Better Homes and Gardens Real Estate Life

Category: Tips for Buyers & Sellers

  • Dealing with Clutter in a Sustainable Way Before an Open House

    When putting your house on the market for resale, it’s not enough to dust, vacuum, tidy, and run the mop over the floors. You’re going to need to do a thorough deep clean starting at the top and ending up in the basement and garage. You will also need to declutter your house, and you should begin that process a couple of weeks before the deep cleaning starts in earnest.

    The fast way to declutter is to just rent a dumpster. But it’s not environmentally friendly, and it’s a shame to let perfectly good stuff go to the dump when someone could use it. Here are some tips on how to approach house decluttering in a sustainable way.

    Start with E-waste

    Gather every electronic device, cord, monitor, television, tablet, printer, used printer cartridge and gaming console in the house, and test everything you’ve got. Make two piles of potential discards: the ones that still work can be donated to local thrift or charity shops or given away on freecycle sites. The broken devices will need to be disposed of in an environmentally friendly way. Your local library or city hall should be able to let you know where you can dispose of e-waste so it doesn’t clog landfills and leach toxic materials into the ground.

    Move on to Sporting Equipment

    Most communities have annual sporting goods trade-in events. If you have perfectly good skis, skates, and sleds you no longer use or that you’ve already replaced, now is the time to let the sentimental “keeps” go. That goes for camping equipment too. If you can’t find a sporting goods store that takes trade-ins, donate to a local boys and girls club or to a thrift store.

    Tackle Closets and Dressers

    There are lots of different ways to handle weeding out your wardrobe. Some advocate getting rid of any clothing you haven’t worn in the last year.  A better approach is to empty out the closet, put back the clothes you wear on a regular basis, and actually try on the clothes you haven’t worn in a while. Anything that doesn’t fit, doesn’t flatter, is in disrepair, or is so hideously dated, can be discarded. 

    If you’re planning to have a yard sale, once you’ve gathered all your clutter in one place, you could have a clothing rack as part of the sale. Just don’t expect to get much for old clothing; it’s rare for anything but coats to sell for more than $5 at a yard sale. It’s probably better to just donate to a thrift store or, depending on the items, to a charity that helps the unemployed trying to get back into the workforce by outfitting them with interview clothes.

    Focus on the Arts

    During one of your decluttering sessions, take a look at your entire collection of books, DVDs, CDs, and albums. A good rule of thumb with books is to only keep the ones you plan to reread (unless they’re reference books, of course) and the ones that will be hard to replace. Are you really likely to reread The Scarlet Letter? If not, get rid of it. It’s not likely to go out of print any time soon. And if it doesn’t, every library in the country has a copy of it.

    You can donate books to thrift stores, sell them to used bookstores, or, in some cases, donate them to your local library for resale. They’ll use the funds to buy more books and you’ll have space on your shelves again.

    Part of the decluttering process has to include re-evaluating your framed photos and artwork. Plan to pack away and store the more personal and edgy items while your home is on the market, and consider digitizing old family photos if you don’t already have albums organized. If someone else in your family has taken on the role of family historian, now might be the time to pass on the archival photos to someone who will actually do something with them rather than just leave them in a box that’s only looked at when you move.

    Tackle the Kitchen

    Clear off all your counters and the tabletop and start at the top cupboard. Take everything out and only replace the items that work or are in good condition. Now is the time to get rid of mugs with chips, toasters with burnt-out elements, pots without lids, and electric can openers you never use. This is also the time to stop being sentimental about things you’ve been given but have never liked. Someone else may consider them a treasure, but if they’ve been hidden away in your top cupboard for a decade, you don’t need them.

  • Seven Reasons Getting Rid of Clutter Helps a House Sell Faster

    Whether you bought a starter home or what you hoped would be a forever home, circumstances change. One thing that doesn’t change though, is the inevitable expansion that occurs when you become a homeowner. As time goes on, you acquire tools that need to be used just once or twice a year, like step ladders and extension ladders, lawn mowers, edgers and leaf blowers. When it’s time to sell, you may find you’ve expanded just a bit too much. Getting rid of clutter is the first thing you need to do when you’re thinking of putting your home on the market, and sadly, unless you move frequently, there are very few people who don’t accumulate more than they should.

    Here are seven reasons you need to get rid of that clutter to ensure a quick home sale.

