora of documents to gather, including current bank statements and work stubs, for the final mortgage paperwork.

Expect to undergo an appraisal and inspection, essential components of the process. Additionally, you'll need to meticulously review the extensive list of closing expenses, allowing for accurate estimates of your financial commitments.

This phase typically spans a few weeks, during which you'll maintain regular communication with your lender via email or phone, as they may request additional documentation periodically. It's imperative to effectively manage your inspection and appraisal reports. Should any issues arise during these evaluations, you may find yourself in a position requiring renegotiation of the price, arranging for repairs, or reaching compromises with the seller regarding necessary work.

Furthermore, a thorough title search will be conducted to ensure the property is free from any liens. Simultaneously, you'll be tasked with selecting appropriate homeowners insurance and furnishing all pertinent information to your lender. In some cases, your insurer may request a pre-inspection before finalizing your coverage.

Undoubtedly, there's a significant amount to accomplish during these weeks as your mortgage application progresses. It's worth noting that according to a study by Insight Media, one-third of respondents experienced a longer-than-anticipated duration for this process.

10. Complete escrow-related tasks: Review contracts, sign paperwork, and complete the transaction.

During the 30- to 45-day escrow period, it is imperative to engage in meticulous management of various escrow-related tasks to ensure the smooth progression of your property transaction. Your lender will establish several checkpoints to facilitate the approval process by their underwriters. These checkpoints typically involve critical tasks such as home inspections, property appraisals, and the submission of additional documentation as necessary. It is important to note that if you are securing an FHA or VA loan, the process may extend due to the additional paperwork required by these loan types. Moreover, any changes in your credit status or income since the pre-approval stage may prompt further verification procedures.

Maintaining open lines of communication with your team is essential throughout this period. Promptly responding to requests for documentation from your lender and communicating your preferred home insurance provider are crucial steps. Additionally, keeping your real estate agent and attorney informed about the progress of the loan finalization is key to ensuring everyone is aligned and prepared for the closing process.

In the timeframe spanning under a month, focus on completing specific tasks such as arranging for a home inspector to conduct an inspection of the property. Simultaneously, begin shopping for homeowners insurance to secure coverage for your new property. These proactive steps contribute to the efficient advancement of the escrow process and facilitate a successful property transaction.

11. Close the deal: Sign final documents, receive your keys, and become a homeowner!

Completing escrow-related tasks is the culmination of the house buying process, marking the point at which all parties involved come together to finalize the transaction and officially transfer ownership of the property. Traditionally, this phase involved physically signing paperwork in the presence of agents, attorneys, and lender representatives. However, advancements in technology have facilitated remote closings in many states, streamlining the process and saving valuable time. In regions like Northwest Florida, transactions are often conducted electronically or through courier services, minimizing the need for in-person meetings.

Prior to closing, it is essential to conduct a final walk-through to ensure that any agreed-upon repairs have been completed satisfactorily and that the property remains in the expected condition. Arrangements for covering closing costs should be made in accordance with the lender's instructions, whether through a cashier's check or digital transfer. Additionally, buyers should prepare to provide a valid photo ID and be ready to sign numerous documents during the closing appointment.

The timeline for completing escrow-related tasks can vary, typically ranging from two days to one week. This timeframe encompasses activities such as scheduling the final walk-through, signing the necessary paperwork, and ultimately receiving the keys to the new property. Whether it's the morning of or the night before closing, buyers conduct a final inspection to verify the property's condition before proceeding to the title company's office to finalize the transaction. Depending on the complexity of the deal, this process may take several hours to complete.

By understanding the sequence and timing of house buying procedures, buyers can effectively understanding the closing process and transition smoothly into homeownership. Whether preparing for a remote closing or arranging for in-person meetings, ensuring all escrow-related tasks are completed diligently is crucial for a successful real estate transaction.

12. Start preparing for the move: Coordinate movers, utilities, and change of address procedures.

It's time to get ready for your move! Start by reaching out to a nearby moving company to book your moving date. Don't forget to fill out a change of address form at the post office and figure out how to set up utilities in your new place.

If you're renting, check your lease for the notice period required to inform your landlord about moving out. Typically, it's around 30 days before your departure date.

Summary:

This blog offers general insights for understanding the home buying process, point out the importance of financial preparedness, market research, and effective communication with professionals involved in the transaction. For personalized advice, consult a professional real estate agent or financial advisor familiar with your specific circumstances and local market conditions.