WHAT YOU NEED TO KNOW BEFORE MAKING A HOUSE OFFER
What to Look for Before Making Your Offer on Your New Home
THINK ABOUT THE FOLLOWING AS YOU PREPARE YOUR OFFER:
- What is the age and condition of the home?
- Are any repairs needed? What will they cost?
- Are the sellers willing to share any of the expense?
- How long has the property been on the market?
- How active is the market (i.e., is it a buyer’s or seller’s market)?
- Are the sellers anxious to sell?
- Is the property in a particularly desirable location or school system?
- Does the home meet many, most, or all the items on your wish list?
PREPARING THE OFFER
Pay close attention to all the details. Be sure that the offer clearly outlines all the terms and conditions of the sale, including:
- Your name and the seller’s name
- The property’s address
- Any special provisions regarding fixtures, appliances, etc.
- The purchase price being offered (including the deposit put down to bind the offer and the deposit to be paid upon the execution of the Purchase and Sale Agreement)
- Any additional riders and deadline dates
- Any contingencies to which the offer is subject (e.g., pest inspection, securing financing)
PROVISIONS AND CONTINGENCIES
Your first line of defense before you go to contract on your home is to include provisions and contingencies in your offer. This ensures that you and your money are protected in the event that the loan is not approved, and the deal is called off. It is very important that the Purchase and Sale Agreement include a mortgage contingency clause, which states that your decision to buy the home is dependent on your ability to get a mortgage. Such a clause allows you to keep your deposit if your mortgage isn’t approved.
Other contingencies should be based on the home’s condition, pest, radon, and lead paint inspections.
TIMING AND DEADLINES
Get your calendar to figure out how long it will take you to negotiate the offer with the seller, schedule an inspection and receive the report and get approved for a mortgage. These are deadlines that need to be met before setting a closing date. Your deal could fall through if deadlines aren’t met.
NEGOTIATING THE OFFER
After you make your offer, the seller may accept, reject or counter it with a different price. If the seller counter-offers, you can then accept, reject, or counter that. As the negotiation goes on, the house will stay on the market. FlareGlobal’s professional real estate agents are happy to negotiate your home purchase and provide you with more real estate tips about the homebuying process:
DO I NEED AN ATTORNEY?
It’s always best to retain an attorney to protect your interests in the homebuying process. The attorney will also:
- Help you prepare the offer
- Help negotiate the sale price and conditions of the sale
- Draft and/or revise the Purchase and Sale Agreement to protect you and your money
- Assist you with the mortgage process
- Prepare you for the final walk-through of the property
- Attend the closing and represent your interests
- Provide you with a three-day right of review of the Purchase and Sale Agreement
KNOW BEFORE YOU OWE
That’s the warning from the Consumer Financial Protection Bureau since the fall of 2015 when the TILA RESPA Integrated Disclosure (TRID) rule was enacted which requires new mortgage disclosure forms and essentially changed the way real estate transactions are processed and closed.
Find out ways to protect yourself before your transaction closes: Mortgage Bankers Association (www.mba.org)
PURCHASE AND SALE AGREEMENT
It’s not over yet! After negotiations are settled and your offer is accepted, a Purchase and Sale Agreement is written up by the broker. This document spells out the agreement in specific detail. Because it’s a legally binding contract, have your attorney review it before you sign it.
The closing date and occupancy date should also be indicated.