Before you write an offer on your dream home, consider these twelve important questions to ensure you're fully informed and confident in your decision.
Can You Find Homes Below Market Value? - Investors often look at many more homes than typical buyers. Finding a real "bargain" takes determination. Ways to do this include buying fixer-uppers, foreclosures, or leftover homes in new developments.
Understanding List Versus Sales Prices - The list price is what the seller wants, while the sales price is what the house actually sells for. Knowing this helps in negotiations. It may be the same as the listing price, or higher or lower, depending on how accurately the property was originally priced and on market conditions. If you are a seller, you may need to adjust the listing price if there have been no offers within the first few months of the property's listing period.
The Low-Ball Offer Dilemma - Submitting a low-ball offer can either start negotiations or ruin the deal. Unless the house is very overpriced, the offer will probably be rejected. Consider comparable prices, seller motivation, and market conditions before making such an offer.
List Price, Sales Price, and Appraised Value - Know the difference between the list price (what the seller wants), sales price (what the buyer pays), and appraised value (an expert's estimate). To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area.This helps in making informed decisions.
Negotiation Strategies - Understanding seller motivations and market dynamics helps in crafting a winning offer. Factors like contingencies, repair requests, financing terms and time of year also play a role.
Contingencies - Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase contract must include the sellers responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.
Furnishings in Home Sales - Understand which fixtures stay with the property and which are negotiable. Fixtures, any kind of personal property that is permanently attached to a house (such as drapery rods, built-in bookcases, tacked-down carpeting or a furnace) automatically stay with the house unless specified otherwise in the sales contract. But anything that is not nailed down is negotiable. This most often involves appliances that are not built in (washer, dryer, refrigerator, for example), although some sellers will be interested in negotiating for other items, such as a riding lawn mower. Clear communication and negotiation skills are important here.
Seller Disclosure - Sellers must disclose material facts affecting property value or desirability. This might include: homeowners association dues; whether or not work done on the house meets local building codes and permits requirements; and any restrictions on the use of the property, such as zoning ordinances or association rules. This helps buyers make informed decisions.
Evaluating Troubled Properties - For foreclosure properties, research and inspection are crucial. If you are unable to get into a foreclosure property, check with surrounding neighbours about the property's condition. Understanding the property's condition and comparative values is important.
Negotiation Techniques - Understanding seller motivations and market dynamics helps in crafting a competitive offer. For example, seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home. Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all. Always ensure you and your REALTOR do the necessary research to come up with an appropriate offer price.
Legal Considerations - You will need an attorney to complete your real estate transaction. Consulting an attorney can offer clarity during process. Understanding contractual terms and contingency clauses is important. In looking for an attorney, ask friends for recommendations or ask your real estate agent to recommend several. Call to inquire about fees and to check on their experience. In general, more experienced attorneys will cost more, but real estate fees as a rule are small relative to the cost of the property you are buying.
What Are Essential Contingencies - Standard contingencies like financing and inspection clauses protect buyer interests during the transaction process. A financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. As a buyer, you could forfeit your deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract.
With these insights, you're ready to navigate the home buying journey with confidence. Thorough research and strategic negotiation are key to securing your dream home.
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