Better Homes and Gardens Real Estate Life

Tag: Offer Tips

  • What to Know Before Making an Offer on a Home

    A smart course of action before making an initial offer is to get to know the home of interest intimately. After all, you will be making one of your biggest commitments in your lifetime with the purchase of your new home. Remember, an offer is a starting point that, ideally will lead to a binding purchase contract. But, until both buyer and seller have agreed to all the terms, including a final price, each party has an opportunity to abandon of the deal.

    It is best to learn as much as you possibly can about a property before you submit a written offer. It is in your best interest to ask numerous questions, starting with your realtor. Other questions you will need to scope out on your own through your due diligence. Home inspections can provide information about inquiries you may have about the structure of a home. Most answers will be straight forward while others will be based on your personal perceptions. The answers you receive will help determine whether you are ready to make that next step of signing an offer.

    Forming an Opinion:

    The process of choosing your perfect home starts with knowing your financial limitations and seeking out properties within your budget range. It is also important to have a well-defined list of “must haves” and “unacceptable” criteria that will impact your enthusiasm towards a property.

    As you classify the various homes you view, consider the following:

    Price: Depending on market conditions, the length of time a house is on the market might indicate a problem or a sign that the seller is ready to make a deal.

    • Is the asking price reasonable?
      • What are the prices of comparable properties?
      • How long has the property been on the market?
    • How many days has it been on the market?

    Condition of the Property:

    • Does the price reflect the property’s condition?
    • Are you willing to make needed repairs?
    • If the property has been updated, are the changes and the quality acceptable?
    • Does the property appear clean, neat and well-kept?
    • Are the floor plan, size and features appropriate for your needs?
    • Revisit the home at different times of day if possible.

    Assess the Value: When you drive around do you get a positive feeling about the quality of life in the area?

    • Are there parks and recreational areas?
    • Is the age of the area apparent?
    • What are your neighborhood 1st impressions?

    Location, Amenities, Infrastructure: Visiting City Hall, County Offices or the Chamber of Commerce provides valuable insight about your potential neighborhood

    • Is there public transportation?
    • How is local traffic? How close are you to major freeways?
    • Are there convenient stores? Additional shopping?
    • Are medical facilities accessible?
    • Planned Developments or Zoning Changes expected?
    • Are taxes reasonable?

    Know the Details: Learn important details about the home and its condition.

    • Know about the heating, cooling, plumbing and electrical systems.
    • Has the roof been repaired or the appliances replaced, and if so, when?
    • Will any warranties transfer to new owners?
    • Has a home inspection been completed and can you gain access to it?

    The written offer is an exciting “next step” in the process of buying a home. But, it is the information you gained during the “getting to know you” phase that will remain with you long after you become an owner.

  • Understanding the Importance of an Offer to Purchase Contract

    Purchasing real estate is an exciting and rewarding process, but it is not as simple as purchasing a bag of groceries. There are contracts involved, transfer of title, loans, financing, taxes, and much more involved than the average sale and purchase of goods. A real estate professional will be necessary to help guide you through the process when purchasing real estate.

    The first challenge one encounters when purchasing real estate is determining your buying power and the property that is best for you. It is essential to know your buying power, also known as how much you can afford to purchase in either cash or through financing. Viewing numerous properties and understanding buyer’s wants and needs will narrow your search to select the best property for you. You will want to determine these challenges prior to signing an offer to purchase contract so that you will not encounter future issues with the contract.

    There are some factors that go into preparing an offer to purchase contract:

    The objective of an offer to purchase contract is to reach an acceptable agreement between the buyer and seller so that the agreement is signed with the intention of moving the deal forward. A real estate professional skilled in explaining and drafting an offer agreement will be present to provide any explanations needed so that they are both in agreement about the terms of this written contract.

    The identification of the property and price are the two most important features of the agreement. The below information is found in records stored at your local property appraiser’s office or tax records office.

    • The exact address of the property
    • The property’s legal description
    • The owner of the record or title
    • The price, including the down payment
    • Any milestone payments as well

    The main terms of the deal are included, but not limited to, the time frame of the deal. For example, the time of the inspection, appraisal, and other time sensitive items should be outlined to provide the buyer and seller have an understanding as to the process of the real estate transaction. In many cases, these facts are more important than the actual purchase price. Many sellers have specific qualifications or contingencies a buyer must meet when presenting an offer.

    The times for an offer and acceptance are also a crucial part to the initial agreement. When presenting an offer to purchase, this is not an open-ended offer as it will expire. A buyer will typically place a reasonable time connected to the offer in order motivate the seller to agree and to control their offer liability in the event all the terms are accepted.