    Minimalistic spacious house interior with two floors
    Minimalistic spacious house interior with two floors

    1. It’s all about imagined lives

    Clutter makes it hard to think. You may not think of your collection of exotic masks from your foreign travels as clutter. But let’s face it, we don’t all like the same things, and if your home is bursting with small objects, buyers can’t imagine themselves in your space. You have to make room for them and their imagined lives in what might soon be their home rather than yours. Store the highly personal collections during the selling process so buyers can see the space as theirs, and they’ll be more likely to make an immediate offer.

    2. Help the potential buyer maintain focus

    Extra seating, family photos and bone china tea cup collections are all distractions. You don’t want potential buyers to become so intrigued (or puzzled) by the things you’ve collected—none of which they’ll be purchasing—that they don’t actually register the house itself. You want them to look at the space, appreciate its best features and become convinced of its potential for their family.

    Built in closet with warderobe in home interior
    Built in closet with warderobe in home interior

    3. Create the illusion of space to entice buyers

    By getting rid of extra seating, paring down the clothes in your closets and weeding out everything in the pantry that’s past its best-before date, you create the illusion of more space, which is always a good thing when trying to sell a home. After all, empty rooms always look bigger than rooms filled with furniture.

    Be strategic, though, and don’t leave yourself with nowhere to sit. Think of your home as wearing its Sunday best rather than sweats and a t-shirt, and if there’s a chair the cat’s clawed, the sun has faded or that needs cleaning or reupholstering, get it out of the house while potential buyers are viewing. There will be plenty of time to kick back and relax in that past-its-prime lounger when you’re moved into your new home.

    4. Well-staged homes photograph better

    While you might get a viewing from a drive-by or after an open house, most potential buyers these days are going to look at your house and its listing online. Good photos make all the difference here, but you’re not going to get them if you haven’t decluttered. Put the family photos away, get all the toys into the toy box, remove the gym equipment that’s migrated from the basement to other living areas and make your real estate agent’s job easier by presenting a home that shows to advantage in both photos and real life.

    white and steel kitchen interior

    5. Maximize kitchen counter space

    Yes, it’s a pain. But even though your family uses the toaster and blender every day, putting them away in cupboards before viewings provides a clean slate and makes potential home buyers think about all the meals they’re going to prepare in their new home.

    If your home’s being shown to first-time home buyers, chances are good they’re looking for more space, particularly an opportunity to expand from a galley kitchen to one that has room for a table and chairs. Help them believe they’re going to be transformed into hosts with the most when they buy your home by giving them the visual space they need.

    6. Don’t borrow trouble

    Cluttered homes make potential buyers uneasy. Viewing someone else’s occupied home is slightly uncomfortable for most people. Clutter is not only a distraction; it makes your home look uncared for. This can make potential buyers start to ask themselves, “if they haven’t taken care of their possessions, what other problems are brewing here?” You could lose an offer if this kind of nebulous doubt sets in.

    7. Let your home show itself

    Let’s face it—you’re selling your home, not the couch and coffee table. By getting rid of clutter and replacing it with neutral but stylish accessories, you lead the buyer’s eye to the features of your home that are its true selling points. That means you’re going to get a quicker sale and a higher price than if you make a potential buyer struggle to see your home’s merits.

  • First Time Home Buyer? Ten Facts Nobody Tells You

    Buying your first home can feel like both the best of times and the worst of times. Here are 10 facts nobody tells you when you’re buying your first home.

    1. Something will go wrong

    No move is ever perfect. Something will get broken or there will be something you’ve forgotten to bring or do. With any luck, the setback will be minor, and you can chalk it up to the old adage, “things happen.”

    2. Some of your conditions might not be met

    One of the least enforceable clauses in offers to purchase is one for cleaning requests. You can stipulate that carpets, refrigerators and ovens be cleaned. However, if they haven’t been, there is often very little that you can do about it.

    If a major repair hasn’t been completed as promised, one of two things will happen: you either won’t take possession of the property on the day you planned or your funds will have to be placed in escrow pending resolution of the issue.

    3. If you don’t have the closing fees, you don’t get your new home

    Legal fees are due on closing, and your funds won’t be released to the seller unless your lawyer is paid. Closing costs usually range from two to five percent of the purchase price, but be sure to verify this information before arriving on closing day. This money is in addition to your down payment.

