Your Found Your House, Now It’s Time To Get It Under Contract
This is where a great agent can really help you. Their knowledge of the market, how fast and at what price homes are selling is information you need to make the best offer.
Start by looking at the “Comps”, these are comparable homes that have sold in the last 6-12 months. Comps should be as close as possible to the same size, stats, condition and location. The more similar they are, and the more recently sold, the better they will work as an indicator of how well priced the home is, and what offer you should make. Your goal is to identify a price that you are comfortable paying, and that the seller will accept. Often the buyer and the seller don’t have the same price in mind, and both parties have to give a bit to get to an agreement.
You will also want to consider how this home is placed in relationship to other competitive homes on the market. If it is clearly better than other available homes it will likely sell fast and close to or over asking price the. On the other hand if inventory is high and sales are slow there will be more room to negotiate. Ask your agent what the market is doing to help determine what kind of price to offer.
In addition to price, you should consider the terms of your offer, these could include:
- Your expected closing date
- How much money you will put at risk if you don’t close (called “hand money” or “earnest money”)
- Any assistance with closing costs you will expect from the seller (called “sellers assist”)
What inspections you will do on the home and how long those will take
If you are getting a mortgage or if you will pay cash
What type of mortgage you are getting
If you or your bank is going to do an appraisal
If you are allowed to terminate a deal up to a specific date
If there is any private property that will be included with the sale
Sometimes the terms of the deal will be as important as the price, and can be used to strengthen your offer.
Once you have decided on a price, your agent will give you an estimate of closing costs and mortgage payment for the home. Then it is time to do the paperwork. This will include the sales contract, sellers disclosure (9 pages where the seller tells you what they know about the house), cost sheets, addendums to the contract and real estate company documents.
Be sure to ask questions and clearly understand the timelines and obligations you will have when making an offer on a home.