You found the perfect home and it’s now time to write an offer. Your Realtor® will call the listing agent to:
- verify availability
- determine if there are any other anticipated offers being written on the home
- ask general questions about the timing or special circumstances of the seller that need to be factored into the offer
This information is used to determine the approach to pricing. This is a CRITICAL part of the process and the reason why going it alone (when buying or selling a home) is not a good idea.
The form that is used to convey the buyer’s request to purchase is generally a state‐approved “Purchase and Sale Agreement.”
This is accompanied by several exhibits, including a “Seller’s Property Disclosure” regarding the condition of the systems of the home, structural and/or repair issues, and any other information required to be disclosed by local laws.
The only instance that a disclosure is not part of the agreement is when the property is a bank‐owned foreclosure, a pre‐foreclosure, or a short sale.
Next, your primary objective (along with your Realtor®) is to establish a pricing strategy. They will provide you with comparable sales statistics, current market fluctuations, and information about the seller’s motivation.
Don’t be fooled by what you hear and see in the media about “deals.” You selected the home because it offered you most of your desired features and benefits at a competitive price. The best advice for you is to establish a final price with the help of your Realtor® and begin negotiations with that end in mind.
Don’t Insult the Seller
You should understand that the seller is not going to give away his home without a realistic price and agreeable terms. By recognizing this as a mutually acceptable transaction, you will not insult the seller with your offer.
On lender‐owned or lender‐approved properties, there is generally less negotiating room and more competition. The contract is awarded to the highest bidder with the best terms of purchase.
The Home Inspection
Once the price and terms of sale are agreed upon and signed by all parties, you will hire a professional home inspector to evaluate the property. The full report will identify every item that does not meet the specifications of today’s building code, is not in good working order, or constitutes a health or safety concern and is not otherwise grandfathered.
This is an opportunity for you and your real estate professional to review what encompasses a realistic request of repairs for a home that is not new. You can identify a major deficiency, and submit a request to the seller to make necessary repairs. The inspection period is not designed to rebuild the house. When you offer realistic requests, the seller will be more likely to compromise.
Finalizing Negotiations
Negotiations must end in a win/win situation for all parties. Additionally, if the property is being sold “as is,” this is the time to decide whether to move forward with the sale or to terminate the Purchase and Sale Agreement.
The final phase is to initialize the loan process. The lender will request final documentation on your financial status and hopefully you did not do something — like purchase a new car or boat or any other big ticket item — that would considerably impact your credit. Though the closing date has been scheduled, there are still a few last‐minute details to address.
- You must arrange to purchase a home owner’s insurance policy. The policy can be paid in
advance or is frequently added to the HUD Statement to be paid at closing. - The decision to purchase or not purchase title insurance should also be addressed at this time. With the volatility of the market and properties changing ownership through nontraditional sales, it is probably more important than ever to fully understand the importance of purchasing title insurance.
This will be a line item on the HUD as well. It is important to note that title insurance policies should be held for 20 years following the sale of the property and the homeowner is still liable for title discrepancies over those twenty years, regardless of whether or not you still own the home.
Purchasing a home is part of achieving the American dream. It is an exciting and rewarding opportunity for you when you have the right people guiding and educating you along the way. Understanding what to expect eliminates mistakes and maximizes the investment.
Find a Realtor® who is willing to educate you about the market by providing data that helps you make intelligent offers from the start.
Keep this final thought in mind: Homes that are the best value always sell first, so when you find the perfect home, don’t wait to make an offer!
Home inspection tips will be covered next month.