    An offer to purchase is an important contract that must be taken seriously. It is a contract between you and the seller that provides the steps and stipulations that will allow you to move forward and shortly, purchase your new home.

  • What Is a Contingency Offer?

    Whether you are a first time home buyer or a seasoned professional, making an offer on a home can be a complicated process. Along with deciding on the price you want to offer for the home, your home offer may also require you to make other important decisions such as whether or not to include contingencies. In order to make this decision, you need to understand what a contingency offer is.

    A traditional offer to purchase a home includes the price you are willing to pay for the property, a date of closing and a date of possession, and other terms for a purchase agreement.

    Sometimes, making an offer on a home is “contingent”, or dependent, on one or more conditions that must be fulfilled before the buyer is willing to proceed with the purchase. In theory, a contingency offer can include almost any condition; however, there are some common conditions that buyers more commonly include in an offer to purchase, such as:

    • Financing contingency –this is a very common condition included by a buyer when making an offer on a home. If the buyer is depending on financing to complete the purchase, a financing contingency is included in the home offer. Usually, the buyer is required to make a good faith effort to secure financing within a specified period of time. Often, the condition is further contingent on the buyer obtaining financing at, or below, a specified interest rate.
    • Inspection contingency – This makes the purchase conditioned on a satisfactory inspection of the property. Most inspection contingencies allow the buyer to back out if a significant problem is encountered during the inspection. Alternatively, the buyer may request the seller to repair the problem or the buyer may choose to accept the property “as is” if the problems discovered during the inspection are insignificant or not costly.
    • Sale of home (Home Sale) contingency – if the buyer currently owns a home, and cannot afford two mortgages, the buyer may make the offer contingent upon the sale of his or her current home. As with a financing contingency, this condition typically gives the buyer a specified period of time within which to complete the sale of his or her current home.
    • Repairs contingency – a buyer may notice problems with the property prior to receiving an inspection report. In this case, the buyer may condition the purchase on repairing the problems.
    • Appraisal contingency – a lender usually determines the maximum amount available to a borrower based on the current market value of the property that will secure the loan. Because market conditions can change rapidly, a buyer and seller could agree on a sales price that is considerably higher than the actual market value in the eyes of the lender. For this reason, an appraisal contingency may be included in a home offer to allow the buyer a way out if the home appraises for less than the sales price agreed upon by the parties.

    As is the case in a traditional offer to purchase, a contingency offer may be accepted as is, rejected in its entirety, or the seller may submit a counter-offer. For example, the seller may accept a financing contingency but wish to allow the buyer less time to secure financing, so on and so forth.

    If making an offer on a home is in your future, be sure to consult with your Better Homes and Gardens real estate agent about whether you should make a contingency offer and, if so, what conditions you should include in the home offer.

  • Tips to Consider When Making an Offer on a Short Sale Property

    Short sales are extremely popular, especially with buyers seeking to purchase property solely based on a reduced price. Price is a huge consideration when purchasing a home and purchasing one at a below market value can provide tremendous savings. As a result, there is a lot of competition when seeking out a short sale. The process of purchasing a short sale is not easy as not only is it competitive to find one, the process to close requires several factors. If you are purchasing a short sale property, consider the following:

    A short sale is when a property is priced lower than the financing owed on the property and the lien holder, typically a bank, is willing to allow the sale to occur despite the price deficit. The buyer receives the property at a favorable price and either the seller handles the deficit, or the bank forgives the debt.

    Approved or Unapproved. Many times a property is listed at a favorable price, and the description will note whether the property is a short sale. It is important to pay attention to if the property is an approved or unapproved property.

    • An approved short sale means that the bank has agreed to allow a sale to occur at the lower price.
    • Many times if a property is unapproved offers are contingent upon the approval of the bank. Offers placed on a short sale that have not been approved can be a big waste of time.

    Patience. A short sale requires patience. Numerous variables are at play when purchasing a short sale, and the process can be time-consuming. Once a solid offer is presented, it may also take longer than usual to have it accepted. Not only must the seller accept the offer, the lienholder must also approve it to facilitate the sale. Knowing that there are several steps involved in the process is essential. At the same time, with a little patience you may end up with a great property and at a terrific price.

    “Cash is King.” In a short sale situation, the lenders are taking a loss on the original loan. It is more favorable in this situation not to have too many variables to be involved. If you were to offer cash, it would in most cases, gain the attention of the lender. Another benefit of offering cash is it allows for less time needed to close the deal. Most importantly, in the event of a short sale, cash offers to move properties much faster.

    These tips will prove useful when considering the purchase of a short sale property. It is always best to anticipate what to expect and how the process will unfold when working with short sales properties. Working with a real estate professional is always in your best benefit as they will guide you every step of the way to acquire short sale real estate.