Wednesday, August 22, 2012

The Home Buying Process: Step 4


This is the fourth post of ten in a series about the home buying process.  The purpose of this series is to educate the reader on different steps in the process to ease any anxiety of the unknown.  Whether you are a first-time buyer or have purchased in the past, it is always advantageous to be up-to-date with the latest news and information to make your path to home ownership as smooth as possible.
Step #3:  The Home Search  

Step #4:  Making an offer
Each component of a purchase contract could really be broken down into separate blog posts.  So, to keep this short enough to not lose readers, I'll point out a few of the parts of the offer that are popular items for buyers to ask about and will encourage you to email me if you have further questions.

     -  Purchase Price:  Of course, right?  Something to keep in mind here- I hear a lot of "I don't believe in offering full price for real estate" or "low ball 'em."  The price a buyer puts on the purchase offer shouldn't be just any number pulled out of space.  Your agent should help you determine a price range that is appropriate using an analysis of the market.  Ultimately it is the choice of the buyer, but writing a fair offer is the goal, and if you just believe in the "low ball 'em" strategy, you could be losing out on an opportunity.
     -  Terms:  Additional terms and conditions are written into the contract.  The most common terms I am seeing right now are buyers that are asking for the seller to pay for applicable costs at closing.  Buyers will often see that the seller pays up to 2-3% of the purchase price towards buyer fees.
     -  Time limits:  Once an offer is accepted, the clock starts.  The offer must be accepted within a set time limit (normally 24-48 hrs) and then the first two weeks are action packed.  Among other things, buyers will need to get a loan application started, home inspections complete (7-10 days), and if the home inspection returns anything that needs attention, requests to remedy must meet agreed upon deadlines (10-15 days).
     -  Contingencies:  Certain components of the contract are contingent upon additional action.  For example, the contract is contingent upon the buyer obtaining financing.  If the buyer is unable to obtain financing, the contract is terminated.  There is also a contingency on the home inspection.  If the buyer is unhappy with the inspection details, they can request for remedy or get out of the deal.
     -  Earnest Money:  Earnest money is money that accompanies the contract to show "good faith."  What it shows the seller is that you are serious about buying their home, and if you were to pull out of the contract for a certain reason that isn't stated in the contract as a contingency, then the seller would receive the earnest money for their time spent with the house off of the market.  If the contract gets to closing, the buyer gets the money back, and often uses it as part of the down payment.  If the contract doesn't close for a reason such as the buyer cannot get financing, the earnest money is returned to the buyer.  In short, the only way that the buyer does not get the money back is if they walk away from the deal for inexplicable reasons.

Again, there are many parts to an offer and every deal looks different.  These were just a few of the major topics that I have experienced.  For more resources on buying a home visit my website www.scottmorrisonrealestate.com.

Take care,
Scott Morrison

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