Okay, now that you have found the home of your dreams and are ready to move forward, how do you go about making an offer? Unless you have significant experience in real estate transactions, you should first ensure that you have consulted professional help (real estate agent, attorney, etc.) prior to entering into any written contract to purchase a home.
Once you have determined what professional assistance you are going to require, it is time to get together with your representative and begin to structure an offer to purchase. Find a comfortable location with a nice table and preferably internet access to write the offer. Your real estate agent should have all of the required forms and paperwork necessary to purchase a home. Your agent should also have all of the current information about the market affecting the home you are purchasing readily available. If not, this information can be quickly found on the internet. Make sure you fully evaluate the market and other factors affecting pricing before you go any further.
When you are buying a home, there are many problems that the seller is obligated to disclose in writing. For example, in Kentucky it is illegal to withhold information about major physical defects on the property, but these disclosures don’t always paint the entire picture of the home. Here are six questions you may want to ask and get answers to that can offer additional insight about the prospective home. Your agent should have already discovered most of this information for you, but if not try to get the answers before you finalize an offer.
1) Why is the seller selling the house? This question may help you evaluate the “real value” of the property. Is there something about the house the seller does not like? If so, you may be able to adjust the purchase offer accordingly.
2) How much did the seller pay for the home? This question can, in some instances, help the buyer negotiate a better deal-maybe even get the seller to carry part of the loan. However, it is important to remember that the purchase price is influenced by several factors, like the current market value and any improvements the seller may have made to the home. The original purchase price might not have anything to do with the current value of the house.
3) What does the seller like most and least about the property? By asking the seller what he or she likes most and least about the property, you might get some interesting information. In a few cases, what a seller likes the most about a home might actually be something the buyer is looking to avoid. For example, if the seller describes his house as being in a “happening community,” the buyer might consider this a negative factor because the area may be too noisy or busy for his or her taste.
4) Has the seller had any problems with the home in the past? It is also a good idea to ask the seller if he or she has had any problems with the home while living there. Has the seller had problems with a leakage from the upstairs bedroom in the past? If so, even if the leak has been corrected, the floor and walls around the bathroom might have been damaged. You should also check that these items were repaired properly.
5) Are there any nuisances or problem neighbors? Use this answer to find out about any noisy neighbors, barking dogs, heavy airplane traffic or even planned changes to the community, such as a planned street widening. This may give you insight on why the seller is really moving. Also remember to check out the area’s crime rate.
6) How are the public schools in the area? Because the value of a community is usually greatly influenced by the public schools in the area, finding out about the area’s schools.
Once you have balanced all of the factors affecting price and have arrived at a fair offering price, you must consider terms. How much will you give as a good faith deposit? How long before the transaction should close? What contingencies should be in place? Are you going to ask for concessions like repairs or closing costs? How will you finance the purchase? As I have stated elsewhere on this website, I am not going to go into great detail with terms because it is a negotiating point and my techniques and methods are personal, private, and considered confidential between me and my clients. You will just have to use me as a buyer’s agent to fully discover what I can offer you…;)
The next step is to put the offer into writing. This is where you will see your Realtor® completing numerous legal documents. Remember the agent can only complete the forms, not give legal interpretations. Luckily, the Greater Louisville Association of Realtors®, in conjunction with the Kentucky Real Estate Commission, has provided all of the required forms in a preprinted, easy-to-understand format to your Realtor®. Remember to seek the appropriate legal counsel if any part of the sales and purchase contract is unclear.
Carefully consider the exact details of your offer and ensure the written offer fully defines your expectations. If two people cannot read the offer and come to the exact same conclusion about the terms, then your offer is not sufficiently well written. Review the details several times before signing, and never leave any open or blank spaces on a contract. It is critical at this stage to be very precise as the entire rest of the transaction will be guided by the sales and purchase agreement. I cannot emphasize the importance of exacting detail or comprehensive review enough; Mistakes can be very costly.
Now your real estate agent should present the offer to the seller. It will be up to the seller, through their agent, to decide how to best handle the offer. Their options are to reject, counteroffer, or accept the offer as written. Obviously, if they reject it outright you will have to carefully review your offer and decided if you wish to resubmit different terms, or move on. If they counter, you will need to determine if you can meet their amended terms and accept, or you can counter or reject their counteroffer yourself. This process continues until the offer is dead or you have an accepted contract.
Once you have an accepted contract, it is on to the inspection / contingency stage, and the Realtors® on both sides of the transaction should be making all necessary plans and ensuring every task required by the contract is completed in a timely manner to successfully get the transaction to the closing table. Contact me at any time regarding any questions you may have about this process. I am here to help and would love to share in the joy of you finding and purchasing your new home!