    4. Good schools increase a home’s value

    You’ll pay more for a house in a good school district. Of course, the good news is you’ll get more for it when you decide to sell. If the home you’re planning to buy is your “forever” home and you don’t have, or plan to have children, this may not matter. Still, it’s something to think about.

    5. Your neighborhood may be about to change drastically

    The municipality may be planning a park, a school, or a playground for your area. Depending on your lifestyle, that can mean profound changes in a short period of time. Check with local administration and the area’s local representative. The first can tell you what the plan is. The latter will have a far better grasp of whether outlined timelines are accurate or not. You can base your decision on the information they provide.

    6. You need to read all the documents yourself

    It’s tempting when you’re paying a lawyer to review HOA or condo documents to simply delegate this task. However, a close reading of the minutes of meetings will teach you a lot about your neighbors-to-be and help you avoid nasty surprises, like planned increases in fees or devolving renovations that used to be the condo board, or HOA’s responsibility to individual owners.

    7. Don’t apply for other credit while mortgage shopping

    Applying for a loan or another credit card may seem like a good idea when you’re about to take the home ownership plunge and know you’re going to need to buy things like garden tools, a gazebo, and a grill. Don’t do it unless absolutely necessary. It can negatively affect not only the amount of your pre-approved mortgage, but it can also mean you don’t get pre-approval. Wait until after you’ve bought your home to apply for more credit.

    8. You’re going to need “earnest” money

    Also known as a deposit, you’ll likely need about $1000 per $100,000 worth of house available when you make an offer. This money is required as a show of good faith and will be held in escrow. You’ll get it back if your offer isn’t accepted, or it may be applied to your down payment. You may forfeit this money, though, if you’re the one who withdraws from the deal.

    9. Your neighbors-to-be may be your best source of information

    Walk around the area you where you want to live. If you see people out gardening or mowing their lawns, talk to them. Strike up a conversation and explain that you’re thinking of buying. Ask receptive individuals what the neighborhood is like, how long they’ve lived there, and how long they’re planning to stay. If you learn that your new home is located next door to some party animals who blast music every single summer evening, you may not enjoy your own backyard, so you may want to reconsider.

    10. Check for rebates you may be entitled to

    You may qualify for first-time homeowner rebates. There may be other municipal, state, or utility-provider rebates available, too. Start investigating early. It may make more sense to invest in attic insulation than an air conditioner if you’re going to get a rebate that covers some or all the cost of the insulation. Some areas offer rebates on newer, more energy-efficient appliances. You won’t know that unless you do your homework.

    A good real estate agent can talk you through the buying process. Now you’re already ahead of the game with these ten facts nobody tells you, and you’ll be able to focus on offer strategy rather than the fundamentals.

  • Discover the Perfect Time for Buying a Vacation Home

    If you’re lucky enough to have reached the time in your life when you can seriously contemplate buying a vacation home, there’s much to be excited about. According to the National Association of Realtors, one in eight homeowners are thinking of buying a second home. While summer may be the time of year you start to think longingly about sun, sea and sand, it may not be the best time to buy a cottage.

    Here are some things to consider when you’re buying a vacation home.

    Peak of season is seldom a good idea

    Avoiding peak seasons makes sense in supply and demand terms. Peak season, whether you have your eye on a Vail ski chalet or a Cape Cod sea shanty, is when the area in which you’re looking is at its finest. Since vacation homes can be sentimental investments, many who’ve inherited them rent them out as additional sources of income so they can hang onto a property. They may be sharing it with siblings or have had to buy them out. They also may be part-time vacation home investment owners who got in early on a new resort but need to ensure 100 percent occupancy during peak season to make their investment pay off.

    Aim for the final weeks of the high season to make your offer or hold off until just after peak season ends. If you’re looking for a summer vacation home, the time between Labor Day and Thanksgiving is the perfect window of opportunity. You’ll still take possession early enough in the year to be able to get a glimpse of what future summers can hold, and you’ll also have a chance to do any needed repairs before winter sets in. Then you can spend the winter planning what you need to do to make the place your own the following summer.

    If you’re looking at a winter vacation home, spring is the best time to make an offer. While diehards may still be renting or occupying their vacation homes, hoping to get one or two more days of spring skiing or boarding in, most will have placed their properties on the market. Just be careful not to leave your offer for too late in the year if the area you’re interested in is remote. Some owners board up their properties for the off season, making it harder to get viewings. Also, don’t forget the power of spring mud. Properties accessible through three seasons may become harder to access during spring thawing and flooding.

