Buying a home in Washington DC
STEPS TO A DC HOME PURCHASE
HOW TO BEGIN YOUR DC HOME SEARCH
Ready to purchase a home in Washington DC but don’t know where to start? Here’s our ‘best practices’ list to set you on the right path to home ownership.
Prioritized Steps
What should take priority as you begin your home search in 2025? Begin by researching your local market. Interview reputable mortgage lenders and obtain a pre-approval. Select an experienced, skilled buyer’s agent to help you structure your home search in a way that promotes efficiency, a smooth process and satisfaction with its outcome.
1. MORTGAGE LOAN PRE-APPROVAL
What Is A Mortgage Loan Pre-Approval?
A mortgage pre-approval is a statement lenders provide asserting your eligibility for a mortgage loan. Pre-approvals are based on your mortgage application and verified income, credit score, debts, and employment history. The pre-approval letter should include: the lender’s name and contact information, your maximum loan amount, estimated interest rate, loan term and an expiration date.
When Is A Pre-Approval Needed?
Before meeting with agents and signing an agency agreement, you’ll want to be sure of your ability to purchase, price point, need for concessions, if any, and understand the cost of borrowing.
- A pre-approval shows prospective agents you’re serious about your intent to purchase and have the ability to assume responsibility for broker compensation
- A pre-approval helps your agent define criteria for timeline, feeds and showings
- Your Pre-Approval should come with a worksheet that helps you estimate transaction costs accurately
- If you find the right property quickly, you’ll have the letter needed to write an offer.
Consult Three Lenders
We recommend that DC home buyers contact three lenders for mortgage pre-approvals and worksheets. Request pre-approvals for the home type(s) you plan to purchase, at the mid-range and the very top of your price point. This will allow you a working estimate for your desired price point, and a ‘worst case scenario.’ Better to be well-informed than panicked at the last minute!
You’ll want a pre-approvals from a local, reputable lenders. You can get a pre-approval over the phone & online.
Review DC homebuyer programs for those that may benefit you. You may also qualify for down payment assistance, home buyer tax credits or DC tax abatement.
Don’t make a lender commitment until you’ve contracted on a home. DC condos, new construction, co-ops, and single family properties all qualify differently. Your priice point also makes a difference. Lenders offer a variety of programs. You’ll want to match your loan to the property you want to purchase.
12 QUESTIONS TO ASK LENDERS
1, What loan options are available to me, including local home buyer programs?
2. What is the maximum purchase price I qualify for? Which loan category does this loan fall into (jumbo or conforming conventional, or other loan type)?
3. What is the current interest rate and associated costs for this type of loan?
4. What will my monthly mortgage payment be at the maximum approved price, and what loan fees apply?
5. Can you provide me with a cost estimate worksheet similar to a Closing Disclosure, detailing all the costs of a transaction at this price?
6. How do my options change if my downpayment is increased or decreased?
7. When is a rate lock available, what is the duration, and do you offer a free ‘float down’ during the loan term? What is your fee for a rate lock?
8. Are there any restrictions for down payment gifts or source of funds?
10. Will my loan be sold after closing?
11. Does this loan have a prepayment penalty?
12. Is this loan assumable?
WHAT YOU’LL NEED
- Sufficient information to complete a loan application
- Credit review. Your lender will run your credit reports.
- Provide copies of your W2s, tax returns for two years, three months of recent bank statements, and any other information requested by lenders.
- Discuss loan options with your loan officer, and make sure to request a worksheet showing all costs of your transaction, and a preapproval letter, both at the highest approval amount.
2. PARTNER WITH AN AGENT
The biggest transaction of a lifetime is no time to wing it. Now more than ever, make sure you have an experienced pro to guide you from search, negotiation and transaction management to closing and beyond. Before taking further steps, interview Realtors to find the professional best suited to your needs and sign an agency agreement.
Quality Representation
New market, new rules, new economic climate. 2025 is a time when real estate expertise is needed more than ever. A skilled agent can acquaint you with the latest changes to real estate practices, provide expert market knowledge, property valuation tools and information, navigate complex negotiations, offer access to exclusive off-market listings, help you identify potential property issues, and ultimately save you time and money by guiding you through the often intricate home buying process, especially in a unique market like Washington DC.
Benefits Of Working With A Buyer Agent
- Market Expertise: Agents have deep understanding of local market trends, pricing, and current conditions, helping buyers make informed decisions based on accurate data. This is especially important in a market with fluctuating rates and diverse options
- Negotiation Skills: Agents can effectively negotiate on your behalf, securing the price and terms that work for you while ensuring you don’t lose your desired property to another buyer.
- Access to Off-Market Listings: Agents may have access to off-market properties that don’t appear on search engines, providing you with an expanded array of options.
- Technology: Digital tools, AI and data play significant roles in real estate, and a skilled agent can leverage them to enhance your search, property valuation and transaction.
- In a competitive market, your agent can provide effective strategies and help structure strong offers persuasive to sellers.
- Property Evaluation: An experienced agent can spot potential issues with a property that might not be obvious to a buyer
- Streamlined Process: Agents manage forms, contracts and other paperwork that may be unfamiliar to buyers. In addition, your agent can guide you through contingencies, inspections, rescission periods, and appraisals, freeing up your time and minimizing stress.
Author | Agent
Skilled Realtor® Susan Isaacs is a 20+ year residential real estate and new construction veteran with expertise in buyer and seller representation, investor representation, new homes, relocation and exchanges. Licensed in the District of Columbia and Virginia since 2006.
- GCAAR Gold Award 2024
- Modern Luxury Top Teams 2024
- Real Trends 2024
- Compass Top Teams 2024
Compass is the #1 real estate brokerage in the nation and a leader in real estate technology.
QUESTIONS TO ASK
- How are DC real estate market conditions right now?
