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Now that you have found a home you would like to buy, you must get the details in writing. The offer is a written proposal spelling out your price and terms regarding your ability to buy the home. You will need to discuss what your choices are in being able to purchase the home and sign a residential purchase agreement so your offer can be formally presented to the seller.
Where To Start When Making An Offer
The offer begins as a written proposal spelling out your stipulations regarding buying the house. For example, if you are asking for the seller to pay any part of the closing costs, that needs to be specified in the offer and agreed to by the seller. Sometimes home buyers have to sell a home before they are able to buy another home, making their offer contingent and the terms and time frames are addressed in the offer and other forms designed to be very specific about any contingencies of sale prior to purchase. Once you have gone in detail with your real estate professional and determined what terms you would like to present the seller regarding choices such as sales price, deposit, closing date, disclosure requirements, inspections and fees, it is time to sign the paperwork.
If it has been a while since you have purchased a home or if you have never purchased a home before, it is important to know that twice a year improvements and revisions are made to update or refine our Real Estate contracts. In 2014 a major revision of the purchase contract was released and now has the ability to address solar panels and other leased items that were not prevalent years ago. In going through the purchase contract with your real estate professional, you will be able to make choices and create a solid offer to be presented and hopefully accepted by the seller.
Forms Signed To Make An Offer Complete
There are a handful of forms to be signed that make up an offer and each one your Real Estate Professional can go over in detail. Some of the basic forms are listed below.
Disclosure Regarding Real Estate Agency – This will spell out the different types of relationships a person may have with a Realtor/Broker. (2 pages)
Possible Representation of More Than One Buyer/Seller – This is a disclosure and consent form to be reviewed regarding Multiple Buyers/Sellers, Dual Agency, and Offers not necessarily confidential. (1 page)
Real Estate Purchase Agreement – This is the terms, conditions, and contingencies in your ability to purchase the home. (10 pages)
Buyer Inspection Advisory – This page does cover the importance of property investigation and is an overview of some of the rights, duties, and privileges you will have to inspect the home during the agreed time frame to do so. (1 page)
A complete offer may also require you to provide the seller your qualifying letter and proof of funds. Once you have submitted your offer, it may be followed by a counteroffer from the seller. The seller’s counteroffer may be countered by the buyer and is common practice as both buyer and seller attempt to negotiate terms that are agreeable to both buyer and seller. Either way, this is just the beginning and once buyer and seller have agreed to terms and signed all forms, the next step will be to open escrow and start fulfilling the terms of your offer.
Knowing The Costs In Buying A Home
There are more costs to buying a home than a down payment. It has been my experience that reviewing an estimate upfront can help you know what to expect as you go through escrow and are not shocked by the amount that is required to close escrow and complete the purchase of your home. Buyers are usually expected to place in escrow a deposit within 3 business days of offer acceptance. This can be anywhere from 1%-5% of the purchase price. That money will come out of your account, be transferred to the escrow account, and distributed accordingly upon closing escrow or canceling escrow.
When buying a home, you may have up front fees such as a home inspection or appraisal. An up front fee is an expense paid out-of-pocket and not through escrow. Some important information to keep in mind about home inspections and appraisals:
Home inspections can vary greatly. Some check the structure of the home, the construction and mechanical systems, and the appliances that may be transferred with the property. Although different inspection companies provide different levels of service, look for and test different things, and may not discover everything that is wrong with a property, obtaining an inspection is the best way to become informed of necessary repairs or problems with the home. Be advised that inspectors do not assess the value of your home. Generally an inspector typically checks the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation, the HVAC system, water source and quality, ceilings, walls, floors, and roof.
In addition to an inspection, the home will undergo an appraisal by a trained professional. An appraisal is an opinion of the property’s value used primarily to protect the lender’s interest. In contrast to home inspections, appraisals are based on past sales data, the location of the home, the size of the lot and the condition of the home. For mortgages insured through the FHA, appraisers must disclose potential problems relating to the physical condition of the home; there are no similar stipulations for non-FHA mortgages.
Once you have had your inspections, appraisal, and reviewed disclosures regarding the home from the seller, you will be able to move one step closer into removing contingencies as defined in your purchase contract, re-negotiate price/terms based on inspection/appraisal reports, and move to the next steps as outlined by your contract getting you closer to the closing table.