    Be sure the time is right

    Before buying a vacation home, you need to think long and hard about a whole host of considerations. First and foremost is whether you will be able to use it enough to make it worthwhile for you financially. Even if you buy a vacation home and plan to rent it out to defray expenses, that means your time there will be limited. While you may love a cottage on a lake in fall, not everyone else does. If you can’t afford to spend the 4th of July at your own cottage, this may not be the time to buy.

    Second, have you considered all the duplicate expenses involved? Whether you want your vacation home to mirror your principal residence in all ways, you can’t escape the fact that you’re going to need two of everything now. Unless, that is, you want to treat every weekend you spend at your vacation home like a camping trip (which may well be the case). You’re not going to want to haul lawn mowers and leaf blowers to the cottage every summer weekend. That goes double for appliances, linens and furniture. You’ll also have a second set of bills for property taxes, insurance, yard maintenance, internet and cleaning costs. In addition, there may be HOA fees, too.

    Third, what are your vacation goals? If you want to visit every continent and are running out of time to tackle Asia and Africa, does a vacation property make sense? If you find you’re drawn to experiential vacations like hiking the Appalachian Trail, swimming with the dolphins or building someone else a home with Habitat for Humanity, a vacation home may be an anchor you don’t need.

    On the other hand, if you know you can afford to invest in a second property and have a long-term plan to use it as a home base while you globetrot in retirement, or if you want your family to have the freedom of the great outdoors while they’re growing up, it might just be time to seize the day.

  • Step 10. Building Wealth through Homeownership

    step 10Buying a home is viewed as a symbol of the “American Dream” for many and provides a sense of security in an often-unstable economy. Many desire this, but are not sure if it is a tangible financial investment that can turn into a profitable venture long-term. Understanding the meaning of wealth can help you make the entire process more reassuring in the long run.

    What is Equity?

    Equity is the amount of home that a person actually owns. This total is not the mortgage amount, but loan balance subtracted from the value of the home. If this number is positive number, congratulations, there is equity in the home and therefore wealth. If the number is a negative number, then the buyer will likely owe if the home is sold and be indebted at the sale.

    Example:

    Home market value    $322,000

    Mortgage Owed          $100,000

    Your Home Equity      $222,000

    If you sold the home at the market value, you would have $222,000.

    This value can fluctuate dependent on the market, but statistically stays within a 10% average, making homeownership a smart choice. Equity is valuable to the consumer because a homeowner can use these untouchable funds later in life to pay for burdens or unforeseen costs such as home improvements, a new home, college or emergencies. This of the home as a savings fund that will not be touched until the transfer of ownership.

    Overall, this is a popular way to increase wealth because the net worth of the family increases over the years. According to the Federal Reserve, the median net worth of a homeowners in 2016 was between $225,000-$230,000. For families that rent, the average net worth was $5,000.

    How Does Equity Grow

    Equity grows with the value of the home, not just the amount paid down by the homeowner. If a home is in the right market, values can increase as the area becomes more desirable, increasing the property value and the equity margin. For example, if a home is appreciating at a rate of 4% per $10,000, this can be leveraged from a $10,000 investment to a $100,000 investment.

    Benefits to Homeowners

    • Forced savings: This is a way to create a steady savings without having the cash in hand to put into a savings account. For buyers who may have a hard time putting money aside for the future, this is a great way to save funds without manually putting the money aside.
    • Value Versus Renting: People who rent have nothing to show for their payments towards a property when they depart a home. This is the downside to renting. Renting is great in the short-term, but provides zero benefits to most Americans when trying to save for wealth.

    When weighing the pros and cons to a home purchase, consider long-term goals. If a goal for the family is to save for future needs, purchasing a home in the right market can make profits that outpace even the stock market. Weigh the options and choose what is best for the family by discussing the decision with lenders, agents and family.

    Build Wealth
    Build Wealth

  • Step 9. Closing on A Home

    Finally, the home stretch of the buying process: Closing! All inspections have been completed and the appraisal has been processed. This means the next steps for the buyers, sellers, agents and lenders is to work with the title company to become clear to close on the property. Closing is the formal process where a seller transfers ownership of the property to the buyers. After this final process, the buyer owns the home outright.

