Before the offer to purchase is created, it is very important that you have been at least pre-qualified or better yet pre-approved by a lender.
This is one of the best negotiating tools a buyer can have. It shows the seller that you are financially able to purchase the home. After you have found the right home, it is time to prepare the offer.
When you are buying a home, there are many problems that the seller is obligated to disclose. For example, in most states, 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 that can offer additional insight about the prospective home before you make a final decision.
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 bathroom 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. It is also a good idea to research community reports - including crime rates.
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, researching local schools is highly advised before submitting an offer.
Knowing all you can about a prospective home, not only helps you decide if it's the home of your dreams, but what offer to make as well. Your real estate professional can help you get your key questions answered and give you advice on how to evaluate your findings.
Common contingencies in real estate are conditions that must be met for a contract to move forward. They include:
These contingencies protect both the buyer and the seller, allowing the contract to be terminated if conditions are not met.
Earnest money is a deposit made by a buyer to demonstrate their serious intent to purchase a property. It's often included with an offer to buy real estate and held in an escrow account. If the sale goes through, the earnest money is typically applied toward the down payment or closing costs. If the sale falls through due to a valid reason specified in the contract, the earnest money may be refunded to the buyer. However, if the buyer backs out without a valid reason, the seller may keep the earnest money. It serves as a financial commitment and a show of good faith in a real estate transaction. Earnest money is typically in the amount of 1% of the homes purchase price.
Seller concessions, also known as seller contributions, are arrangements in the real estate contract where the seller agrees to pay some of the buyer's closing costs or other expenses. These concessions are typically a set percentage of the home's sale price and can help the buyer with upfront expenses, making it easier to afford the purchase. Seller concessions are negotiable and can be an incentive for the buyer to proceed with the sale.
Negotiation is a process of discussion and communication between parties with differing interests, seeking to reach a mutually acceptable agreement. In the context of real estate, it involves haggling over terms such as the price, contingencies, repairs, and other aspects of a property transaction. Effective negotiation aims to find common ground and ensure both parties are satisfied with the final terms. It's a crucial skill in real estate for buyers, sellers, and agents to achieve the best possible outcomes.
Backing out of a real estate contract can have several consequences, including:
1. Forfeiture of Earnest Money: The buyer may lose their earnest money deposit if they back out without a valid reason specified in the contract.
2. Legal Action: The other party (buyer or seller) may take legal action for breach of contract, potentially seeking damages.
3. Costs and Time: Both parties may incur costs and waste time, such as attorney fees, inspection fees, and opportunity costs.
It's crucial to carefully consider the terms and contingencies in the contract to understand the potential consequences of backing out. Valid reasons for backing out may include issues with inspections, financing, or other contingencies specified in the contract.