Home Buying in Five Steps—Part 3

You can find part one of the series here, and part two here.

Sometimes you find your perfect home on the first day out. Sometimes it takes longer. I’ve shown a client in excess of 100 homes in the past until she found her perfect match. However long it takes is up to you; you’ll know it when you see it.

Of course, some of my clients have asked me to submit offers on homes sight unseen. You read that correctly. We’ve reviewed the online listings and found what appears to be the best home. I’ve done a preview, which means I visit the home personally to confirm that it is indeed a good match. And then I submitted an offer for that client. This is an extreme case usually reserved for clients that are relocating to the area and have only a modicum of time allotted to the transition, and it has been known to happen. In the age of texting, camera phones and smart phones with HD video capability, technology has made the unthinkable a reality. But let’s get back on track and discuss what it actually means to write and submit an offer.

You found the perfect house and you’re ready to submit your offer to purchase. If you have a buyer brokerage agreement in place, your agent will make recommendations of the offer terms as well as represent you during negotiations and through the closing of the transaction. One of the key things your agent will do is research the comparable sales in the area to ensure that you don’t offer too much or too little for the property. Yes, you can offer too little. The current market is rife with competition, so you want to make sure that your offer price is in line with the market as well as a good deal for both sides. Sold comparable properties are used by appraisers, so that’s what your agent will focus on when assisting you with determining a solid offer price to ensure the best chance of your contract being accepted. You could have multiple competing offers on the same property, and in fact, that’s likely. In today’s market, if a property is in reasonably good condition and is priced in line with current market sales prices, the property will typically go under contract quickly. Some properties are being snatched up in mere hours.

Once your agent has helped you determine the correct offer price, the amount of closing costs you will ask the seller to contribute and any other terms such as asking for an appliance to remain with the property or asking for the seller to provide a termite bond or maybe a home warranty, he or she will prepare the offer. This is typically done on a pre-printed form that your agent completes by filling in the blanks with the terms you would like to offer. There are many different styles and formats of real estate sales contracts so we won’t cover them in depth here. Always remember to ask as many questions as you have and make sure you fully understand everything you are agreeing to in the offer. You will be bound to purchase the property once all the terms are agreed to and all contingencies have been met. Also, make sure you receive copies of all documents that you are asked to sign.

Additional terms you might want to include in the offer are the amount of earnest money (good faith funds you place on deposit to demonstrate your serious intention to the seller; note this is different from a down payment), the closing attorney, the date and time of closing that you’re requesting, the length of time for finance and inspection contingencies and many other points of negotiation. The agent will typically submit the offer to the seller’s listing agent or broker. There is usually a time limit for the seller to answer the offer by countering the offer with new terms, rejecting the offer completely or accepting the offer with no change. Once the offer has been accepted by a mutual agreement between the parties, you have what is known as a binding agreement. Typically the clock begins ticking on the day after the date listed on the contract as the binding agreement date and any inspection and finance contingencies periods begin at that time.

In some cases, the offer is submitted through a website such as offers made to HUD and more recently for properties owned by the Federal National Mortgage Association better known as Fannie Mae. Even though the methods differ, the process for arriving at and submitting offers is basically the same. Your real estate professional is there to represent you and guide you through the process.

You can also end up in a situation where the seller receives multiple offers on the property and issues a call for the submission of highest and best offers from each of the submitting buyers. This most often occurs when purchasing real estate owned (REO) property, commonly referred to as a foreclosure. Often the listing agent will provide a one-page form to your agent and you will simply make any changes, if you wish, to the original offer on that form and resubmit. As I pointed out earlier, this situation is occurring frequently in the current environment. I find it’s always best to submit your highest and best offer the first time if you want to have the best possible chance of winning the contract.

Now that you have successfully submitted, negotiated and bound an offer to purchase, the next step is usually the home inspection. Next week we’ll discuss the importance of the home inspection and the reason I recommend that no one complete the purchase a home without first having the home inspected.

iDeal Real Estate Professionals, LLC is owned and operated by Brandon Bramlett and C. Mark Willix and is affiliated with Maximum One Realty Greater Atlanta. For personalized service visit us at www.idealrealestateprofessionals.com. You can also email us at info@idealrealestateprofessionals.com.