    On average, this process takes 30-45 days, but 60 day closings are not uncommon. The timeframe of this process is dependent on when the buyer wishes to gain possession, when the seller is willing to vacate and if there were any issues during the inspection period.

    Get an Updated Loan Estimate

    During the initial loan attainment, the lender likely provided a loan estimate (LE), which included the mortgage amount, monthly payments, insurance fees, and any additional fees associated with the closing including title insurance and closing fees. Be sure to attain an updated LE halfway through the buying process and compare numbers. Usually, about a week before the closing, the title company will provide a Closing Disclosure (CD) that breaks down the updated fees for the buyer and seller. If there are any questions or discrepancies, now is the time to ask/amend. Remember that a CD:

    • Is Required to be Provided to the Buyer & Seller at Least 3 Days Prior to Closing
    • Includes All Loan Terms, Projected Monthly Payments, Closing Costs & Fees

    Not sure what all the details are on the CD? Use this interactive closing disclosure explainer.

    What Is Title Insurance?

    The term “title” refers to the collected ownership records of a piece of real estate, including the transfer of any property rights, and any loans using the property as collateral. A clear line of title makes you much less vulnerable to ownership claims from other parties and to outstanding debts of previous property owners. This is part of the closing fees and essential to ensure no other person has claim to the property.

    *Note: The title company can be a separate entity from the settlement company, but is often the same organization.

    Where Is the Closing & What Happens?

    A closing typically occurs at a settlement agent’s office, which can be at the title company’s office or executed by a mobile notary as well. Typically, three documents are signed:

    • Deed of Trust: A deed is the records with the local Clerk of Courts of the transaction and the mortgage lien on the property now owned by the buyer.
    • Promissory Note: A legal agreement that the buyer will pay the lender for the mortgage principal, plus the agreed upon interest, as well as where fund are to be sent.
    • Closing Disclosure (CD): The itemized list of all debts and credits to complete the closing that are associated with the contract.

    If documentation of homeowners insurance has not already been provided, it must be provided at closing. If the down payment and funds for closing have yet to be received, this must be provided at closing as well. This is typically 2-5% of the home’s value and can include recording fees, loan origination fees, notary fees title insurance and homeowners insurance.

    Who Attends a Closing?

    • Buyer or Buyer Rep
    • Agents
    • Seller or Seller Rep
    • Lender Rep
    • Closing Agent
    • Notary Public

    Not all are required to attend and the selling party can sign in a different location than the buying party. This is very typical when one of the parties lives in a different state or during a VA loan closing.

    Closing on a Home
    Closing on a Home

  • Step 8. Purchasing Home Insurance

    Now that such a large investment is drawing to a close, it only makes sense to insure the property for both parties: the lender and buyer. Homeowners insurance protects the homeowner and the contents of the home in case of accidents, theft and other disasters. These unforeseen circumstances can cause serious stress to homeowners and force a default on the loan, without this assistance. Knowing that insurance is needed is one thing, but how much insurance is needed and who to choose to have the policy through can be a headache for some buyers. Feel more at ease by using these guidelines to find the ideal policy for this upcoming purchase.

    A home is typically the largest purchase of your life, protect yourself and your family with the proper insurance.

    Shop Around

    Never go with the first policy submitted for review. Shop around and receive numerous policies to compare coverage and rates. Get quotes from a variety of servicers ranging from local to national companies. Ask neighbors and family members who they would suggest for that specific area. One provider may be excellent in one area, while not as strong in others. This is critical when buying in high-risk flood areas.

    When speaking with these providers, be sure to ask qualifying questions of each provider to determine if they are the correct provider.

    • What percentage of possessions does the policy cover for partial and total loss of home?
    • During a disaster, does the company pay out any funds prior to an inspection of the home?
    • Does the policy cover living costs when unable to stay in the home?
    • Does the policy cover full replacement, or a percentage of the contents in the home?
    • What provisions does the policy incur for floods?
    • Does the policy replace the contents of the refrigerator?
    • How many days can the family stay in temporary lodging covered?

  • Step 7. Home Buying Appraisals

    Once under contract, lenders require an appraisal prior to closing. An appraisal is quite different from a home inspection. A home appraisal is an unbiased and professional opinion on how much the home is worth. This is a required step by lenders that ensures their investment. An appraisal determines the worth of the home and ensures the lender is not providing more money than what the home is worth. This works as a guarantee to the lender’s investment into the home in case the property ever went into default by the buyer. The appraisal price ensures that the lender is likely to recoup their money if this were to occur and they were forced to sell the home either as a short sale or foreclosure.

