I’m a first time home buyer who’s shopping around independently and I’m quite confused by the order of things in the buying process. Some of the houses I’m interested in are privately listed so there’s no realtor to steer the process. For instance, is a building inspection mandatory for banks and insurance companies and if so, what’s the right timing for this inspection?

Although a realtor is your best source of advice on these matters, I will try to sketch out a sequence of some of the major events. Before you start house shopping, you should go to several banks to discuss the possible extent of your credit since borrowing most of the funds for a house purchase is almost inevitable in today’s housing market. Once you have determined the maximum amount a bank is prepared to lend you, shopping in this price range begins.

When you find your dream home, you must come to a negotiated agreement on the approximate value you are willing to pay and the seller is willing to accept. If you do not have a realtor representing your interests, then I recommend that you seek the advice of a lawyer to commit to paper the details of this offer to purchase. For instance three of the most common caveats in a purchase contract stipulate that your offer is subject to financing, subject to house insurance and subject to a building inspection. In other words, if you cannot secure the financing, house insurance or you are dismayed by the findings in a building inspection report, you can collapse the contract.

Now you have an accepted tentative financial offer subject to certain conditions as defined in this legally binding agreement to purchase. One of the next things you should do is get the building inspected by a qualified building inspection company. This inspection is often not mandatory. However, since the inspection report defines the deficiencies and weaknesses in a building, it is quite common these days for banks and insurance companies to request a copy of your inspection report to determine their risk in financing your building. As well, because this is probably the largest single purchase of your life, you will want to know the condition of the structure, roofing, site conditions, basement, furnace, cosmetic features and electrical and plumbing systems to name a few reported subjects. Sometimes re-negotiation with the seller is required to account for issues that were raised as a result of the findings in your inspection report. After you, the vendor, your bank and (possibly) your insurance agent have all agreed on the defined or re-defined terms contained in the contract, you can remove the “subjects” in your contract and proceed with the closing portion of the sale.

As you can see, purchasing a house is a complex process with the potential for lots of unexpected obstacles along the way to completion. Issues like competing offers, property appraisals, water tests, septic system analysis, financing and negotiations all affect the potential success or failure to purchase. These are some of the reasons I recommend engaging a professional realtor to help you navigate these waters.