Real Estate Planning & Transaction Timeline: a Guide for First-Time Homebuyers
“I just want my keys! How long’s it going to take to buy my home?”
Be warned: Once you start the home buying process, settlement day can’t come soon enough. The eager anticipation of getting your keys on the big day, and then making your new home your own, is a feeling unlike any other.
The amount of time the homebuying process will take — from the day you start planning and preparing to the day you’re walking through your new doorstep with boxes in hand — can vary widely depending on several factors. To get the most accurate estimate, let’s break down the steps in the process into different phases, and we’ll discuss those phases and the range of time each of those phases might take.
The Preparation Phase
We cover a large part of this process in our last article, Preparing for Your Home Purchase: Getting Your Financial House in Order. The biggest step in the preparation phase is getting your budget and financing strategy prepared, from setting aside the money you’ll need to choosing your mortgage lender and the mortgage program that fits best with your needs.
Another step within the preparation phase is setting your home search parameters: the style of home, location, critical criteria (the “must-haves”), and other factors such as condition and features. If you’re like most of our clients, you’ll be browsing online listings well before you are ready to actually step foot in the door and start searching, which is great. Make note of addresses that jump out at you. Having those as reference points will help you and your real estate agent establish some focused search parameters.
Finally, choosing the right real estate agent to help you with your home purchase is a key factor in determining how the process will go, and how informed and supported you’ll feel along the way. Referrals or recommendations from friends, family, and colleagues is a great place to start. You can also look at which agents are most active in the market area where you are searching. Finding an agent who is a true expert in your search area means they’ll be more familiar with the neighborhoods and communities you are considering. They’ll also likely be familiar with many of the comparable sales in the area, which will be of great help when it comes time to understanding value and market conditions.
The step in the preparation phase that is generally the most time consuming is financial preparation. This varies from one person to the next; it could be something you are ready for today. Or it could take you six months to a year to complete if you need to save more money, eliminate current debts, or improve your credit in order to secure financing. This is why we always advise our clients to begin this step well in advance of their target “move by” date.
The Search Phase
I would define the search phase as the window of time after you have assembled your team (your mortgage lender and real estate agent) and are approved for your mortgage financing. At this point, you’re now beginning to actively view homes with intent of making an offer when you find one that suits your needs.
This is another step that can vary widely from a timing perspective. The factors that can make the search phase quick or lengthy often come down to luck. We’ve had clients who we’ve gone on one home tour and made an offer that was accepted.
Others may have more specialized searches, seeking a particular architectural style, or a particular floor plan in a community that does not have a ready supply of homes for sale. In those cases, it could be several months before the right home hits the market.
Market conditions can play a role in this as well. In a very competitive seller’s market, you may need to make several offers before you get one accepted. In a buyer’s market flush with inventory, you may go out to look at five or six homes in one afternoon and end up with a first, second and even third choice from that list.
Since this phase tends to be the most variable of them all, I can’t give an accurate time estimate. Instead, I’ll say that it could take as little as one week, or up to several months depending on the factors at play.
The Contract-to-Closing Phase
The contract-to-closing phase is the stage in the home buying process that begins when the seller has accepted your offer and ends on settlement day — when you get your keys and officially own your new home! Of course, this time period varies as well, but averages anywhere between 30 and 60 days. The factors that determine exact timing include the seller’s needs (such as what settlement date do they need and whether they are still living in the home), the timeframe your lender will need to finalize your mortgage and get it ready for funding, and your own needs as well.
There are many smaller steps within this phase, including completing your home inspections, getting an appraisal, obtaining homeowners insurance, reviewing HOA or condominium bylaws and documents (if applicable), and scheduling your movers and your final pre-settlement walk through.
When it comes to the homebuying timeline, one thing’s for certain: the exact timeframe is completely unique to your situation, current market conditions, and other surrounding factors. However, hopefully this information can serve as a guide as you plan your home purchase.
Need more guidance in your search for your first home? Start here.
Paul Augustine, Associate Broker at RE/MAX Centre Realtors