Congratulations, you have found the house of your dreams and fantasies of sitting in your new back yard are dancing through your head. This is the most important part. After all the work and searching you finally found what you were looking for and now it is time to close the deal. Depending on the situation and who is involved this can get slightly complicated.
Before the offer
Before you make an offer to purchase the house of your dreams you need to make yourself look like a good buyer to the seller. In many instances, a seller will take less money for a fast closing with a secure buyer. If you don’t need a mortgage, all the better and the offer will be what is called an “All Cash” offer. If you, like most of the population, require mortgage financing, then the offer will be subject to you obtaining a mortgage in a certain amount. The less money you need from the bank the better as far as the seller is concerned.
Preapproval
Prior to making the offer on the house, make sure you have preapproval from a reputable lender. A preapproval is simply a letter from a lender that says, so long as everything you told us is true, we will offer you financing up to X amount. Having this document makes you look like a serious buyer who has done his/her homework and is ready to go forward. A preapproval is not a commitment and is based wholly on verbal communications with the lender. You should not need to allow them to run your credit or provide them any real documentation of obtain this.
Earnest Money
Part of the offer will include how much money you are willing to put in escrow on contract, also called a down payment. The terms of the contract of sale which you will execute with your attorney after the offer is accepted by the seller, allow for a return of these funds in most instances if the deal falls apart. It is something of a security blanket for the seller. The larger the down payment, the better as far as the seller is concerned but the smaller the down payment the better as far as the purchaser is concerned. The old way of putting 10% on contract is no longer the way as the prices of houses have increased since that time. An acceptable down payment is about $10,000.00.
Offer
The Seller knows that what he is asking for is not what he is going to get; however, you do not want to seem as though you are not putting in a serious offer. Prior to the collapse of the real estate market, an offer withing 10 to 15 percent of the purchase price was considered a reasonable offer and would typically be considered by the seller. Times have changed and we are now in a buyers market. A reasonable offer in the current climate is 10 to 20 percent below asking price.
Counter-Offer
Be prepared for the seller to propose a counteroffer. In some cases, this negotiation process can be made up of multiple counteroffers and can take some time. Remember that the purchase price is not the only negotiation tool available to you. You may be willing to pay more if the seller agrees to paint, leave some furniture, update the kitchen, etc… in many instances this is the time to think a little outside the box. Many sellers have difficulty assigning value to their home as memories and sentimentality’s, add fictitious value to the house. Sellers are often times willing to do work to the house or provide other incentives that may even be more costly.
Acceptance
Once the seller agrees to your offer, you will sign the binder to the contract and now is the time to call your Real Estate Attorney. Your next step will be signing the Contracts with your attorney.
Related Posts:
2. 7 Days To Owning A Home: Day 1 – Your Credit
3. 7 Days To Owning A Home: Day 2 – Financials
4. 7 Days To Owning A Home: Day 3 – Where To Live?
5. 7 Days To Owning A Home: Day 4 – Where Do I Find My Dream Home?
