Buying

Making an Offer

Making an offer to purchase a home  has its own set of factors. Rely on a good agent's experience and knowledge to make a successful home buying offer.

Once you've found your ideal house, it's time to get started with the financial and contractual side of the purchase. Let your agent guide you through this process. Purchase contracts vary in length and terms from state to state, and sometimes within a state.

Multiple offers on the same home are not uncommon, so you may only get one chance to make an offer that the seller will consider. That's why it's important to think carefully about your strategy. In most cases it is better to have your real estate professional present the offer. If you have any personal interaction with the homeowner, avoid sharing any information about your move, your current housing status, financial status or your feelings about their property - positive or negative. This could work against you in future negotiations.  You and the seller have different goals, so it's important to consult with your agent.

How Much?

Your agent can help you find out what other homes have sold for in the area, and how much money you might have to put into repairs or renovations. These considerations should be a factor along with the amount you're comfortable spending.

In addition to sale prices of other comparable homes, there are several ways you can come up with a winning bid. For example:

  • The condition of the house. Is the home in move-in condition, in need of paint and other cosmetic improvements, or a fixer-upper that needs real work?
  • The market. If you are in a buyer's market - where there are more homes for sale than there are people to buy them - prices are probably stable or falling. If you are in a seller's market - where there are more buyers looking for homes than there are homes for sale - prices are probably moving upward.
  • Your ceiling. If you have a credit pre-approval, you know how much you can borrow for your home purchase. Of course, you may not be comfortable paying as much as you've been approved to borrow, so think carefully about your financial situation before making an offer.

Next, decide how much you are willing to pay for a home. Remember, the advertised price of a house is just a starting point - it may take quite a bit of negotiating to arrive at a final cost.

Lease Options

Looking to buy home through a lease option? Learn about lease options here, or contact an agent for complete support.

A lease option is an arrangement between the buyer and the seller to purchase a house after renting it for a specific period of time. A portion of the rent would be applied toward the purchase if the option is exercised. This is referred to as rent credit. Most institutional lenders will accept rent credit as part of the down payment, if rental payments exceed the market rent and if a valid lease-purchase agreement is in effect. A copy of the valid lease-purchase agreement must be attached to the loan application. Read any lease option arrangement carefully for details about transferring the option and other important concerns.

All Cash

Though most buyers don't buy a home with all cash, anyone considering such a move may be wondering how it's done. Because all cash buyers sidestep the time-consuming loan qualification process, the deal can close very quickly. The primary advantage of buying a home with cash is completely avoiding mortgage interest. Buyers also save money that would be spent on loan origination fees, required appraisal, some closing costs and various other charges imposed by the lender.

Home Inspections

You've made an offer, and reviewed all the documents the seller has provided regarding the condition of the home. But, one important step before you finalize your real estate offer could help you avoid costly home buying mistakes. We have contact information for several home inspectors here on our site. Hire a professional home inspector to give the house a standard inspection that includes:

  • Room-by-room review
  • Exterior home components
  • Electrical systems
  • Foundation and structural components - both interior and exterior
  • Heating/air conditioning systems
  • Plumbing systems
  • Attic/basement/crawl spaces

Once you have arranged for a home inspection, plan to accompany the inspector for the entire procedure. You have the right to be there, and leading home inspection companies will encourage your presence. It helps you to better understand the findings in the report and will reduce post-closing surprises. Don't forget your list of questions and items of concern.

A thorough home inspection covers more than 1,000 items, everything from foundation to roof, and takes two to three hours depending on the size and age of the property. The report should reflect the condition of about 400 items. A typical inspection can range from $300-$600

Some common items a home inspection could uncover are:

  • Maintenance problems such as rotting decks, paint chips, water damaged ceilings, etc.
  • Electrical problems (even faulty fuses can lead to bigger difficulties in the future)
  • Drainage problems, which could include water intrusions below the home
  • Roof leaks and defects from aging
  • Poor ventilation, especially in an attic; this is the time to assure that all vents are clean and working properly
  • Excess air leakage due to poor weather stripping and subpar caulking around fixtures
  • Failed window seals, which are routinely found with dual pane windows
  • Environmental contamination caused by asbestos, mold, formaldehyde, lead paint, radon, soil contamination and/or water contamination
  • Faulty lines in water heaters, overflow piping and/or hazardous flue conditions
  • Structural damage caused by water seepage into the foundation, floor joists, and door headers should be discovered at the source, and can be easily identified with a home inspection.

Homeowners' Insurance

Protecting your new home with insurance is a must. How well you do that depends on the details of your policy. And while you are not required by law to have homeowners' insurance, mortgage lenders require that you do.

A standard policy will suffice in most instances. It protects against several natural disasters and catastrophic events. However, it will not guard against earthquakes, floods, war and nuclear accidents. The policy can be expanded to include these disasters as well as coverage for such things as workers' compensation. In fact, the lender may require that you purchase flood or earthquake insurance if the house is in a flood zone or a region susceptible to earthquakes.

You can also cover the depreciated value of personal property, such as televisions and furniture, by purchasing a replacement-cost endorsement. This is an extension of coverage that can enable you to replace the item with one of comparable material and quality.

Timeline and Paperwork

Closing can also be referred to as settlement or escrow. Your agent will guide you through the closing process.

Ownership of the home is officially transferred from the seller at the closing meeting. Most of the people involved with the purchase of your home will attend your loan closing.

In advance, a title company is usually hired to conduct a search for any recorded documents that affect the deed to the property. Examples include easements, liens, tax assessments, covenants, conditions and restrictions, and homeowner association bylaws. The buyer and lender must approve the preliminary title report prior to closing.

Once the conditions of sale have been met and the preliminary title report has been approved, all parties will agree to sign closing documents. The preliminary title report then becomes the final title report, on which any applicable title insurance is based.

If everyone agrees that the papers are in order, the buyer submits payment to cover the closing. If the lender will be paying your annual property taxes and homeowners' insurance for you, a new escrow account (or reserve) is established at this point. After the documents have been signed, notarized copies will be forwarded to the lender, funds will be released, and the sale will be recorded at the local recorder's office. This legal transfer of the property may take a few days. It is at the point of deed recordation that you become the official owner of the home.