    Once the contract is accepted, an appraisal timeframe is stipulated within the contract. The lender hires an Appraisal Management Company (AMC) to complete the task and provide documentation to the lender. The average cost of an appraisal is $500. This is usually tacked onto the mortgage fees or the total is requested by the lender from the buyer.

    What Influences an Appraisal and the Appraisal Price

    Formulating an appraisal price is determined by numerous factors, some of which do not include the home itself. Here are some of the major factors of a home appraisal:

    • Recent Sales of Similar Properties: Homes within the area that have similar square footage, room/bathroom ratios, lot size and footprints are often used to help determine an average for the area, which is factored into the final number. The more recent sales in an area, the more accurate the number.
    • Current Market Trends: If the market is hot or cold affects the final number of an appraisal as well. If the home where to go on the market and sit, the lender would have to invest more money into the home, costing additional money. Hot markets raise the appraisal price for buyers.
    • Home Amenities: Sure, the home may be 2500 sq. ft. but is it the opposite of an open floor plan? This can be a deterrent to many buyers, meaning the home will not sell as quickly and/or its value drops. Does the home have damaged vinyl? Does it not have a garage? All the home’s amenities can factor into the final number.

    What Happens After the Appraisal?

    Now that the appraisal is complete and the appraised value has been determined by the third-party appraiser, the final negotiations can begin. If the appraisal is above the contract price, the transaction can continue onto closing. If the appraisal is below the contract price, the lender will determine if you can proceed in purchasing the home, or if you’ll have to look for something else. It is possible to negotiate a reduction, but often a tough battle to win. This is where having a good relationship with the lender comes into play.

    Remember, an appraisal is a requirement to close on any property. A lender will not lend money without the completion of an appraisal, even if there is a home inspection.

    What is a Home Appraisal?
    What is a Home Appraisal?

  • Step 6. Property Inspections During the Home Buying Process

    A property inspection is by far one of the most important portions of the home buying process for any potential buyer. Although home inspections are optional, it is suggested that all buyers spend the additional funds to attain a home inspection. Home inspections average between $300-$500 dependent on the area, but can save the homeowner thousands of dollars in the long run. A home inspector can see and notice issues that the average eye may oversee, which alleviates unanticipated home repairs and increased costs. Adding a home inspection to any purchase offer ensures that any issues that may arise are known upfront. This can affect not only the price of the offer, but whether to continue with the contract.

    What Does a Home Inspection Cover?

    American Society of Home Inspections helps set a standard of practice for home inspections throughout the United States. A typical home inspection includes structure standards, roof & attic inspections, basement inspections, HVAC systems checks, plumbing, electrical appliances and garage space checks. The inspectors are considered 3rd party observers and are there to objectively provide information about any home they are ordered to provide an inspection for. It is suggested that the buyer is present for this inspection to be able to ask the home inspector questions regarding any issues or discrepancies seen by the inspector or buyer.

    Inspections can take 7-14 days to occur and be received dependent on the demand in the area. The inspection report will include the following:

    • If the problem is a safety issue, minor repair or major defect
    • What items need replaced and what needs repaired or serviced
    • What items are suitable for use, but should be monitored by the buyer.

    Once the buyer receives the home inspection report, the buyer can counter the seller with required repairs and updates to continue with the current offer. If the seller is unwilling to make these changes, the buyer can opt for a price reduction or choose to leave the contract.

  • Step 5. Real Estate Contract Negotiation

    As a buyer, finding the perfect home in a realistic budget can be one of the most exciting purchases in a lifetime. Now that the desired home has been found, it’s time to create a contract in coordination with the buyer and their agent. A contract, or purchase offer, is a legal transaction that outlines how much you want to pay for the home, all terms and conditions of the purchase, and legal requirements based on state and local laws. Buyers, sellers, agents and the chosen title company are all involved in the coordination of the successful accepted offer.

    You will work with your agent to determine what is an acceptable offer on the property. Trust the agent’s advice as they know the area extensively and can dictate if the asking price for the home is above the value of the home. Hot markets may also require a higher offer price dependent on bidding wars. No matter what your proposed offer is, consider these tips and questions when making an offer on a home.

