In a previous article I wrote, Path to Homeownership: House Hunting I described how to inspect a house using your 5 senses. While house hunting, it is a good idea to write down notes on what you have seen. Write down the good, the bad, and the ugly. Throughout the day, you may have looked at several houses, so it is a good idea to have a checklist for each home you visited. At the end of the day, if you have determined which home is of interest to you, look at your notes. Revisit your budget. Determine the most you are willing to pay according to your budget and the condition of the home, as well as, the amount you were pre-approved for. I call this Number Crunching Time!
Whatever you do make sure that you are certain about the offer that you make because once your offer has been accepted it becomes a legal contract. In today's market, a buyer's market, the buyer has the upper-hand. Seller's are in need to move, houses are on the market for months and the number of homes in foreclosure are on the rise. Knowing the situation of the market is key in determining how your agent is able to negotiate the sales price of the home of your dreams.
EARNEST MONEY
Earnest money is the amount of money you are comfortable putting down as a deposit. It shows the seller how serious you are about purchasing the home. The amount that a buyer decides to put down can vary, every agent may have there own specific way of determining what that amount should be. The deposit is held in escrow and must get to the escrow company within a specific amount of time. It is held with the escrow company and will be applied to closing costs at the time of settlement. It is important to note that a buyer can lose their deposit if they fail to meet the terms of the contract.
CONTINGENCIES
Contingencies limit the seller's and buyer's responsibility to fulfill the contract and seal the deal. Real Estate contracts have specific clauses which allow renegotiation in limited areas. It is important for buyer's and seller's to fully read and understand their contracts. , Being that there are numerous of inspections that may need to be done, you can include a contingency upon a home, roof, chimney, etc...inspection. If you are moving out of your current home and it hasn't sold yet, you can make a contingency upon the sell of your current home (although, this is not a popular move...sellers may be willing to accept it). Now that there are many Short Sales and Bank Owned properties...these properties normally come in as-is conditions and even if you opt to pay for the home inspection and put a contingency in the contract for that. The home inspection is only for your self-knowledge. It is a good idea to do though because often lender's are not willing to loan money to a buyer with a home in need of major repairs that will affect the value of the home.
The advantage of contingencies is knowing what you are purchasing on your terms, they can help the buyer get either the repairs fixed or a lower sales price. Contingencies are not only for buyer's, a seller could counter and decide to include a contingency of their own.
Once you are ready to make the offer in writing; Along with the purchase price, you want to include any concessions (amount of money that you'd like the seller to help pay for, like closing costs or repairs, etc...), conveyances (any personal property that you would like to include in the sale. for example, a refrigerator or washer and dryer), earnest money, contingencies, acceptance (amount of time the seller has to accept the offer).
Rosemary Brooks, my partner and mother, wrote a blog Buyers do not...out negotiate. It gives some good insight on how buyers even with the best intentions can out negotiate there way from the house of their dreams. My mother and I, work together known as the Mother and Daughter Realty Team. We try our best to give the best advice to get you into the home you want on your terms.
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