So far you have figured out what you want in your new home
using the checklist, figured out how much you can pay for a new home and found
a home you would like to buy with the help of your Buyer’s Agent. Next is the
legal stuff, the offer contract. You can download all kinds of contracts from
the Internet if you like but I think when you are buying something worth
several hundred thousand dollars you probably want some advice from a
professional. You can get help with the contract from your Buyer’s Agent or a
Real Estate Attorney. Either of these professionals have all of the tools you
need to have a valid, competent and, most importantly, a complete contract
offer. There are an incredible number of laws in every state covering even the
most basic real estate transaction so unless you want to take up the study of
real estate full-time, I suggest you stick with the professionals.
Your offer should include the price you want to pay for the
home, the amount of your down payment and the amount and terms of your expected
mortgage. There are also disclosures you must complete and sign. There will be
things about the home you will want to include in the offer. Maybe you want the
seller to throw in the washer and dryer in the laundry room or those new
appliances in the kitchen. You can include lots of things in your offer, the
worst that will happen is the seller says no and don’t forget that golden word
“NEGOTIATION.” You can negotiate anything so that both you and the seller win
in the end. There can be contingencies to protect you from unforeseen issues and but the seller will want those contingencies removed at a point in the escrow process so that all the ends are tied up by the close of the escrow process. Those contingencies and the steps to
have them removed or satisfied should all be included in the contract. This contract should be as complete as possible, remember my unfinished kitchen fiasco, so take some time to make sure everything you want is included and make sure you understand everything you are signing. Ask questions about anything that you don’t understand. An experienced professional should be able to get answers for all of your questions and should be glad you asked.
At this point you must have completed the process to get preapproved by your lender. You just aren’t a credible buyer without that preapproval. You will also need to put down a deposit. While there is no hard and fast rule about how much the deposit has to be, in most cases I recommend the 2% rule. Your deposit should be about 2% of your offer price. If you are offering $250,000 for the home, then your deposit should be $5000. A reasonable deposit is one of the ways to show the seller you are a serious buyer and can
help you to stand out from the crowd if the home has multiple offers.
Once the offer is submitted you will probably have a little lost sleep waiting to see what the seller says. Depending on the type of property you are trying to buy the response can be anywhere from 3 to 45 days, sometimes longer. Your Buyer’s Agent should keep you informed of the progress of your offer and don’t hesitate to contact him/her if you don’t hear something.
There is usually one of three ways the seller will respond to your offer. The first is a complete acceptance of your offer which simply means you got everything you asked for. The second is an acceptance with a counter-offer which includes changes the seller would like to make to your original offer. Maybe they want to take the washer and dryer with them. No matter the terms of the counter-offer you will be able to accept the counter-offer or you can counter the counter-offer. I have seen counter offers go back and forth several times until both the buyer and the seller feel they have the best terms they can achieve. Remember you want this to be a win/win for everyone. Your agent should be able to help you craft your counter offers and help you with the negotiation process. The third response is to counter with a completely new offer. This doesn’t happen very often but I have seen this happen more frequently in the current market. This response means that rather than responding to your offer, the seller makes up a completely new contract and your offer contract is trashed. This type of response calls for the help of a professional to make sure your interests are protected. Your agent or attorney is invaluable when this type of response is received.
Once this process is complete and everyone is satisfied you will enter escrow and a whole new list of items starts, but that is for the next post.