The Typical Real Estate Transaction

A standard, residential purchase transaction looks like some version of the diagram to your right. Let’s look at the pieces.

For unique loan programs, commercial property purchases, or other unconventional processes, visit this page instead.

Pre-Approval & Shopping

1) Pre-Approval: Unless you have the cash to purchase what you’re shopping for, the first step is always to talk to a lender. During this initial process, you & your loan officer will come up with a plan, determine how much you can afford, and give you some needed direction. After you’ve filled out loan app and begun sending initial docs to your loan officer, you’ll receive your lender’s blessing in the form of a pre-approval.

2) Shopping: Now you have a lender backing your offer(s), so it’s time to visit homes & open houses w/ your Realtor
This is mine

3) Offers & Negotiations: With your pre-approval & rolling top 3 in-hand, you’ll begin making offers. In sum, you’ll discuss terms w/ your Realtor, e-sign the document, and wait to be accepted, ghosted, or countered.

Escrow - Due Diligence: Part 1

4) Escrow Opens: Escrow opening marks the beginning of the hard part. Requirements can vary by state law & offer terms, but the overall goal of this phase is the same- removal of contingencies.

5) Initial Real Estate Stuff: On the real estate side, you’ll schedule your general inspection, deposit your EMD, begin shopping for insurance, and ensure you attend the last 15min of your general inspection.

6) Initial Loan Stuff: If your loan officer still needs your loan app or initial docs, that needs to happen yesterday. Otherwise, your job is to e-sign these benign docs, lock/float your rate, and ensure the appraisal is ordered. Once disclosures are e-signed, your file will be submitted to underwriting for review.

*Quick Overview of the Escrow Process:

You can divide the escrow process into 2 sections: Due Diligence & Closing Procedures (shaded in light grey).

The Due Diligence phase accounts for the majority of everyone’s time, effort, and bandwidth. Recall the goal of every real estate transaction. In order to accomplish these objectives while keeping all parties safe from one another, the process revolves around safeguards we call “contingencies”.

For more details, visit the page on escrow.

Escrow - Due Diligence: Part 2

7) Due Diligence Review & Negotiations: Although most contracts have verbiage declaring is to be sold “as-is”, there’s usually a chance to open dialogue on repairs or concessions now that the property’s condition is has been fully revealed.

8) More Lender Stuff: Once you receive conditional approval, you’ll be asked for specific docs (called “conditions”) to check all the lender’s boxes. This is where you’ll deal with appraisal results and any circumstances that make your scenario unique, so it’s inherently the trickiest part of the loan process. Check out the dedicated pages on loan underwriting for more info.

9) Loan Approval & Contingency Removals: Once the property’s condition (or concessions) is agreeable, the appraisal came back without issue, and the buyer has received loan approval, the buyer & seller can motion to remove all contingencies and begin closing procedures. *Be advised- this happens automatically in some states.