- Why is a written agreement required for us to tour homes?
- What is the value of a buyer’s agent in the current market?
- What are my buyer broker compensation options in 2025?
- Does your brokerage charge an ‘admin’ fee? How much is it? Is it negotiable?
- What are your broker compensation rates? Are they negotiable?
- How do you manage offers when cooperative compensation is not provided?
- What’s your strategy for negotiating buyer broker compensation with a seller and listing agent?
- What if I can’t afford to pay my broker and still cover closing costs and downpayment?
- What are the risks of not working with a buyer’s agent?
- Explain new buyer agency forms
- Does a seller concession for buyer broker compensation count against Fannie Mae or Freddie Mac caps?
- Can I pay my own broker and still use a VA loan?
- What tools do you use for the home search process?
- How much time should I expect my home search to take?
- How will I know if my goals are realistic and achievable?
- Will I be able to view off-market listings?
- Do you handle my full transaction personally, or will I be working with someone else most of the time?
- What’s your communication style and what communication tools do you use?
- How many years have you practiced real estate in Washington DC?
- What experience do you have assisting buyers in my pricepoint and preferred neighborhoods?
- Please explain how appraisals can affect my transaction
- What do I need to know about home inspection contingencies in the current market?
- What expectations would you like to set with me?
WHAT YOU MAY BE ASKED
- Do you have a pre-approval letter issued within the past 30 days? Who’s your lender? (You’ll be asked to provide a copy of the pre-approval letter)
- Are you working now–or planning to work–with other agents?
- Have you toured homes or consulted with other agents?
- If so, can you furnish a copy of your agreement(s)?
- What type of financing will you use, or are you paying cash?
- Do you have any credit, tax or other issues that may affect your ability to obtain a mortgage loan?
- Do you have available funds for an Earnest Money Deposit, closing costs and broker compensation?
- Do you understand new buyer/broker compensation rules and practices, and how they affect you?
- How much will your downpayment be?
- What are your expectations for your home search?
- Do you have any concerns about working with a buyer’s agent?
- Do you understand what buyer’s agents do, don’t do, and how they benefit your search?
- What are your desired locations, “must-haves” & “wish list?”
- Pets? Parking? Metro proximity?
- What’s your timeline?
- What else is important to you?
Buyer Agency
Interviewing and hiring an agent should accomplished before reviewing listings and touring homes. In fact, new rules require it. Read about buyer agency and how it affects you.
3. STRATEGY AND SEARCH
Review your wish list, timeline, price point and other inportant factors with your agent. Discuss market conditions and how they align with your goals. Your agent should provide various strategies to help you accomplish your goals, and explain the pros and cons of each. Reach compromises where necessary.
Identify the search targets your agent will need to create your search feeds. If you’re working with a Compass agent, you’ll receive invitations to a private Collection of listings that match your search criteria. All the latest listings will generate automatically, and you’ll get updates in your Inbox as often as you choose. You will also be able to view off-market opportunities on the Compass network.
You and your agent will discuss the merits of each listing of interest amd you’ll create a shortlist of favorites. Once you’ve identified the homes you’d like to tour, prioritize them and your agent will set up a tour. This process continues until you identify a home you’d like to own.
Your agent may inquire about buyer broker compensation, create and review a comparative market value analysis (CMA) and outline an offer strategy. Strategy for offers differs with each property.
4. OFFER AND CONTRACT
Your agent will draft your offer and attach all necessary disclosures, then send it to you for signature. Once signed, the offer will be ‘packaged’ and submitted to the listing agent.
A ratified offer exists when all terms are agreed upon in writing. During the contract phase, you’ll exercise your contingencies, if any, perform your due diligence and review any additional documentation required or provided. There may be some additional negotiation involved, for contingencies such as inspection and appraisal. Once all contingencies are satisfied, you’re on your way to settlement.
5. SETTLEMENT AND POST-CLOSING
At settlement, you’ll take legal possession of your new home. Your title company will facilitate the closing, during which you’ll sign loan documents, if any, and other settlement paperwork. At the end, you’ll be handed the keys.
Post-settlement, your agent may check in to make sure your move went smoothly and all is as expected with your home. Many clients appreciate having access to acontractor and vendors list for improvements and repairs.
Tips
Earnest Money
Earnest Money Deposits typically range from 3% to 20%, depending on the situation and price point. The lower end of 3% commonly represents an amount equal to a special mortgage program, or relates to a low-priced property. EMD at the higher end commonly relates to sums for cash transactions, high-value purchases and/or deposits relating to multiple offer scenarios. EMD is presented with your offer in the form of a photo of a check, and credited toward your downpayment if the contract goes to settlement.
Note:
- EMD will be lost if you default on your contract.
- EMD is held by the title company and deposited when a contract is ratified
- EMD percentage affects the strength of your offer.
Down-Payments
Note:
- Downpayment amount can affect the strength of your offer
- If in doubt of your down payment %, err on the conservative side. You can always increase downpayment, but reducing can trigger contract issues
- Consult with a mortgage professional to determine your downpayment options. Always consult with a mortgage professional to determine your downpayment options.
Closing Cost Budget
In addition to down payment, you’ll pay for transaction closing costs, which can be estimated at approximately 3% to 3.5% of the purchase price of the home, plus broker compensation. Transaction costs vary based on loan product, type of home, and purchase price. Ask lenders for one or more worksheets detailing costs to make apples-to-apples comparisons. Provide your lender with basic worksheet information such as top price (worst case scenario), condo fee if applicable, tax zip code and loan type.
Note:
- Three pre-approvals from different lenders are recommended for best comparison
- Be sure to use the same criteria for each pre-approval for best results in estimating closing costs.
- Worksheets should be as close as possible to a Closing Disclosure.