So, we’re covered the prep-work, and you’ve done the hunting with an awesome Realtor–You’ve found THE house. It’s got 90% of ‘your list’, you’ve seen it at different times in the day, it’s in your price range, the taxes are reasonable–now what?
1)Let your Realtor know you’re ready to make an offer-and have them get you a CMA(Comparative Market Analysis)
Don’t just throw out a number-get with your Realtor and have them run a CMA for you (a good one will do it if they know you’re ready to submit an offer anyways). Go over the “Comps” with your Realtor–see if the listing price seems right in comparison to similarly sized homes (Beds, Baths, Sq, Amenities, Ect) in the area that are on the market, pending, or sold recently. You’ll have to take into consideration the location of the home relative to the “Comps” (is it closer to the highway then the others?) and the condition of the home, as well.
Think of it as CYA (Cover Your Ass) research. You wouldn’t go to the store needing a fridge and just point to one that looked good and said-“I’ll take it–FULL PRICE-DONE!” right? You’d look at reviews online, check out the different features in comparison to other brands, and the prices at different stores. Same concept-bigger purchase–go in educated!
2)Come up with reasonable offer with your Realtor, draw it up
After looking at all your “comps” and deciding what you’d like to offer the home’s seller-have you’re Realtor draw up the offer. The offer can be as simple as what folks call a “Clean Offer”–Asking for nothing more than the house and what is built into it. Or, you can ask for items in the home. Lots of people will ask for the fridge, but you can ask for that awesome 60″ HD TV, or the sectional that worked perfectly in the game room. They don’t have to say ‘yes’, but you can ask for them 🙂
It’s at this point, too, that you can add contingencies (‘I will buy your house if this happens’) to your offer.
For example-let’s say you need to sell your home before you can actually buy this new home. Lots of times this happens when YOUR home you’re selling is “under contract/contract pending” waiting to close so you can get your funds. Or, if you’re like most folks and need to secure financing (a mortgage) to buy the home-this is when you would let the seller’s know. Another contingency is that the home would have to have an inspection by a home inspector of the buyer’s choosing in X number of days. There are forms from the Texas Real Estate Commission for all sorts of contingencies, these are a few examples tend to be the ones we see the most of.
It’s snowballin’ right along here…
A written offer is good. A written offer with earnest money is excellent. Earnest money is generally a check or money order you submit along with the written offer as a show of “good faith.” This money end up going toward your down payment if the buyer accepts your offer and you go under contract. How much depends–usually a small percentage of the purchase price. If the contract falls through for some reason other then you-the buyer-defaulting on the contract–generally the earnest money comes back to you.
4) Option Fee?
This one is up to you-but in the most basic way of explaining-you would pay an option fee for a given amount of time (5-14 days, it depends) with which you could back out of the contract at any time. You don’t get this fee back-but some people think of it like an super short-term insurance policy.
5) Submit your offer, and wait!
Have your Realtor submit the offer–from there, you wait. That what this step is all about. Sometimes seller’s and their agents are super quick to turnaround and address your offer, other times-given circumstances-it can take longer–in instances where a seller may no longer be living in the home, be out of state, if the seller is a separated couple–you get the picture.
6) Counter offer, Decline, Acceptance?
No, these aren’t the psychological steps to homeownership…One of these is what you will most likely hear from your Realtor about your offer.
a)Decline the offer: The seller’s didn’t like your offer, and didn’t wish to give you a counter offer. A lot of times this comes hand-in-hand with “low-balling”(making a much lower offer on a house then reasonable-a good Realtor will steer you away from such practices).
b)Counter offer: The seller’s did accept your offer, but in return send a counter offer. The ball is now in your court, as they say.
What you have to remember here is that your first offer no longer exists. If you offer $200k on a home that was listed at $220k, and they counter at $210k, you counter back with $190k, and the seller freaks out and goes, “No, no–We’ll take $200k!” Too late–the offer on the table is simply the $190k, everything else is void.
Sometimes counter offers go back forth a number of times–especially when personal property (the goodies that DON’T come with the house-fridge, TVs, sectional) is being thrown in the offers.
c) Acceptance: The seller’s accepted the offer.
You’re going under contract, baby! I’ll pause here–you go ahead:
That was a long one-Part IV will cover what “Going under Contract” means-and what you as the buyer need to do!
This upcoming weekend should be great–who wants to go look at some homes?! 🙂