How to Buy a House
Find out as much as you can about the home buying process and the specific property in which you have interest- how long has the home has been on the market, are there other interested buyers, are there other offers on the table currently, and is there a specific day the sellers will review the offers.
Your agent should send you the last six months of recent sales data to review and compare. These “comps” tell about the most recent market and what current buyers/sellers have agreed on for a sale price. Compare the comps with the subject property; square feet, renovations of kitchen, bathrooms, age of systems (HVAC, water heater, septic) roof, windows, and landscaping. The location in the area or neighborhood also will be a factor in determining the property value, a home on a side street or cul-de-sac may be more appealing than one on a busy road or next to commercial space.
Also review the pending sales (homes under contract, but not yet settled) and see if your agent can uncover some information about those transactions. You want to ask about the number of offers they received or a ballpark selling price. The pending sales represent the most up-to-date market statistics. Your agent’s opinion of the home’s value and any other relevant factors can all factor into your offer price.
Call your lender
Your lender should be one of your first contacts in the home buying process to make sure you are are looking in the right price range. Let her know you plan to make an offer on the home. Not only will you need a pre-approval letter with your offer, but you will want an update on mortgage rates and products, since these change daily.
From the time you applied for pre-approval until now, there could have been a massive shift in rates or a new product that could benefit you. For all you know, you can afford more, or that bonus you received last month could mean a higher down payment and qualifying for a better product.
Make sure you know and are comfortable with the amount of cash needed to close.
In addition to price and financing, you will need to decide on terms including the settlement date, the settlement company, how much of a earnest money deposit you will put down and any contingencies you will include in the offer to purchase/contract.
Contingencies are the details that have to be satisfied before you and the seller are locked into the commitment to transfer of the property ownership. Each contingency gives you an opportunity to do and inspections, ask for/negotiate repairs, secure financing or void the contract- the seller can also void the contract in some cases. You will need to decide which, if any, contingencies you will include: home inspection, radon inspection, appraisal, financing, home sale, and others.
How long many days will you take for your inspections? Do you want to close quickly or take a longer time? Will you need an appraisal and loan contingency? How long should that be?
The terms of your offer can make or break your deal. If the seller wants a quick close, and you can do it, give it to them. If you are competing with a cash offer, make your offer as stream-lined and with the least amount of contingencies you are comfortable with.
Make the offer!
Once you decide to move forward, do it. Waiting to see what happens in terms of a price reduction or if anyone else if interested is only working against your own best interest. Offer less if you perceive the property to be over- priced instead of waiting for a reduction and certainly don’t wait for the competition.
There are 4 components to an offer;
the contract – with offer price, contingencies, settlement company, financing arrangements and settlement date.
lender letter -stating you are qualified for the purchase price
financial information sheet – a document supplied by your agent detailing your financial situation- and ability to purchase (brag sheet).
earnest money deposit check – customarily 2%-3% of the purchase price- (although it can be more or less).
While you should give your best effort for the home you want, there will be other homes if that one gets away. Make certain you are immediately notified when a home comes on the market in your preferred neighborhoods by having your agent set up an automatic email from the MRIS for you, so you don’t miss anything. Have faith that another great home will come along in the future and- and be ready!
Evers & Co.