Pfanntastic Home Buyers Handbook Chapter 7 A. - Making An Offer

Pfanntastic Home Buyers Handbook  Chapter 7 A. - Making An Offer

 In our journey towards buying your 1st home, so far we have covered.

• A broad overview in buying your 1st. Home
• Location, is Everything
  
• Selecting a Realtor
• Preparing to View Homes
• Watching the Market
• Financing Options
• Finding A Lender
• Getting (Pre) Approved for a Mortgage

Please review the previous chapters for more details in our Pfanntastic Home Buyer Handbook Series, and or contact Peter of Linda Pfann.

By this point, you should have found a real estate agent and really build a great working relationship with them (if not we would love to apply for the job please talk to Peter and Linda Pfann), completed your pre-approval work with a lender or mortgage broker, and seen a few homes. At this stage, you will likely have one or two real favorites, and might want to revisit your short listed homes. If you have not made up your mind on a home yet, you should take your time and keep looking. But keep in mind that if you wait too long, you may end up in a bidding war with another buyer.

Making an offer on a home is a huge step, both exciting and possibly a little scary, one more reason you have completed all the "prep" work and have your team of experts ready to assist and answer any questions you may have. . You will be taking on the responsibility of a mortgage, repairs, and or other chores that come with home ownership .

While you should be cautious, you should also make a bid on a home that you really like within a week after seeing it. This will put your mind at ease so that you can think of all the other items you will have to get done before the closing.

What To Do Before Making An Offer
Before you make an offer on a home, you should do the following:

• Revisit the short listed properties.
• Find out more about your favorite property and the neighborhood
• Find out about taxes in the area, and
• List, Review any and all questions and concerns you have about the property

These suggestions will help you make the most informed decision possible when it comes to buying your first home.

Revisit the short listed properties.
Having a good 2 nd. or 3 rd. look at the homes on your short list will give you an opportunity to compare, specifics of each home, and decide which home, property, location features and benefits will work the best in you specific situation.
It is a great way to coming to review and possibly list both the good and not so good of each property and beginning the decision making process.

Find Out More About  your favorite Property
If you find a home that you might want to buy, you should find out everything you can about the property first before making an offer. Visit the Municipal office and or Land Titles records office to see how much the current homeowners paid for their land and the value of their property.
Together with Peter and Linda Pfann, collect, review and analyze any and all details about the property which may include an evaluation report, cost of buying, review any and all paperwork available about the property and or area.
Review the zoning and allowable uses for the property, review any restrictions, bylaws and or future changes in the area.
Almost every weekend in most neighborhoods, there will be an open house. Stop by and see for yourself what the homes in the area look like and what you can get for your budget. (just let the hosting agent know that Peter and Linda Pfann are your Realtors).
Once you have completed your "homework" you will have a better idea of how much you should offer for the home and will be much more confident about your decision going forward.

Find Out More About Taxes In The Area
The homeowner, (you) will be paying yearly property taxes, local taxes, school taxes, community dues, and other taxes that could drive your household spending through the roof. Before you commit to living in a certain area, make sure you understand everything you will be paying each year.
As your real estate agent Peter and Linda Pfann will have the neighborhood information that will help you decide where you want to move. You can also visit your local tax office and see how much the current homeowners paid in taxes last year.

List, Review any and all questions and concerns you have about the property
Now that we have collected and reviewed a substantial amount of information about the property you like best, it is time to review and determine if you want proceed with making an offer on the property and make it your new home.
It is a great time to review all the information you have about the home, area, value, condition, and seek answers to any questions that you may have in advance of preparing and submitting your offer to the sellers. Together with Peter and Linda Pfann and members of your home buying team, we should be able to resolve and answer any outstanding questions and concerns and get ready to prepare the most appropriate offer for your new home.

How To Write A Purchase Offer
This is the most important step when making an offer to buy your first home. The purchase offer should outline everything you expect from the homeowner and what they can expect from you. You should include the following in your offer:

• price being offered
• amount of deposit on the home
• amount of money you will be putting down on the home
• mortgage terms
• Contingencies also often referred to as the "subject to clauses" (such as appliances that will stay repairs that will need to be made, removal of items in the yard, etc.)
• when closing will take place
• specify who will pay which fees
• any reports that will be needed, and

Each of these categories should be explained in its own paragraph (s) in your offer. You should try to be as specific as possible when writing up a purchasing offer.

In BC, and most of Canada, we typically use more or less standardized contracts, and documentation with the majority of the typical terms and conditions set out in wording and interpretations reviewed, tried and tested by numerous lawyers, agencies, the courts and years of application in thousands of real estate transactions. Peter and Linda Pfann will gladly review any and all terms and conditions in the standard contract with you as well as review and create any specific amendments that ensure that your best interest are looked after.   BC has its own laws concerning land registration, the form of the documentation, and fees that are to be paid. Be aware of these laws before signing and or submitting your offer to avoid surprises or disappointments.

Have a lawyer or your real estate agent look over the purchase offer before sending it. They may have some advice or additional categories you should add depending on the age of the home, the neighborhood, and the laws that exist. If you make an offer that is reasonable, well written, and hard to break, then you will be on your way to buying a home.

