First of all, it’s perfectly legal to buy a home on your own without using a Realtor or a real estate agent. Read our helpful blog post explaining the difference between them: “Is a Realtor Better Than a Real Estate Agent?”
Let’s go over all the steps you need to buy a home in California without using a Realtor.
- How to decide what is the right home for you;
- Figuring out how much financing you qualify for;
- How to look for the perfect home;
- Looking at potential homes;
- Determining fair market value;
- Negotiating with a seller;
- The importance of contingencies in home purchase contracts; and
- Understanding how the closing process works.
How to Buy a California Home Without a Realtor
Step 1: How to Decide the Right Home for You
Like ice cream, everyone has different tastes when it comes to the ideal home to purchase. Before spending hours online looking at hundreds of photos of houses for sale you need to know what you want.
Write down your needs, preferences, colors, types of houses, and styles. Include whether a backyard is important or a swimming pool is a must. What will you do with your new home?
A single person has different needs than a family. A smaller home makes sense to a single person unless he or she wants to raise a growing family. Either buy a home with enough rooms to raise a family right away. Or, buy a smaller home with room to expand.
Location plays an important part for buyers. Where a buyer works influences how long of a daily commute, he or she is willing to take. Walking to work is more convenient than driving for an hour or more. How important is nearby public transportation? Which neighborhoods appeal to your lifestyle?
The cost of a new home separates the wealthy from those with fewer means. Everyone probably would like to live in a mansion, but few can afford one. An all-cash buyer carries more clout than someone with a small down payment relying on a large mortgage loan.
Convenience plays an important part. A ready-to-move-in house with all the amenities is more convenient than a fixer-upper requiring lots of time and money.
Step 2: Figuring Out Financing
Unless you have all cash to buy the home, you will need to get a home loan (mortgage) to make your purchase.
Before you begin searching for your new home you must know how much you can afford to pay.
We recommend that you meet with a bank loan officer or a mortgage broker to see how your credit score, income, expenses, savings, and debt determine your ability to obtain a loan and make all the payments. If your credit scores are too low read our blog post about: “How To Raise Your Credit Score Fast”.
Learn about financing your first home purchase in our blog post titled: “Financing Tips for First Time Home Buyers”.
We also recommend that you obtain a “Pre-Approved Mortgage” letter from your lender or mortgage broker. This letter is different from a “Pre-Qualified Mortgage” letter. Read about the difference in our blog post: “Improve Your Chances for Home Loan Approval”.
Step 3: Looking for the Perfect Home
Once you figure out what you need and can afford you can search amongst the many available listings. It seems easy, but that depends on the sellers and available information about their houses.
Ever read an MLS listing description? You might need a dictionary for some of the legal jargon and terms used by Realtors. For example, the San Diego MLS contains these abbreviations you might not understand like:
- AGT = Agent;
- CLA = Call Listing Agent;
- FRR = First Right of Refusal;
- LSEO = Offer Accepted with Lease Option;
- PRPM = Property Manager; and
- TNNT = Tenant.
Also, you need to learn all the important legal terms and what they mean. This legal platform explains all the important legal words in a real estate transaction from A to Z: “Real Estate Terminology for Home Buyers”.
Step 4: Previewing Potential Houses
Don’t expect a warm reception if you knock on the front door of a listing when the seller’s family is sitting down for dinner or watching an important TV program.
Most likely, you will find the seller only wants the listing agent to handle all the buyers. So, you contact the listing agent to set up a preview. Now you are dealing with a Realtor or a real estate agent.
You must understand the protocol of previewing homes. Don’t expect a free run of the house all by yourself. After all, you might be a burglar sizing up a house for a late-night visit. Or, a thief helping him or herself to the family jewels.
Expect to be escorted throughout the house by the seller or Realtor. Might make you nervous and skip the important things to look for like the electrical panel or the water heater and HVAC systems.
Step 5: What is the Fair Market Value?
The sales price is not set in stone. Some sellers may think so, but if they can’t find a buyer for that price, they must lower it.
How do you know what is a fair price for the home?
This is one benefit that Realtors provide you. A Comprehensive Market Analysis (CMA) comparing nearby recently sold homes with similar features like size, number of bedrooms & bathrooms, and a swimming pool. The CMA helps you to determine the fair price of similar homes you see.
Step 6: Negotiating with Sellers
Are you good at negotiating? Like bargaining prices at a yard sale? Do you know the legal terms used in a purchase and sale agreement?
Beware: We don’t want to discourage you, Yet, when buying a home, you must sign a legal contract that the seller will use against you if you fail to meet all conditions and terms.
You might end up losing thousands of dollars in an Earnest Money Deposit the seller will ask for when signing a purchase agreement. Learn about earnest money deposits at one of our Realtor’s blogs: “What is the EMD (Earnest Money Deposit Check)?”
Step 7: How the Closing Process Works
Once you sign a contract to buy your home you must either hire a real estate lawyer or use a title company or escrow company to set up the home purchase closing.
A home purchase “closing” involves signing many legal documents to get the title to the home you are buying. Once you and your seller signs all of them and the EMD and mortgage funds are deposited with the closing officer, the title deed naming you as the new owner gets recorded with the county public records.
Disclosures: California law requires your seller to give you written disclosures about the home including material defects about any pest problems, physical condition, environmental issues, and other problems. Read about a California seller’s disclosure obligations.
If All These Steps Challenge You, Consider the Benefits Realtors Provide
Buying a home is not easy. After reading the above steps, you may feel like you need to act like a lawyer, home inspector, business contracts negotiator, and real estate expert.
The alternative is to work with an experienced Realtor who can perform many of these functions for you at no cost for you. That’s right, you don’t have to pay your Realtor to represent you and protect your interests during the home buying process. The seller pays the listing agent a commission shared with the buyer’s agent.
Let your Realtor do all these for You:
- Help you with deciding what home you wish to buy;
- Introducing you to mortgage brokers;
- Finding the right home for you;
- Previewing potential homes for you and with you;
- Determining the fair market value of homes;
- Negotiating price and terms with the seller or agent;
- Introducing you to an escrow company to set up a closing;
- Answering your questions about the home buying and closing process; and
- Celebrating with you when the purchase closes and you become the new homeowner.
How Big Block Realtors Help Buyers in San Diego County
Another of our posts helps buyers know “What To Expect During The California Mortgage Process”.
We also help buyers with our unique RealScout program that includes your desired features in your next home into the San Diego MLS database. This brings faster results of listed homes meeting your needs. Read about our RealScout benefits for homebuyers at: “RealScout Comes to San Diego to Help Home Buyers”.
Contact us to let one of our experienced Realtors help you find your ideal home in San Diego County.
Steven Rich, MBA – Guest Blogger
Search Local Real Estate Below Or Use Our: Home Search Tool: [idx-quick-search format=”horizontal”]
HAVE ANY QUESTIONS?
Let us know, we love to help:
Call: (800) 550-3209
or Click: www.BigBlockRealty.com/contact
Big Block Realty – CA BRE #01885775