Here is the second in the series on some tips on becoming a good buyer. This is particularly important in this market. (Here's Part 1 in case you missed it).

Do your home search- Using the Internet (more than 80% of buyers are using the Internet to do their home searching), your agent, newspapers (may or may not be helpful in your area), driving around neighborhoods, going to open houses, etc. The more strategies you use the better educated you will become about the market and the type of home you like. Being educated about the marketis so important so you will understand the value of the homes you are interested in, in the areas you like. Tour the homes that interest you with your agent so you can compare and contrast. You will want to narrow down the list of homes to those that meet your criteria, including affordability.

Make an offer - Once you find the property you would like to buy, a written offer to purchase is made, using a standard state form (a verbal offer means nothing), accompanied by a deposit (the expected amount may vary in different states), outlining all the terms and conditions of the offer as well as your contingencies - buyers usually, at a minimum, make offers contingent on obtaining a mortgage (unless you are a cash buyer) and home inspection. Many buyers these days are making offers contingent on selling their current home. There will be a CONTINGENCY PERIOD (in Southern California the default time frame is 17 days but you may negotiate a longer period) during which you will need to remove all the contingencies included in the offer - hazards disclosure, inspections, title, loan, and more. Talk to your agent to learn about all the many issues to consider. It may work differently in other states so check with your agent in advance so you understand the expectations.

Offer acceptance OR rejection - Understand that the seller can respond in a number of ways to your offer. The seller may accept it outright, or may counter offer by making any number of changes (e.g., price, close of escrow date), REMEMBER - any change made by the seller negates your original offer and creates a new counteroffer for you to consider. The seller may also reject your offer outright without making any sort of counteroffer, or the seller may even not respond at all during the time frame you stipulate. Your goal is to make an offer that either the seller will accept, or which will encourage negotiation - a low offer will likely result in outright rejection. Once the seller is annoyed, further negotiations by you may be at risk. And it's a waste of time for everyone.

Contingency Period - once the offer is accepted, indicated by all parties' signatures where required, you have many tasks you need to accomplish, as does the seller. There are documents that you are expected to review and approve (e.g., in CA the seller's disclosure, natural hazards disclosure). Some of these are from the seller, forwarded to you through your agent, and others come from other sources (e.g., in CA the escrow company sends a Preliminary Title Report). If you elect to have any inspections you will need to select a home inspector and have your inspection. Make sure you understand what the job of the inspector is and your rights as a prospective homeowner. You will also need to apply for a loan and have it approved by the end of the contingency period. Keep in mind that this review process may vary from state to state, and your agent will have the best information on what you should expect and the things you are required to do.

Stay tuned for the final round of buyer tips. And let me know if there are any questions.