Step 3 Home Found
-The Offer-
Once you have selected a suitable home, the next step is to make an offer. We suggest that before making the offer, that you are absolutely sure that the home you have selected is truly the one you want to purchase. If the offer is accepted it will become an official and binding contract. If it is not accepted, and only changes are made, all you have is just a counteroffer.
Prior to making an offer, we must make sure the offer is reasonable. The offer price is contingent upon many factors such as, how long it has been on the market, the home's current condition, any repairs that must be made, and the neighborhood where the property is located. To ensure that you get the best price and home for your money, a Comparative Market Analysis will be performed. With the right Realtor(, the offer can be properly negotiated and structured professionally to ensure that your offer will be acceptable to the seller - beating your competition to “the dream.”
-The Contract-
As stated earlier, when the buyer or seller accepts an offer, a legal and binding contract is created. The contract outlines all the terms, conditions and stipulations that are negotiated between both the buyer(s) and seller(s). A contract is enforceable by law and can be held as evidence in any court. A legal contact must have both the signatures of the Buyer(s) and Seller(s) before it is considered a binding Agreement. Verbal offers are not practical and will not be accepted.
-Earnest Money-
After you have made an offer, and it is accepted by the seller and all other procedures have been taken care of, you will now write a check or cashiers check (estimated between 500-1,000 dollars) as Earnest Money. The earnest money shows the seller that you are serious about buying their home.
The Earnest money is not a fee, but is applied toward your closing costs. However, if you change your mind about purchasing the selected home, and this decision isn't based upon a financial contingency clause contained within the contract, you will lose your Earnest Money. This is called collateral damage. Important note: make sure you have all agreements made between you & the seller in writing.
SECTION: 3-A
-Appraisal-
Since the Lender will have ownership in the property, an appraisal will be ordered to protect their invested interest. Lenders want to make sure they aren't lending you money on a property that isn't worth its value. The Cost to order an appraisal varies from Lender to Lender. For price ranges see Financial Review.
-CMA-
To ensure you don't pay more than the fair market value of a home, we will perform what it is called a Comparative Market Analysis. Performing a CMA allows us to see what other home buyers have been willing to pay for homes that are similar to the one you are considering purchasing in a particular community or geographical locale. If the CMA is performed correctly, it could literally save you hundreds, or perhaps even thousands of dollars. Purchasers tend to lose money when their agent neglects to perform a CMA before submitting an offer on their behalf. The main purpose of performing the CMA is to set the parameters of the offering price.
Important Note: Even though these two are similar in design, Appraisals and CMA's aren't the same. An appraisal tells what your home is worth, and what the dollar amount Lenders are willing to lend you. A CMA shows only what other buyers have been willing to pay for homes that are similar in a geographical area.
SECTION: 3-B
-Home Inspection-
It is very important to make sure that your home is fully inspected. An Inspector will determine if there is any structural damage, faulty wiring, busted plumbing pipes, mold, mildew, and exterior damage that would endanger or prevent you from living in the property or selling it in the future. Getting an inspection on your home will cut down on these risks.
PROS: FHA requires you to get a home Inspection for your protection.
CON: Optional in some cases and can be waived.
Regardless of the type of financing you are approved for, to ensure your safety we strongly recommend that you get a Home Inspection.
-Termite Inspection-
Very Important! Before Lenders will lend you the money to purchase a home, you will have to obtain a termite clearance letter first. The seller will provide this valuable document to you. A termite clearance letter states, at the time of Inspection, there are no visible signs of termite infestation. However, if termites are found, they will have to be exterminated or the closing may be postponed or cancelled depending upon the severity of the infestation. If the damage caused by the termites is too severe, it may be in your best interest to consider looking for another Home.
-Home Warranty vs. Home Insurance-
A lot of people make the mistake of using these two terms interchangeably. They are very similar in their application, but are different in their specific areas of coverage. Literally, there are many service providers that have their own polices to accommodate the needed coverage. Since no home warranty or home insurance company are the same, your Realtor( can assist you in choosing the best one that suits your needs. Below is a simple method to tell them apart.
Rules of Thumb:
- A Home Warranty covers: Appliances in the Home
- Owners Home Insurance covers: Fires, Flood, Natural disasters, etc.
TOP
|