The first step in purchasing a home is to get pre-approved. Meet with a lender, mortgage broker or bank to discuss your income, debts, and assets for pre-approval. After reviewing your information, the lender will tell you how much they can lend and at what interest rate.

Getting pre-approved also shows sellers you're serious. Sometimes a pre-approval is required to view expensive residences, but it also speeds up the offer process once you select a home.

If your house offer is rejected, here are 3 immediate actions that can be taken:

Increase your offer: If the seller rejected your offer because it was too cheap, consider boosting it.

Ask for a counteroffer: The seller may reject your offer, but still be willing to negotiate by offering an alternative. This lets you change your offer or negotiate closing date or repairs.

Keep looking: If the seller won't negotiate and you won't raise your offer, you can look elsewhere.

Real estate agents receive a commission from sellers, usually a percentage of the sale price. The seller and buyer share the commission negotiated by the seller before listing the home.

Best part? Most buyers don't pay their agent directly. However, the commission is included in the home's sale price.

Buyers' markets are opposite sellers' markets. Supply over demand creates a buyer's market, providing buyers a negotiating advantage. More than a 7-month supply indicates a buyer's market and property value decline.

Common buyer's market causes:

-Lots of homes for sale

-Recessionary economy

-High mortgage or interest rates

-Mortgage approval issues or tighter lending constraints

-New home construction overexposure

In a seller's market, inventory is fewer than 5-6 months, hence prices rise. The low availability of properties on the market keeps housing prices rising.

Common seller's market causes:

-Home inventory shortages

-Economic growth and job creation

-Low mortgage or interest rates

-Reduced lending regulations or simpler mortgage financing

-Slower new construction homebuilding

The "Days on Market" is the number of days a property has been listed on the local multiple listing service. It starts the day the home is listed and will accumulate until the seller has accepted an offer and signed a contract.

Knowing the DOM for a home is critical to your negotiating power. Why? Because the number of days a home spends on the market directly affects the price of a home. This information can be used to the buyer’s benefit to negotiate a lower price.

Contingent means that one thing must happen before another. Real estate deals fall through if the seller or buyer don't meet specified standards. Contingencies, or contract “clauses,” safeguard any party from not obtaining funds, an inspection, or a variety of other possible situations that may arise.

Your home's value is estimated by an appraisal. The appraisal is completed by an appraiser who gives the lender or bank confidence that the property is worth a given amount. After the buyer and seller agree on the price, an appraiser performs a home appraisal to make sure the loan is justified and supported by the value of the home.

The fair market value is the price a buyer will pay and the seller will accept. Homes don't always sell for fair value.

If a buyer really wants a property or a bidding war breaks out, a buyer may offer more than the list price or fair market value.

After agreeing on pricing, the seller collects earnest money from the buyer and this money is called the earnest money deposit. This ensures that the buyer is sincere and not just negotiating deals with other house sellers.

Earnest money typically ranges from 1-3% of the sales price depending on the market. The buyer will get their earnest money back if the seller backs out. The buyer will lose their earnest money if they back out under certain conditions.

The earnest money deposit will go towards the closing costs the buyer is responsible for.

A list price is how much the seller lists the home for, which is also referred to as their “asking price.” The sale price is the amount of money the home actually sells for.

Title insurance protects homeowners from allegations made by previous owners, such as unpaid taxes or unfair contractor compensation. Title insurance covers legal bills and title disputes during your homeownership.

Two types of title insurance exist: Selling a home normally requires lender title insurance. The lender is protected from housing claims with this type. Owner title insurance is optional, but paying this one-time price will protect you from title issues for as long as you own the home.