Making An Offer
After completing your research, you will be ready to make an offer on your first home. You will visit with Peter or Linda Pfann (your agent) to sign a formal agreement that will outline your offer and for how long you will be making this offer. Most agreements will give sellers a reasonable amount of time to consider and respond to your offer.
During this time, the offer may be accepted, rejected, or a counter offer will be made. You will have to decide what you will want to do next if the offer is rejected or another (counter) offer is made. If the offer is accepted, then you will have to contact your lender, a home inspector, and start making arrangements for your move.

Most homes will go to closing within a month to 45 days after an offer has been accepted. This may seem like a long time, but it is not. You will have plenty to do in the meantime. Be sure to ask Peter and Linda Pfann for your Free copy of our Moving Guide, a Pfanntastic step by step guide assisting you with each and every step of the moving process. Also Ask us about our Free to use Enclosed Moving Trailer.

Low Or High Offers
Hopefully, by researching the neighborhood, the property, and the value of the home, reviewing the evaluation report we completed, your understand of a realistic value for the property will be close to or within a negotiable range to the seller’s bottom line price as possible. Sometimes, though, this is not possible. There may be circumstances that may prohibit you from making an offer that is close to the selling price.

Making The Right Offer
Making the right offer is both an art and somewhat of an educated guessing game. Once we know a realistic value range of the property and compare this with the asking price, there will be situation that you as the buyer will have to decide what amount in your offer is enough to make the seller to seriously to accept your as is, while you will still be happy if they did.  The closer you can come to the most realistic value of the property, the more likely it is for both you and the seller wanting to move forward and make an agreement,

Making the right decisions when buying a home are not always made quickly. You should play by the rules and just see what happens. If you get into a bidding war and cannot bid any higher, then it is best to let the home go and find another. You should not be a slave to your first home by buying one that is over your budget. There are many homes available if you keep looking.

How To Handle A Counter Offer And Offer Rejection
Sometimes, if you give homeowners an offer that is lower than their asking price, they may offer a counter offer. This is usually an offer that is more than your offer, but a little less than the asking price.  

Counter Offers
Depending on where you live, the laws pertaining to counter offers will vary. Typically, the number of counter offers is limitless, but no counter offer can be the same. While counter offers are usually concerning money, these offers may also contain the following:

• Ownership of appliances
• Deposits
• Specific terms or conditions in the contract
• Repairs and or property condition
• Time frames for closing, and
• Time frames for counter offers

Buyers and sellers may only have hours to accept, reject, or offer another counter offer after receiving one. This can be a very stressful process, especially if you are dealing with a seller that has other offers on the table. While most homeowners will reject an offer if it is too low or they have received another, some will try to get the most they can from the sale which can include the smallest items in the home.

If you are determined to buy a home, but still want a lower price after the buyer has reacted with a counter offer, you can try to find a price that will suit everyone’s needs. If you are making a counter offer that does not make that much of a difference, you should weigh the odds that another offer has been made, the homeowner will reject your offer, and that time is ticking for everyone.

Try your best to accept the counter offer before making one of your own. Is it really worth losing your dream home over one or two thousand dollars?

Dealing With Rejection
The hardest part about an offer rejection is that the homeowner does not have to answer your offer. If you do not hear from the homeowner within a week, it is safe to assume they are not interested in your bid. While this can be frustrating, you will have to move on. Begin your house hunting again and try to stay positive.

If the homeowner gives you a response in the form of a rejection, they may site the reason why in the paperwork. If your offer was too low, they had another offer, decided not to sell, or want to wait for a higher offer, at least you can move on without wondering why your bid was rejected.

Considering Items In The Home
When you are writing your purchase offer, you should consider the items that you would like to keep and items you would like to have removed from the home. These items can include:

• Certain appliances (such as the washer and dryer)
• Lighting fixtures
• Storage fixtures
• Single air conditioning units that fit into windows
• Hardware from windows and doors, or
• Pools

You should put these items in writing so that you will get them with the home. Some homeowners may try taking certain items with them either because they didn’t know that you wanted them or because they were not supposed to be sold with the home to begin with. Be sure to obtain a list of items the homeowner is selling with the home so that you can compare it to your list.
This can also work in reverse. If there are items that you would like removed from the home or the property before you move in, you should specify these in the offer.

Understanding The Seller
One of the key elements of making a solid offer is having an understanding of the seller. Peter or Linda Pfann as your agent will be able to tell you a little about the seller that may help when trying to come up with a fair offer.
When deciding on an offer for the home, you should find out the following about the seller:

• How eager are they to sell their home?
• How long have they lived in the home?
• How many offers have they received?
• How many have they turned down?
• Have they lowered their asking price?
• Are they relocating to another area?
• Do they need to sell their home quickly?
• Are they waiting for their asking price?

These questions, although you may not know the answer to some of them, will help you make an offer that will be looked at by homeowners and taken seriously. Sometimes when a homeowner needs to leave the area in a certain amount of time they will lower their asking price. This could be an advantage for you, but if the homeowners have already lowered the price, they may not want to lower it any further.

Make a reasonable offer and see what happens. Depending on the circumstances, it may be accepted, and you can call yourselves "home owners in waiting.
In our next section we will be covering how to deal with specific market conditions and how this may affect your offer.