If you stumbled on this blog first go to part one.

Okay per part 2 we have narrowed down the search to 3 of our favorite homes and now we are researching the logistics of the homes. 

What is the status of each home?  Meaning:

Short Sale:  Have they started negotiations with the bank?  Are you the 1st offer in?  How much time is left before foreclosure is assumed? The best advise I can give my clients/buyers on a short sale is be prepared for the long haul.  It can and has taken up to 6 months to close a short sale deal.  If the price is right and you love the home the wait can be worth it, but there are no guarantee's.  You may get to the end and never close.  If you have a lease and you need to be out by a certain time this may not be the best route for you to take.  Now some short sales may have been approved by the bank and they may be to very near the "end", so it may be worth your time and trouble to go for it.............but get the facts.

Bank Owned:Most 1st time home buyers are going the FHA route.  And most bank owned homes are sold "as is" so do your research as much as you can till you can get utilities on.  A FHA loan will require an FHA appraisal.  The FHA appraisal will check for working "everything"!  2 year life left on the roof "no leaks" and no peeling paint.  If they find anything wrong with the home they will require it to be repaired and reinspected prior to close.  If the bank is not willing to make these repairs the loan will not go through.  You may need to research an FHA 203K loan to get the job done.

Regular Sale:  I must say I do not get many of these any more, but excited when I do!  Look at the listing card and see what the seller/owner has agreed to to when it comes to types of financing.  If they have listed FHA they are willing to work with you on any necessary repairs that may be needed.  (however needs to be outlined in a contract/offer - discuss with your agent.

Before putting your offer in, please have your agent run compatibles in the area..........also known as comps.  Look at what like homes have sold for in the area in the last 6 months..........get an idea for your top dollar on the home and make sure you do not go over.  You may love the home and willing to pay full price, but will the house appraise for that amount?  If it will not you will not be able to get the loan.  This is where you use your head and not your heart.  And where our Realtor can keep you focused.

Also before putting an offer on the home have your lender run you a GFE (good faith estimate) in the climate we are in, the numbers may have changed sense the time you had gotten your pre-approval.  Make sure it is ran for the highest amount you will offer to know worse case senario.  Make sure you can afford te mortgage payment and the amount needed to close.

Do you need sellers to contribute to closing cost and pre-paids?  This needs to be on the contract and you need to understand that this gets paid by seller out of their proceeds, so in fact by paying your closing cost and pre-paids they are already taking a reduction in price, most likely 3 percent right off the bat...

You may go back and forth a bit on price and some Realtors will choose to do a "meeting of the minds" before putting the final agreed upon offer on paper.  This is why a Realtor is good to use for this process....it is not personal, it is a business deal.  The sellers who love their home do not want to hear how you are going to spend money changing up the home they have loved for years.......you never know what you might of said to the home owner that may have soured the deal. 

Part 4 next week.............What to do after the offer is excepted.