The Real Estate Buying Process - Step 1 Part B

If a buyer is extremely motivated in buying a home he/she may consider offering a higher offer from the start. Why risk losing a home you love because of a conservative offer?  Basically regardless of what the statistics read and what other offers are on the table you sometimes need to ask yourself the question, “How would I feel if I lost this house to someone who paid one dollar more?” If you feel financially comfortable in offering a higher price and you know that you would be devastated to lose the house to another buyer offering one more dollar, why not offer that dollar? This personal motivation is the x factor in real estate because you never know how valuable a home may be in the eyes of another buyer.

Example: What if you always dreamed of buying the lake house that you and your family used to vacation in? The sentimental value may surpass the asking price and outweigh the market trends. You cannot afford to lose this house because another home could never be substituted to fulfill your dreams. With the threat of a second potential buyer you decide to offer ten percent over the asking price. You know that most homes in multiple bids only sell at six percent over, but you do not want to take any chances. This is a prime example of how personal motivation can make a huge difference in your offer.

4. The Contractual Term Dates- As mentioned above the terms of a contract incorporate a number of actions a buyer must perform. Until each of these dates and actions are satisfied the property cannot close and the seller cannot assume that all the contingencies will be satisfied. Due to this reason sellers will generally like to have each contingency met in the quickest amount of time. The longer these terms are delayed the bigger the risk. Additionally the more money deposited by the buyer in the quickest amount of time is also equally important to many sellers.

Dictating the time frame for all of the contingencies to be performed is also something many buyers will negotiate. Depending on the three other components involved in writing an offer the dates could vary, yet to paint a clearer picture I will give an average contract’s term dates. Average, of course, is relative to my market and may not be the norm for yours. Consult a local real estate professional for a more accurate time frame in your area.

Initial Deposit: Presented with the offer usually in the form of a copy. The original may be held by one of the two lawyers or real estate companies in a trust account.  Typically $1000, yet this may vary depending on how strong you wish to make the contract and how much the purchase price is.

Additional Deposit: Ten days is usually an acceptable amount of time, yet may also fluctuate depending on the seller and/or buyer. The additional deposit will often be the entire down payment subtracted by the initial deposit and then divided in half. For instance if the down payment is twenty percent on a $100,000 home, or $20,000, and the initial deposit was $1000 the additionally deposit would be approximately $9500.

Home Inspection: The home inspection can usually be made within seven to ten days.  Once the home is inspected it is understood that the home inspection report may not be received for another three days or more. This of course is also able to fluctuate based on other specific factors to a given contract.

Mortgage Contingency: If you are buying a home and need to get a mortgage in order to do so you will need a pre-approval letter from a mortgage company upon writing an offer. This pre-approval does not, however, guarantee your mortgage. To guarantee your mortgage you must first apply. From application to receiving your mortgage it may take anywhere from a couple of days to over a month depending on the mortgage company you use. Typically a mortgage contingency will be between twenty to thirty days, yet depending on the close date among other factors this can also be negotiated.

Closing Date / Balance of Deposit: The closing date is one of the most important factors in a real estate contract because it entirely depends on the motivations of both the buyer and seller. If time in a home is more valuable then money the contract may change accordingly. Most homes will close between thirty to ninety days after the contract is accepted. This is largely due to the fact that most mortgage companies will guarantee an accepted mortgage for up to sixty days and will then allow a thirty day extension. This is the norm, yet just like everything else in real estate certain situations dictate different negotiations to exist. The balance of deposit is the amount of the down payment which has not been previously submitted. This amount will be brought to the closing table as the buyer’s final performance.

Once you have completed each of these steps by formulating educated decisions about the purchase price and other contractual terms you will feel at ease know matter what the seller’s decide. Remember buying a home is a complicated process, yet selling a home can be just as complicated. Motivations will vary and certain sellers will always be unreasonable. These factors are out of your hands. All any buyer can do is become educated enough to make the right decisions for themselves. Once these decisions are made the offer can be written and the journey to buying a home has begun.

Coming Soon:

The next step of the process will cover the seller’s three responses; acceptance, decline, or counter.

www.MichaelPennisi.com