When you're buying a house, your offer marks the beginning of a back-and-forth between you and the seller, typically with a real estate professional advising you both.
The more intentional you are about your offer, the better your chances of making a successful bid. Here are the 10 tips you can follow to save time and money.
1. Know Your Limit
Your agent will assist you in putting together a strong offer. It's a mutually beneficial relationship, so you can trust your agent's advice on price, contingencies, and other contact details. You'll be able to move more swiftly if you work together with your agent.
2. Learn to Speak "Contract"
An offer is essentially a contract. The paperwork and phrasing differ from state to state.
Before you go house hunting, go through some sample offer forms. If you need more information, a real estate attorney may walk you through the documentation so you're familiar with the terminology when you're ready to make an offer with your agent. Offer forms for your state will be available from your agent.
3. Set Your Price
There is always a listing price for a home. Consider it the seller's initial bid in your home purchase negotiations. As the buyer, you will include an offer price in your offer. When a home seller receives a bid, this is the first thing they look at. By using comps (or comparables), your agent can assist you to assess whether the seller's listing price is reasonable.
4. Figure Out Your Down Payment
You must make a down payment on your loan in order to obtain a mortgage. Making a 20% down payment on a conventional loan (as opposed to a government loan) allows borrowers to avoid paying private mortgage insurance (PMI). PMI is a monthly fee that protects the lender in the event of a default by the borrower.
5. Show the Seller You’re Serious: Make a Deposit
The amount you put down as proof to the seller that you're serious about buying the house is known as an EMD (earnest money deposit). The earnest money will be applied to your down payment at closing if the seller accepts your offer. If you try to back out of the arrangement, you may be forced to pay the seller.
6. Review the Contingency Plans
Most real estate contracts include contingencies, which are requirements that must be completed before the transaction can proceed, otherwise, the buyer will be able to withdraw their EMD.
7. Read the Fine Print About the Property
The sales contract contains important details regarding the property, such as the address, tax ID, and utility kinds (public water or private well, gas or electric heating, etc.).
8. Make a Date to Settle
A proposed settlement date must be included in the sales contract you send to the seller, which verifies when the transaction will be completed. When the purchase agreement is signed, the clock starts ticking. If you don't close on time, the party who caused the delay may be required to compensate the other party by paying "penalty interest" at a specified rate.
9. Brace Yourself for a Counteroffer
If you’re making a lowball bid or going up against multiple offers, the seller may decide to make you a counteroffer — a purchase agreement with new terms, such as a higher sales price or fewer contingencies.
If you're planning to buy a house these tips will certainly help you.
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