Buying a house is very very strange*. The mechanics have been dispassionately laid out extremely well by TallRoo, but actually doing it is another thing entirely. Here is how it happened for fuzzy and blue and myself all wrapped up in a first and second person description of the process.
We saw a house for sale that looked really nice, and we were like "wouldn't it be neat if we could afford one of those", and then laughed and walked away. Then, on the sly, I did the math and figured out that if we were careful we could afford it.
Well. That changed everything. So we started looking around at houses. Unfortunately, the process we were about to embark on was going to be really painful - we could already tell. First, you have to deal with some frantic type A realtor who wants you to buy as huge a house as possible because their commission is a percentage of the sale price, then you have to find someone to lend you a pile of dollar bills that weighs more than you do, which will probably involve talking to some obsessive hyper-anal-retentive money person.
But whatever. We were initially willing to go through with it because why the hell not, right? The first step was to find a buyer's agent. After much searching, we found the hippiest buyer's agent we could find — this turned out to be the best decision we made in the whole process. Finding a good agent who you trust and work well with seems to be one of the keys to not getting screwed. After initial consultations with them and other money people, they put us on a daily email list that sends out new for sale listings as they come out.
And that's when homebuying starts to break your heart. Because you see listings like "beautiful house that is centrally located for $10,000 less than your max", so you go check it out 2 days later and find out that it sold on the first day for $15,000 more than the asking price because there were 10 offers made on it. Or you see "wonderful 2 bedroom house in your price range that isn't too far out and the price is right and the yard is huge" and you go check it out and it has 7 foot ceilings, which is great for hobbits, but not so much for 6'2" jongleurs. So you decide to not offer. A week later that listing reappears for $7,000 less and you have to suck it up and agonize into saying no, despite the fact that there is an awesome .5 scale pirate ship in the yard of the people across the street.
So you keep doing this. Again and again. You will see an open house opening up down the street when you go to drop your visiting friend off at the train station. When you return 1.5 hours later, the house is sold with 3 backup offers. As you ride your bike past, you have a brief conversation with the victorious sellers who provide you with the understatement of the year: "It's a seller's market".
After a month you start to despair. You saw the house with the beautiful 100 year old willow tree in the front yard go in less than 24 hours for a cash offer. Because it turns out that you are competing with people who have the ability to just write a check for a 50 foot stack of dollar bills. You see an inexpensive beautiful craftsman 2 story with a wonderful yard that is 5 miles out and you start thinking "We could buy this house and have enough left over to buy a car to commute with!" and then you stop, because those are bad thoughts. Eventually the despair enters your bones and you ask your realtor for a listing that contains every house on the market, which you go through one by one and realize that there isn't a house for you there.
When we got to this point, we were ready to quit. You might not have been, but we were. A week later, we got a call that there was a cute little house coming on the market on Friday, and wouldn't we like to ride by it and check it out. The initial ride-by goes well, so I checked out the inside with Hippie Realtor Lady on Saturday. That goes well, so fuzzy and blue checks it out with Hippie Realtor Lady on Sunday. After the Sunday viewing we decide that we like it. And if we like it, we should place an offer. So we head back to the office and we see Hippie Realtor Gentleman who starts to vacillate between friendly hippie when talking to us and real estate man when thinking of the offer. It is amazing. He has the ability to talk to us about money without giving us hives, but he is murderous at the bargaining table.
So here's how it goes: you make an offer and your realtor starts putting in high tech legal attacks. You learn about acceleration clauses - which make the bidding work like Ebay which is freaky in itself - and you learn how to borrow more than 80% without getting stuck with mortgage insurance. As you go home that night you start to ruminate on the rate at which things are happening: there was a slow burn until you decided you wanted a house, followed by a period of about 1/2 that figuring out that yes, you definitely CAN afford one, followed by a succession of periods where you look at more and more houses at an ever-increasing rate. Eventually you are revved up the the speed at which the market is operating, and you are able to see a house and decide to make an offer in one day, which is what is usually required. So you make an offer. At that point, events are moving extremely fast and the whole thing has been taken out of your hands and put into the hands of the professionals who know how to move fast. The next day your offer is presented, and you get a phone call "there's going to be another offer". Another offer? "Activate Plan B." So your offer is presented, and it all depends on your realtor's suaveness. You sit around at home clutching your stomach and getting phone calls that have nothing to do with the house. People call to say hello and you want to shout at them to go away and not talk to you. You get hangup phone calls - far more of them than is statistically likely. Finally you get a call: "Congratulations! Come to the office and sign stuff."
This is all moving much too fast.
But you do it anyway, at the speed of light, relatively speaking. Each successive interval has dropped by half; surely you have hit the singularity, right?!?
The seller wants to close quickly. He took your offer over the other one because you said "we can't offer too much more money, but we can offer to close quickly". Which means that you now have 2 weeks to line up everything. 2 weeks to make sure you aren't getting screwed. 2 weeks to get an inspection and approve it. 2 weeks to verify that the neighborhood doesn't suck. 2 weeks to make sure the neighbors aren't operating a crack house. 2 weeks to bargain about any issues found in the inspection. 2 weeks to contact the city and find out about any easements or boundary issues or tax problems. 2 weeks to get house insurance. 2 weeks to get a loan finalized and your rate locked. On a per hour basis, these prove to be the most lucrative 2 weeks of your life. On average, I made $386 dollars in the hour it took to type this up - of course you never see any of this money. The money is electrons. But it's also all your life savings going to the down payment.
Surely it can get no faster, more tense, and more hectic than this? Well, finally, the answer seems to be yes. Once you get all the inspection issues sorted out, everything goes into hurry up and wait mode until the day of closing, when you are actually given the keys. Your keys. For your house.
* - tense in this description will also be strange