Buying a home requires a series of steps that optimally occur in a certain order. Deviating from the normal order or skipping steps works sometimes, but understanding the logic of the normal process is a useful context for any purchase transaction.
Finding out what your financial constraints are is relatively simple, and should precede any serious house hunting. Quick answers to basic questions such as whether it makes more sense to rent or to buy and how much you can borrow are easily answered using the calculators provided at the Buyer Tips section of this site. If the answers you get from this first pass are encouraging, more definitive answer to what you can buy is tremendously useful, and is best achieved by getting a formal loan pre-approval. This will be useful to define the proper price range for your search, and in a competitive market, essential to making a successful offer.
Unless you are already clear as to what you are looking for, a search of the available listings within your price range in various cities will quickly familiarize you with the tradeoffs. Using the Movoto Basic Search or Custom Search tools makes this extremely easy to do. In one place you will get a larger house with desirable views, in another the better schools but the houses will be smaller, and so forth. You may want to find a group of houses that look promising and drive by these houses or go to open houses. After a few weekends of driving around, most people find that their preferences have become clear.
When you are starting to get a good sense of what you are looking for, it is time to find an agent that is familiar with your target area and is well-versed in all aspects of evaluating properties and negotiating purchase contracts. Unlike many of the larger firms, Movoto has no inexperienced agents. Movoto carefully selects only agents that have several years of demonstrated abilities. These agents are backed up by a support staff of escrow coordinators, assistants, inspectors and attorneys that guarantee you a level of service that is unavailable elsewhere.
When you have found a house that you would like to purchase, and the agent has done his preliminary analysis of the pricing of the house relative to other properties, your agent should guide you through a thorough evaluation of the seller disclosures. Based on market conditions, (how many days properties are typically on the market, how many disclosure packages have been picked up or read online, number of committed offers, etc.) your agent should be able to estimate how much you will need to offer to get the property. If the seller decides to work with your offer, there is commonly a counter-offer made that alters the price, the terms of the offer or both. The initial counter-offer can be accepted or responded to with another counter-offer. This process continues until both sides have a deal that they can live with or it becomes evident that there is not going to be a meeting of the minds.
The buyer then makes an initial deposit, typically to the escrow company that acts as the repository for deeds and funds associated with the transaction. The amount of the deposit varies, though in California, when working in active markets, the deposits tend to be the full amount that can legally be attached by the seller if the buyer defaults. This amount, called liquidated damages, is 3% of the purchase price, and can be in the form of a personal check. Later deposits to escrow may need to be in "good funds" form, which means that there is no uncertainty as to the funds being received by the escrow company (cashier's checks or wire transfers satisfy this requirement).
If the contract has contingencies with respect to the condition of the property, the buyer has experts examine the property and provide appropriate reports. A general structural inspection is the most common one, though there are many others that specific properties may warrant. Among these are: roof, soils, septic, boundaries, underground tanks, structural pest (if the seller has not provided a report), and so forth. When the inspectors have determined the condition of the property, the buyer may decide not to proceed (i.e., to exercise the contingency), to renegotiate based on what is found, or simply to release the contingency and proceed with the deal.
Loan and escrow papers need to be signed prior to close, and allowing enough time for the lender to review the documents and fund the loan. Best practice is for this to occur roughly a week before the scheduled close of escrow date. Close of escrow is a fairly mechanical process in California. The title company records the transfer deed and provides checks to the seller, the brokers and pays any bills that there may be. Unlike the closings on the East Coast, there is no real event associated with the closing that requires participation of the principals. This is, of course, simply an overview. More detailed discussion of the component parts of this process can be found in other sections of the Buyer Tips.