First Time Home Buyers #3

First Time Home Buyers

Making an Offer

You’ve found a home that meets your wants, needs and budget. It’s time to make an offer.

The offer is a legally binding commitment stating that you will buy the property for an agreed-upon price provided certain terms and conditions are met. An accepted Offer to Purchase Real Estate must be in writing and signed by both parties.

 

Considerations for the Offer

When you prepare your offer, consider the following points:

• What is the age and condition of the home?
• Are any repairs needed? What will they cost? Are the sellers willing to share any of the expense?
• How long has the property been on the market?
• How active is the market (i.e., buyer’s or seller’s market)?
• Are the sellers anxious to sell?
• Is the property in a particularly desirable location or school system?
• Does the home meet many, most or all of the items on your wish list?

 

Preparing the Offer

The offer should clearly outline all terms and conditions of the sale, including:

• Your name and the name and that of the seller
• The property's address
• Any special provisions regarding fixtures, appliances, etc.
• The purchase price being offered (including the deposit put down to bind the offer and the deposit to be paid upon the execution of the Purchase and Sale Agreement)
• Any additional riders and deadline dates
• Any contingencies to which the offer is subject (e.g., pest inspection, securing financing)

Timing and deadlines are very important in real estate transactions. Allow yourself enough time in your offer to get an inspection, negotiate the Purchase and Sale Agreement, apply for and obtain mortgage financing, and set a closing date. Real estate deals often fail based on the inability to meet deadlines.
The seller may accept, reject or counter your offer. If there is a counter-offer, you may in turn accept, reject or counter that. Remember that regardless of the progress of your negotiations, the house remains on the market during negotiations.

Does a First Time Home Buyer Need an Attorney?

It is recommended that you retain an attorney when purchasing your first home. An attorney will protect your interests and will

• Help you prepare the offer
• Help negotiate the sale price and conditions of the sale
• Draft and/or revise the Purchase and Sale Agreement to protect you and your money
• Assist you with the mortgage process
• Prepare you for the final walk-through of the property
• Attend the closing and represent your interests

The Purchase and Sale Agreement

Once your offer has been accepted, a Purchase and Sales agreement is drawn up by the broker. It is likely the second contract between buyer and seller, and spells out the agreement in specific detail. This is a legally binding contract that should be reviewed by your attorney before you sign it.


Adding Provisions and Contingencies:

You can provide protections for you and your money by including provisions and contingencies in your offer. The Purchase and Sale Agreement should include a mortgage contingency clause, stating that your ability to buy the house is contingent upon your obtaining financing by an agreed-upon date. Such a clause ensures that you do not lose your deposit on the house if your loan is not approved.
Other contingencies should include acceptable home, pest, radon and lead paint inspections. The loan closing date and occupancy date should also be indicated in the agreement.

Though not required by law, a satisfactory home inspection is a major part of buying a home. The inspection examines the condition of the property and identifies necessary repairs and potential problems before you buy the home. The inspection generally costs a few hundred dollars, and is paid for by the buyer.

• More Tips for First Time Home Buyers to come!