When you have finally found the home you want, you can hardly wait to make it your own. It’s such an exciting time. The housing market today moves quickly so you’ll want to submit your offer as soon as possible. Ideally you’ll want to submit your offer within a few hours of touring the home and deciding it’s the right home for you.
Before writing up the offer there are a few things to consider:
1. What price do you want to offer for the home? Based on the information I provide you with comparable sales for the area and the sale to list price for the neighborhood, you’ll have a good idea if the home is priced right, above or below market value. Unless there is good reason, low-ball offers will only offend the seller. So, when making your offer you want your offer price to reflect the true market value of the home without overpaying for it.
2. Decide your walk away price now! While you want the home at the lowest price possible, the seller wants the highest price possible. Sellers generally do not accept the first offer you submit but instead will counter it to begin negotiations. Before you even submit an offer, you want to decide the top price you’re willing to pay for the home. Deciding this now will keep your emotions in check and prevent you from making a decision you might regret later.
3. Earnest Money. Earnest money is not mandatory; but it does show good faith and is a way of standing out from other buyers. Most sellers will require some amount of earnest money, anywhere from $250-$1,000 depending on the price of the home. If you agree to offer earnest money, then it usually gets deposited with the title company and is held by them until closing. The money is then applied to your down payment or closing costs, as long as you follow through and close the deal. Otherwise, you could risk losing the money. The earnest money is typically collected within 1-2 days of the seller’s acceptance of your offer, or after the home inspection period. You’ll want to decide if you want to offer earnest money and if so how much.
4. Closing Cost Credits. Both you and the seller will have you own closing costs to pay. Depending on market conditions, the type of financing you’re getting, and other factors, we may be able to ask the seller to give you a credit towards your closing costs. You should have this information before you even begin looking at homes. But if not, be sure to ask your lender if your loan will allow a credit and an approximate amount you should ask the seller to credit you.
5. Home Warranty. These days most sellers offer you a one-year home warranty as part of the deal. If one is not being offered, then you’ll want to decide if you want one. A home warranty costs the seller between $500-$750 depending on items covered and size of the home.
6. Contingencies. Sellers prefer clean offers…those with very few or no contingencies. However, almost every offer has some contingencies (appraisal, financing, etc.). Here are a few other considerations we’ll want to discuss further and include in your offer, if applicable.
- Appraisal Contingency – what are your plans if the home doesn’t appraise for the purchase price?
- Home Inspection Contingency – it is not mandatory, but you should ALWAYS have inspections!
- Home Sale Contingency – do you need to sell a home before you buy one?
- Financing Contingency – are you waiting on that gift letter from a relative for the down payment? Are you pulling money from your 401-K or IRA account and need a certain amount of time to get it?
7. Pick a closing date. Home loans typically take 45-60 days from the date the seller accepts your offer and all parties have signed the contract, to the date of closing. Be sure to stay in contact with your lender regularly so deadlines are met and you close on time. Extensions are permitted if all parties agree, but you might run the risk of losing the home and/or money by requesting one.
After the Offer is Written
After we’ve discussed the above items, I’ll write up the offer for you to sign. After you sign, I’ll submit it to the seller’s agent and then we wait. Sellers are typically given 24 hours to respond, sometimes less depending on the circumstances and market. The seller can accept the offer as written, reject it, or counter it. Most sellers will counter.
Once you and the seller have come to an agreement and everyone has signed, you’re in contract! From this point on, I’ll guide you through the process of removing any conditions and contingencies so you can close the deal.
You get the keys to your new home!
Have questions? Call 614-208-9794 or email email@example.com. I’ll help you buy sell love Columbus.