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First Time Homebuyers Check- Off List - Part II - Write An Offer
December 22nd, 2006 categories: 1st Time Home Buyer, Home Buyer, Mortgage, Real Estate, Real Estate Tips
First Time Home Buyers, here is Part 2 of successful home buying tips.
Stress is less with the knowledge of knowing what should be occurring during your home buying experience. As I always say, knowledge is empowerment! You wont know if someone is doing their job correctly if you dont know how the job should be done. I see way too many home buyers, that are not being represented correctly. Take the time, to find out what you should expect from your Realtor. Do you have a full-time Realtor working for you? Have you Googled their name? Or are you using someone who is a part-time agent who may not even own their own home?
Here we are, you have found the house that you want to place an offer on. Depending on how comfortable you feel with how much money to spend on a house payment, may depend upon the area that you can afford.
Remember, you can always move-up later. This is a stepping stone for you where you will need to maintain a home and stay put for a minimum of 2 years in order not only to gain equity but also to eliminate any added taxes that the government would issue if you stayed less than 2 years.
Youve already been prequalifed by a Mortgage Broker that your relative, friend or Realtor has recommended and its now time to put all the information together to write an offer.
Your Realtor needs to provide you with a CMA (Comparative Market Analysis) of the property that you want to buy. This will help you to determine the offering price. A CMA is a compilation of all the homes/condos within a 1“mile radius of the house/condo you want to buy that are for sale, in pending sale and have sold within the last few months.
When looking at the CMA you want to determine if the homes have about the same square footage of living space, the same amount of bedrooms etc. There should be an average sold price along with an average price per square foot. Ask your Realtor what price he/she recommends.
You never want to insult a Seller. Your goal is to make an offer that you can afford and feel comfortable with, that is in direct comparison with the CMA while keeping the communication line open with the Seller for further negotiations.
On your offer make sure you ask for a 1 year Home Warranty. This will take care of many items such as air conditioning, heating (if added to the contract), stove, oven, refrig (need to add) electrical, plumbing etc.
Ask the Realtor to supply you with a pamphlet from a few Home Warranty companies. The pamphlet shows what each warranty company covers and the cost to the Seller for this coverage. You will also be able to see what is considered additional coverage and what is basic.
The timeline (when you want to actually have the house be yours) needs to be on the contract with the proper names that will be on Title. Make sure that you are aware of your current lease agreement and make the dates be in direct alignment so that you have the least out of pocket expense.
Inform your Realtor that you want to have a Home Inspection. The cost to you of a Home Inspection is directly associated with the square footage of the house and whether or not it is a slab foundation or a raised foundation. Typically, the cost runs $250 for a 1200 square foot home and goes up from there. A Home Inspection is a must and you will need to pay at the time the Home Inspector does the inspection on the house.
I always ask that my Home Buyers attend the Home Inspection. Again, the more you know, the less stress and the better for all. No house will be perfect, since none of us are perfect, either. You need to simply focus on the things that are of prime concern. Avoid knit picking the Seller with everything found on the Home Inspection report.
On the offer ask that the Seller pay and provide a Pest Inspection Report. Also, ask that the Seller pay for Section 1 items. Section 1 is considered to be active infestation (meaning termites) and/or dry root as well as leaks. These would be costly items for you and you need to make sure that you dont end up having huge expenses once you move in. Ask in your offer to have the Seller pay for section 1 if there is any found when the Seller has the Pest Inspection.
Section 2, in my opinion is not worth knit picking with the Seller. As an example a section 2 would be a stain under the kitchen sink that is not currently wet to the touch where there had obviously been a leak in the past but had been corrected. Your Lender will more than likely ask that the Pest company provide what is called a Pest Clearance. If anything is found on the Pest report and the items have been corrected, the Pest company will re-inspect the property and then issue a Pest Clearance.
Some of the other items that you might want to consider addressing on your Purchase Contract to the Seller are:
- Increasing Days of Disclosure Period
- Keeping the Loan Contingency until Funding of the Loan
- Ask the Seller to Pay for Your Closing Costs
- Ask the Seller to Provide a Roof Certification
- Ask the Seller to Provide Heating and Air Maintenance Receipts
- Ask the Seller to have the Home Professionally cleaned before it becomes yours
- Ask the Seller to have the Carpets Professionally cleaned
Now, this doesnt mean that each and every one of these items should be on your offer, choose wisely. Ask the Seller for the ones that would apply and that you would like the Seller to address. Remember, you want this to be a win, win for both you , the Home Buyer and the Seller.
The better they feel, the better the negotiations will go and the better the transfer of the property will go. If you want to make some points with some Sellers, offer to close on a certain date but not occupy for 2 days after close. That gives the Sellers time to vacate the house and have the home cleaned and ready for you instead of rushing out of the house and leaving just in the nick of time for your moving truck to arrive. It takes a little of the stress away for both the Seller and the Home Buyer and it actually benefits you in the long run.
These are just a few of the tid bits that I wanted to share with you to help you realize what should be done during the process of making an offer on the home of your choice. There are many exceptions and additional items that would be specific to a house. The more experienced your Realtor, the more knowledge they will have at their finger tips in helping guide you with drawing up the best offer for the home of your choice.
Stay tuned for Part 3 for First Time Homebuyers Disclosures after the holidays.
Related Articles:
Why is Buying A House Stressful?
Why Should a Seller or Buyer Choose Remax?
First Time Home Buyers Check-Off List “ Part I
What Does A Realtor Do When I Want To See A House or Condo
A very informative series - I’ll be sure to check back for part 3!
Glad you found it informative…that’s my goal. Part III will follow.
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Read the small print on the contract of the home warranty. A quick internet search for complaints on home warranty companies will show you they don’t often cover any old expensive item like a central air conditioner. They have exlusions for things like rust & corrosion, which any old unit has.
LP, you are absolutely right. That’s why you want to make sure that you have a good, experienced Realtor representing you. We know how to make sure that the AC is covered.
Thanks for your comment and I hope next time you use an experienced Realtor so that you don’t run into the hazards of poor representation.
There is no way an agent can change the terms of the home warranty contract. In fact most agents get a commision for selling the contracts and the brochures are very misleading. Many agents aren’t even aware of it.
LP, First of all Realtors do NOT accept or get any money for or from Home Warranty companies.
Secondly, if you had been represented properly by your Realtor, they would have made sure to have the necessary items taken care of with receipts in order for the Home Warranty to kick-in. Obviously, from your comments, your’s did not.
Please don’t assume that this is the case for everyone, it is not. In fact, tonight one of my new buyers called & said their A/C was not working…the Home Warranty will be there in 3 hrs. and I have all the proof needed to make sure that the A/C will be covered. But then again, I’m great at what I do and make sure that my clients are well taken care of.
If you would like to discuss this further, I’m game!