Making an offer to buy a home
Making an offer on to buy a home is one of the most exciting aspects of the home buying process. As soon as you are notified that your written offer has been signed and accepted by the seller as is, then it will immediately become a binding home sales contract. In order to be successful and fully satisfied with your home sales agreement, it is important to do the proper groundwork. Here are some important factors to think about before you make an offer on a home.
Will you be in it for the long haul?
Before making a home purchase you need to consider whether or not you will be living in the home for a long period of time (i.e. at least 5 years). Remember, it takes a considerable amount of time and money to buy and sell a home, so if you are unable to commit to living in a house for at least 3 to 5 years, then you may very well end up at a loss when it comes time to move. So you should take the time to evaluate your circumstances. For instance, there is a quaint 1 bedroom condo that a young couple is eyeing, and even though it may have all the fixtures and amenities that they ever wanted, it would be wise for them to consider whether it is big enough to accommodate a possible addition to their family. Ask yourself if you will be comfortable staying in the home and the neighborhood for longer than 3 to 5 years. If the answer is no, you should probably step back, consider the whole picture and look elsewhere.
Do you know your negotiables and non-negotiables?
For instance, when making an offer for a home purchase, you could specify that the purchase is contingent on the results of a home inspection, which is a thorough, professional inspection of the property that can detect structural issues, safety concerns, mold problems, and more. It is a good idea to make your offer contingent on whether or not the results of the home inspection is to your satisfaction. You want to clearly state in your offer which repairs you’re willing to fix yourself, which problems you would ask the sellers to pay for, and which issues would cause you to retract your offer.
Do you know how much to offer?
Knowing whether you’re in a buyer's or seller's market will help you make the most informed and appropriate decision in regards to the home price. If you’re in a seller's market, and you you want to make an offer on a home that has just been listed, it may be smart to bid higher than the listing price to ensure that your offer is accepted before any competing offers come in. On the other hand, if a home has been listed for several months and it is a buyer's market (i.e. there is a higher supply of comparable homes than there are buyers), you can probably offer to pay an amount that is under the asking price. If you are an inexperienced homebuyer, it is highly recommended that you receive some guidance from a licensed real estate agent. You will be able to make a more informed decision if you’re equipped with knowledge of the recent comparable sales prices in the area. Knowing the seller’s specific situation can also give you some leverage.
What is typically included in an offer to buy a home?
Typically, your offer should include terms such as the offer price, the terms of payment (whether it will be through cash or a mortgage), details of who will pay for the inspection, details of who will be responsible for what repairs, a limit on how long the offer is good for, the method for transferring certain taxes and utilities over to your name, any contingencies you have discussed or would like to request, etc. Contingencies are important aspects of negotiating a home purchase because they give you the power to get out of the contract if certain requirements aren’t met.
By doing the proper research and by keeping yourself fully informed before drafting your written offer, you will be able to avoid unnecessary complications and give yourself the best chance at owning the home of your dreams!