If you are like most home buyers you start by searching online and going to open houses, whether you are still in the dreaming stage or already working with a Realtor. Open houses are a great way to get to know neighborhoods, check out Realtors and get a sense of the market.
So what happens if you find a home you really like… what comes next?
If you are already working with a Realtor, schedule a showing with your agent. If you don't already have an agent representing you, find one. It could be the agent you met at the open house but it doesn't have to be… it could be an agent you met and liked at another open house or someone you found online or someone recommended by a friend. What's important is that it is someone you feel comfortable working with.
So… after a second visit, does it still feel like the right home for you? If so, it's likely time to write an offer. Ask yourself how you would feel if you decided to think about it for awhile, then decided to move forward and it was gone. If that gives you a pit in your stomach, it's time to write… now! You never know when someone else will write an offer and it will be gone.
You must submit financing pre-approval with your offer so it's time to ask your lender for a pre-approval letter. If you aren't already working with a loan officer you can get referrals from your Realtor or friends.
Here is a summary of key parts of your offer…
- Earnest money – usually about 1-2% of the purchase price, to be held in an escrow account with the listing broker until closing, when the funds will be applied to your purchase
- Price – what you are offering to pay for the property; list price gives an indication of what the seller is willing to accept at that point in time, but is just a starting point; you decide what the property is worth to you based on how much comparable properties have recently sold for, how well the property matches your personal needs and wants, etc
- Closing date – when you want to transfer ownership, often within 4-6 weeks; this is when you will sign your mortgage papers, transfer the deed and get the keys to your new home; you will need certified funds to complete your purchase
- Financing – how you plan to pay for it: % you plan to put down, what kind of financing, if you are asking the seller to contribute to your closing costs, etc
- Inspection – whether your offer is subject to an inspection and when it will be completed, usually within a week of coming to an agreement
- Contingency – whether your offer is subject to the sale of another property; if it is, your property must be already listed for sale or be ready to list soon
- Possession – although possession is often immediately after closing, other arrangements may also be made, such as possession the following day if the seller must close on the property you are buying before closing on a new home
- Personal Property – includes items such as appliances, window treatments, etc
- Miscellaneous – includes items such as home warranty, responsibility for city inspection requirements, etc
- Arbitration – in the state of Minnesota you have the option of deciding at the time of purchase agreement to resolve any future disputes through arbitration…click here for more information
Upon reviewing your offer your seller will have three options: (1) sign and accept the offer as is, making it a legally binding agreement; (2) counter your offer with proposed changes; (3) reject your offer. Negotiations can go back and forth between buyer and seller multiple times before coming to an agreement… or not.
Minnesota purchase agreements state time is of the essence and when dealing directly with the homeowner that usually means you will have a response within 24 hours. If banks are involved as in a foreclosure or short sale time can vary greatly depending on the circumstancs.
- Finding the right home for you – Part 5, signs you have found it!
- Can I make a verbal offer to buy a home?
- Steps in Buying a Home
- 10 Signs you are ready to buy
- Common Buyer Questions… including what it costs to use a Realtor
- Dual Agency…and other agency relationships in real estate transactions
- What happens at the inspection? Should the buyer be there?