Steps To Getting That Home Under Contract !I wrote a blog about a year ago, about what to offer for a home when your using comparable homes to base your price on, but I am finding more and more buyers wanting to base their offer on strictly their opinion of what they think the home is worth. Because of this I decided that it was time to write a blog explaining HOW you go about deciding on what your first initial offer on a home should be from the very first step !
Now, again if your buying the home through the listing agent unfortunately they may or may not go thru the trouble of doing this with you. This is again another reason to use a buyers broker, this way you have your own agent to educate you on what a home is really worth ! If the home is overpriced the comps will show you that, and if it is action priced your agent will be able to clue you in so you don't lose the house because of a low offer that is quickly outbid.
- Once you have gone and viewed them home and decide you like it, take the time and go back a 2nd time - look through the house thoroughly to see if there are any items you have questions about, if there are 2 refrigerators than make sure it says there will be 2 in the listing, these are things that if overlooked can cause you stress and anxiety later on in the process. You will get the chance to have a home inspection after you have gotten an accept offer prior to going to contract to look for any issues with the foundation, electrical, plumbing ect.
- Make sure that you have your pre-approval in order and your agent has a copy of it, make sure you also have the funds available that will be needed. Check with your mortgage broker and review what your closing costs will approximately be. The reason why is because IF you are going to need a seller concession (cash advance on your mortgage), you must let that be known to the seller upfront. All of this paperwork will need to be sent out when you present your offer so have it ready for your agent prior to submitting your first offer !
Those first 2 steps should take you only 1-2 days to complete, this is something that is really very simple but I am seeing more and more buyers who are doing these things after they submit an offer and than have to scramble to figure it all out !
- Go and meet with your Buyers Agent, in their office - yes I said in the office, Why ? Because you can't review comparable homes if your leaning on the trunk of a car ! Hopefully you and your agent have been discussing the value of homes in the area, so that you will at least have an idea of what the value is worth.
- IF a home is priced at its fair market value than you can safely offer 7% less than what the listing price is, most homeowners & Realtor will want to not or recommend going less than 3% - 5%.
- IF a home is priced above fair market value than you will want to start around 5% less of what the fair market value is NOT what the listing price is - these homeowner can take sometime to get an accepted offer and sometimes you may have to walk away for a week or 2 and let them sit with no offers in sight and than go back to them.
- IF a home is priced below fair market value than you will not want to put in an offer quickly, and around 3% less than the listing price if you are really not comfortable paying the list price. These homes are priced to sell which means they will more than likely get numerous offers if you go in extremely low it will be easy for another offer to be a better deal for the homeowner.
Notice that all three categories refer back to FAIR MARKET VALUE, you must look at the comparable homes that have sold in detail to figure this out since very rarely will you find a home that is an exact match to the home your looking at !
- Hopefully the process of getting an accepted offer went smoothly, the moment you get a accepted offer you will want to get a home inspector into the home within a day or two of your accepted offer. You should let your attorney know so they are expecting the contracts, can review them and have them in case the home inspection turns up items that need to be addressed & than properly put into the contracts if need be.
- Your offer is accepted, home inspection is complete, and the only thing left to do is sign your name on the dotted line ! Don't leave much time between these things happening remember a homeowner can go with another offer even if yours is accepted, until you sign your name on the dotted line the house is not yours !
Steps 4 & 5 should be completed within about a week, the longer it
takes for you to complete these items you are leaving a window for the
homeowner to receive a better offer !
Next weeks blog will be specifically about what things in a home are worth when you are determining the fair market value of a home that is on the market.