    • Condition of Home: Does the home need minimal or extensive renovations? Are these renovation projects something you can handle as the buyer? Will you need to hire contractors? These questions should affect the offer to the sellers.
    • Are there HOA limits? There may be numerous renovations that could improve the home, but these must fall within HOA guidelines. This can affect the price presented as some restrictions may increase or decrease the value of the home.
    • Pet Laws: Consider if four-legged friends are accepted in the community or neighborhood desired. Many breeds such as Pit Bulls, Dobermans, Rottweilers and Chows are restricted. Weight limits can also be an issue.

    Research Contract Language

    As with any contract, the language within can be confusing for even the most knowledgeable of buyers. Research and ask your agent to explain standard stipulations in a real estate contract to help make the decision quick for contract offers. For example, in many areas a home inspection must occur within 14 days unless otherwise mentioned in the contract. Who pays for this home inspection is something that can be negotiated and must be mentioned in the offer.

    Speaking with a real estate attorney is another option for those that wish to be 100% sure that an offer is legal, fair and beneficial. Don’t be afraid to ask the agent or real estate lawyer any question. No question is silly when making such a large purchase.

    Set The Price

    The offer price is the final number brought to the seller for the property. As mentioned above, work with the agent to determine a fair price for the home. Is the area a buyer’s market or a seller’s market? Have homes sat on the market for extended periods of time? Will this home require serious renovation? Is the asking price set to the comparable market value for the area?

    Down Payments

    The lender can help determine an acceptable down payment on a home based on how it affects the mortgage payment and what is an attractive escrow amount for the seller. In previous years, a FHA or Conventional loan down payment was as high as 20%. After the market drop, this has decreased significantly. In 2017, the median down payment was 10%. A down payment is not required with VA loans, but VA funding fees will be required at the closing which can either be rolled into the mortgage or paid at closing. The types and requirements of loan options can be confusing, work with your lender to find the option best for you.

    There are also payment assistance programs available that assist homeowners in specific areas, incomes, ethnicities and additional criteria with providing funds for down payments on homes. To determine what the monthly mortgage payment will be based after the down payment, ask the lender to run the numbers, and/or use mortgage calculators to determine the estimated payment per month.

    Earnest Money Deposits (EMDs)

    An Earnest Money Deposit (EMD) is an initial deposit submitted with an offer to show a seller that the buyer is serious about purchasing the home. This can range between $1,000-$10,000 depending on the price of the home and the area. This deposit will be held in escrow by the title company and go towards the closing of the home. Note: If the buyer backs out of the deal, the buyer may lose this deposit. Choose wisely and read the contract carefully.

    An Offer is More Than a Number

    A final number is extremely important to an offer, but other stipulations and instances affect whether an offer is in favor of a buyer or seller. Here are some additional items to consider when providing an offer.

    • Form of Payment: All cash offers are extremely attractive to sellers as this removes lender contingencies and takes the concern away from the seller as to if a buyer can truly qualify for the loan.
    • Clear Title: If a home does not have clear title, outstanding permits and/or code enforcement issues, this can take additional funds to clear. The contract should dictate in the additional terms who will take care of these issues, whether the buyer or seller. Usually buyers ask sellers to fix and provide an asking price that reflects the headache.
    • Outstanding Taxes/Utilities: If taxes or utility bills are outstanding, this should be reflected in the contract as well.
    • Deeds: There are numerous types of deeds including: General Warranty Deeds, Special Warranty Deeds, Deeds Held by Trusts and Deeds Executed by Courts (Foreclosures). Each has their own pros, cons and headaches. Discuss these differences with the agent and lender and adjust the price dependent of the situation.
    • State Specific Clauses: Each state has their own rules regulations to follow for transactions. Discuss these differences with the agent before submitting a final offer.

    Contingencies

    Contingencies are steps or provisions that must be met before the final transaction goes through (they keep the seller and buyer accountable and protected). Each agent (buyer & seller) should hold each other accountable to ensure that these are done in a timely manner as discussed in the contract and by the appropriate party. These seem like easy steps, but can hold up a closing more often than expected.

    Other Contingencies:

    • Financial: Missing Lender Docs
    • Appraisal: Delayed Production of Docs
    • Clear Title: Title Company Misses Information
    • Home Sale: Seller Needs More Time to Vacate, Buyer’s Current Home Sale is Delayed

    Fine Print: Understanding the contract is so important. Be sure to read over all the fine print and discuss with the agent to not miss any discrepancies.