How the Home Buying and Selling Process Works: A Step-by-Step Guide

Understanding the sequential steps of a real estate transaction can demystify the process for both buyers and sellers. This guide breaks down the typical journey from listing to closing, based on a practical simulation of a transaction. The key stages involve listing the property, submitting an offer, negotiating the contract, and managing the deal through to closing, followed by financial settlement.

What Are the Initial Steps to List a Property?

The process begins when a seller decides to list their home. A crucial first step is selecting a listing agent, a licensed real estate professional who represents the seller. The agent will help determine a competitive listing price—the advertised sale price of the home—based on a comparative market analysis. Next, the property is marketed, which includes professional photography and scheduling tours for potential buyers. In a simulated exercise, this stage involved children acting as agents to schedule a tour of a subject property, highlighting the hands-on nature of this phase.

How Does a Buyer Submit an Offer?

Once a buyer finds a suitable property, the next step is to submit a formal written offer. This document outlines the proposed purchase price, desired closing date, and contingencies—conditions that must be met for the sale to proceed, such as a satisfactory home inspection. The offer is typically accompanied by earnest money, a good-faith deposit that shows the buyer is serious. In our assessment, negotiations can become detailed; for example, a seller might counteroffer on the price, the amount of earnest money, or even include unconventional requests, requiring skilled agents to keep the deal on track.

What Happens During Contract Negotiation and Closing?

After an offer is accepted, the transaction enters the closing phase. This period involves fulfilling contingencies, such as the home inspection and appraisal—an independent assessment of the property's value conducted for the lender's benefit. The title company conducts a title search to ensure the property can be transferred free of legal claims. Once all conditions are met, the parties proceed to the closing table, where final documents are signed, and ownership is officially transferred. The financial settlement includes the distribution of funds, such as the seller receiving the net proceeds after paying the real estate commission and other fees.

How Are Funds Processed After Closing?

The final step involves the precise processing of finances. At closing, the buyer's funds are transferred to the seller. The seller's real estate broker then disburses the commission, the fee paid to the real estate agents for their services, which is typically a percentage of the sale price. Based on our experience assessment, buyers who work with a broker offering a refund may receive a portion of the commission back after closing, a process handled by the brokerage's accounting department.

To navigate this process effectively, we recommend: engaging a knowledgeable real estate agent, understanding all contract contingencies, and securing pre-approval for a mortgage loan before starting your search.