How a Real Estate Deal Works: A Step-by-Step Guide to Buying or Selling a Home

Most people go through a real estate transaction only a handful of times in their lives. The process can feel overwhelming — not because any single step is particularly complicated, but because there are a lot of moving parts happening on overlapping timelines.

This guide walks through every major phase of a residential real estate deal, whether you're buying or selling. It's written in plain language, with notes on what to expect, what to watch for, and where deals tend to get stuck.

Step 1: Get Your Finances in Order (Buyers) or Set Your Price Strategy (Sellers)

Buyers: Mortgage Pre-Approval

Before you start looking at homes, get pre-approved — not just pre-qualified — by a lender. Pre-approval means a lender has reviewed your income, assets, credit, and debts and issued a conditional commitment for a specific loan amount.

Why it matters: Sellers take pre-approved buyers more seriously. In competitive markets, offers without pre-approval letters often aren't considered. Pre-approval also gives you a realistic price range before you fall in love with something you can't afford.

•       Gather documents: W-2s, tax returns, pay stubs, bank statements, and ID.

•       Understand your loan options: conventional, FHA, VA (if you're military), or USDA.

•       Lock in your rate only when you're under contract — not during pre-approval.

•       Pre-approval letters typically expire after 60–90 days.

Sellers: Pricing and Preparation

Work with your agent to run a Comparative Market Analysis (CMA) — a data-driven review of what similar homes in your area have actually sold for, not what they're listed at. Pricing right on day one generates the most activity and the strongest offers.

•       Address major repairs or disclose known issues upfront.

•       Stage the home or at minimum declutter and deep clean.

•       Discuss your timeline — are you buying simultaneously? Relocating for a PCS move? These factors affect your negotiation strategy.

Step 2: Sign a Buyer's Agency Agreement or Listing Agreement

Before working with an agent, you'll sign a written agreement that defines the relationship. This has always been standard practice for sellers (listing agreements), and as of August 2024, the National Association of Realtors settlement requires written buyer's agency agreements before an agent can show you homes.

What Buyers Should Know

•       A buyer's agency agreement spells out the agent's duties, the duration of the agreement, the geographic area, and how compensation works.

•       Compensation is negotiable. It may come from the seller, the buyer, or a combination.

•       Read this document carefully. Ask questions about anything you don't understand. You're hiring a professional — treat it like any other contract.

What Sellers Should Know

•       A listing agreement authorizes your agent to market the property and outlines commission structure, listing duration, and your responsibilities.

•       Understand what marketing the agent will provide: professional photography, MLS listing, online syndication, open houses, etc.

•       Know the cancellation terms before you sign.

Step 3: Search, Show, and Select (Buyers) or List and Market (Sellers)

For buyers, this is the house-hunting phase. Your agent will set up automated MLS searches based on your criteria and schedule showings. Expect this phase to take anywhere from a few weeks to several months depending on the market and your flexibility.

For sellers, once your home is listed on the MLS, it will syndicate to major real estate platforms. Your agent manages showings, collects feedback, and adjusts strategy if needed.

A practical note: Avoid making major financial changes during this period — no new credit cards, large purchases, or job changes. Lenders re-verify your financials before closing, and surprises can derail your loan.

Step 4: Make an Offer and Negotiate the Contract

When a buyer finds the right property, the agent drafts a purchase offer. In Tennessee, this is typically a Tennessee Association of Realtors (TAR) Purchase and Sale Agreement. Key elements include:

•       Purchase price and how it will be financed.

•       Earnest money deposit amount (typically 1–3% of the purchase price in this market).

•       Contingencies: financing, inspection, appraisal.

•       Proposed closing date and possession date.

•       Any requests for seller concessions (e.g., seller-paid closing costs).

•       Personal property inclusions or exclusions (appliances, fixtures, etc.).

The seller can accept, reject, or counter. Negotiations may go back and forth several times. Once both parties agree and sign, you have a binding contract, and the clock starts on all contingency deadlines.

What Is Earnest Money?

Earnest money is a deposit that shows the buyer is serious. It's held in an escrow account — not given directly to the seller. If the deal closes, it's applied toward the buyer's costs. If the buyer backs out without a valid contingency, the seller may be entitled to keep it. The contract spells out exactly how this works.

Step 5: Due Diligence — Inspections, Appraisal, and Title Work

This is the busiest phase of the transaction, and it's where most deals either solidify or fall apart. Multiple processes run in parallel.

Home Inspection

The buyer hires a licensed home inspector to evaluate the property's condition. This typically costs $300–$600 depending on the home's size and age. The inspector examines the structure, roof, HVAC, plumbing, electrical, and more.

