Once you have located a house that you want to purchase, your next step will be to have your Realtor prepare a written offer to purchase. Making an offer can be both exciting and frightening...there are always nagging doubts about whether you are making a good decision or not.
It is a good idea to ask your Realtor for their opinion regarding offering price and terms, but it is also important to remember that you are the one obligating yourself to this purchase, so dont ever feel pressured to pay more or buy a home you feel uncomfortable with.
When you are ready, simply tell your Realtor that youd like to make an offer on your favorite home. Ask them to help you determine your total payment, including taxes and insurance, based on the financing approval you have received. There are a number of questions you must address when making an offer to purchase, so that your Realtor can properly complete the Offer to Purchase.
1. Financing Contingency you would be released from your contract if you were declined for financing for any reason by the lender.
2. Subject to Appraisal you would be released from your contract if the appraisal report indicated a value less than your purchase price.
3. Time to respond a seller must respond by the time you specifyyour Realtor may recommend a shorter or longer time, depending on market conditions and individual circumstances.
4. Amount of Earnest Money an earnest money deposit in your Realtors escrow account helps signify your level of seriousness and intentionthe more, the better as far as a seller is concerned.
5. Closing costs your lender and Realtor may recommend that you ask for the seller to pay some or all closing costs, in order to enhance your offer or reduce your total down-payment, or both. Keep in mind that if you are asking the seller to pay your loan closing costs, that the effective selling price will mean less money to the sellerbe ready to adjust accordingly.
6. Home Inspection, Survey, and Pest Inspection who pays for these items or if they are required to be purchased as part of your contract will initially be determined by your offer to purchase.
Keep in mind that if you are making a really low offer (lowball), you may be more successful in your negotiations if the rest of your offering terms are clean, simple, and uncomplicated. For instance, if you are offering $20k less than the offering price, the seller may be willing to look at your offer or at least make a counter-offer if you are pre-approved for financing and arent requiring a home inspection. They might have had a previous contract that wasnt consummated because the buyers couldnt qualify for financing. Utilize the knowledge and experience of your Realtorthey are familiar with your market and will help to negotiate on your behalf.
If a seller likes every part of your offer except one small detail, their response to you is still a counter-offer, which you may accept or reject, nullifying your previous offer. This information itself can sometimes be useful in negotiating, and usually the most patient party in a buyers market will come out on top in negotiations.
Once you and the seller agree on the price and terms of the agreement, and everyone has signed the agreement, then it becomes a contract. At this point your lender will want a copy of the contract as soon as possible, so they may order the appraisal and begin processing your loan.
Making offers on homes and the negotiation process can be stressful for even veteran homebuyers. Try to remain calm and open-minded, even trying to imagine how the seller is feeling is sometimes helpful in completing negotiations. Remember, your Realtor is more familiar with this process than you are, and by listening to their advice and having confidence in your decisions based on the information they provide, you should be comfortable knowing you are going about this stressful business in the most intelligent and logical way. Happy Hunting!!!
Clint Wooley is co-owner of Sunscape Rentals and Sales, and HomeMax.org, a source for information, tips and articles for first time home buyers. HomeMax offers free Realtor referrals and Lender referrals. HomeMax Case Managers will help guide you through the home buying process. http://www.homemax.org
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