After the inspection, the buyer can request repairs, ask for a price reduction, request a seller credit, or accept the property as-is. In Tennessee, the inspection contingency gives the buyer the right to terminate the contract if they're not satisfied with the results — within the timeline specified in the contract.

Additional Inspections to Consider

•       Radon testing (common in Tennessee)

•       Termite/wood-destroying organism (WDO) inspection (often required by lenders)

•       Septic inspection (for properties not on municipal sewer)

•       Well water testing

•       Mold or environmental assessments if warranted

Appraisal

If the buyer is financing the purchase, the lender orders an appraisal to verify the home's market value supports the loan amount. If the appraisal comes in lower than the purchase price, the buyer, seller, or both will need to negotiate a solution — the seller lowers the price, the buyer covers the gap, or the parties meet somewhere in the middle.

Title Search and Title Insurance

A title company or attorney reviews the property's ownership history to ensure the seller has clear title and there are no outstanding liens, judgments, or encumbrances. Title insurance protects the buyer and lender against future claims. In Tennessee, closings are typically handled by a title company or real estate attorney.

Step 6: Loan Processing and Underwriting

While inspections and title work are underway, the lender processes the buyer's loan. The underwriter reviews everything: income verification, employment history, credit report, appraisal, title work, and insurance.

Common reasons deals stall at this stage:

•       Unexplained large deposits in bank accounts.

•       Employment changes or gaps.

•       New debt taken on after pre-approval.

•       Appraisal issues.

•       Missing or incomplete documentation.

Once the underwriter clears the file, the lender issues a "clear to close" — the green light for the closing team to finalize everything.

Step 7: Final Walk-Through

Within 24–48 hours of closing, the buyer does a final walk-through of the property. This isn't a second inspection — it's a confirmation that:

•       Agreed-upon repairs were completed.

•       The property is in the same condition as when the contract was signed.

•       All included items (appliances, fixtures) are present.

•       The seller has vacated (unless otherwise agreed).

If there are issues, address them before sitting down at the closing table. Once you close, your options become limited and more complicated.

Step 8: Closing Day

Closing is when ownership officially transfers. Both parties sign a stack of documents, funds are disbursed, and the deed is recorded with the county.

What Buyers Should Bring

•       Government-issued photo ID.

•       Cashier's check or wire transfer for closing costs and down payment (your lender or closing agent will provide the exact amount in advance via the Closing Disclosure).

•       Proof of homeowner's insurance.

What Sellers Should Bring

•       Government-issued photo ID.

•       All house keys, garage remotes, gate codes, and mailbox keys.

•       Any documentation required by the title company.

Key Closing Documents

•       Closing Disclosure (CD): Itemizes all costs for both parties. Buyers receive this at least 3 business days before closing.

•       Deed: Transfers ownership from seller to buyer.

•       Promissory Note and Deed of Trust: The buyer's commitment to repay the mortgage.

•       Settlement Statement: Final accounting of all debits and credits.

After all documents are signed and funds are received, the title company records the deed. The buyer receives the keys, and the transaction is complete.

Typical Timeline: What to Expect

A standard residential transaction from accepted offer to closing typically takes 30–45 days. Cash deals can close faster. VA loans sometimes take slightly longer due to additional requirements. Here's a rough timeline:

Where Deals Go Wrong

Most real estate deals close without major problems. But when they don't, these are the usual culprits:

•       Financing falls through due to credit changes, job loss, or documentation issues.

•       Inspection reveals significant defects and the parties can't agree on a resolution.

•       Appraisal comes in low and neither party will bridge the gap.

•       Title issues surface — boundary disputes, unpaid liens, missing heirs.

•       Buyer or seller gets cold feet and looks for a legal exit.

•       Communication breakdowns between agents, lenders, and title companies.

Working with experienced professionals — a good agent, a responsive lender, and a thorough title company — reduces these risks significantly.

A Note for Military Families

If you're PCSing to or from Fort Campbell or any other installation, the transaction process is the same, but timing is tighter and the stakes feel higher. A few things specific to your situation:

•       VA loans have specific appraisal requirements (Minimum Property Requirements) that can add time.

•       VA funding fees apply unless you have a service-connected disability exemption.

•       If you're buying before you arrive at your new duty station, your agent can do virtual showings and handle much of the process remotely.

•       Coordinate with your relocation office early — some entitlements and timelines are use-it-or-lose-it.

•       If you're selling and PCSing simultaneously, build in a buffer for overlap. Having a clear plan for temporary housing reduces pressure on both transactions.

The Bottom Line

A real estate transaction is a structured process with defined steps, deadlines, and protections for both sides. The best thing you can do — whether you're buying or selling — is understand what's coming next so nothing catches you off guard.

If you have questions about buying or selling in the Clarksville, Tennessee or Fort Campbell area, I'm happy to walk you through it.