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Selecting a Home
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Making an Offer
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Contract Details |
Selecting a Home |
You've done your homework and seen
what the market has to offer - now
it's decision time.
Choosing a Home
Choosing which home to purchase is
the critical phase of your search -
make sure the house is right for you
before deciding to buy. Consider
your wish list, the location, and
the price when making your final
decision.
Consider the Neighborhood
You've already researched the
community (we hope!) in general
terms - now it's time to take one
last look at the neighborhood to
make sure it's the right place for
your family. Consider your route to
work, the local shopping - anything
that affects your lifestyle and
daily routine.
Check the Details
Make sure the house is right for
your family and lifestyle. Will your
furniture work out? Is the yard big
enough? Does the layout work well
for your family's routine? Check
through your wish list and notes to
make sure you're not forgetting
anything.
Research Multi-Family Units
There are some specific concerns
involving multi-family housing. If
you're seriously considering this
type of home make sure that you do
the research so you know what you're
getting. Review our multi-family
housing checklist if you are
planning to buy a condo or
townhouse.
Don't Buy if You're Not Sure
Don't buy a home out of frustration
or impatience - this is a major
investment and it should be treated
as such. If the market is strong or
your standards prove to be
unreasonable you may need to revise
your expectations before continuing
the search.
Be Wary of Overheated Markets
Think carefully before getting into
a bidding war or buying a home with
a hyper-inflated price. Extreme
sellers' markets can develop when
national and local economic
conditions are exceptionally strong.
During these periods prices can rise
dramatically and buyers can be
pressured into taking aggressive -
and often irresponsible - actions.
Be careful, however, as these strong
periods are inevitably followed by
severe corrections. Homeowners
buying at peak periods often find
themselves with substantial paper
losses - a condition that can take
years of normal appreciation to
correct. |
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Making an Offer |
The offer is the first step in
negotiating the purchase of your new
home. Try to consider all of the
relevant facts when determining your
offering price. Homes often sell for
negotiated figures that are below
the asking price - sometimes
considerably below, so give serious
consideration to your initial offer.
Consider Market Conditions
Home pricing and sales activity is
strongly affected by the strength of
the underlying market. In a weak
market purchasers may be able to
negotiate substantial reductions
from asking prices. Conversely, it
is risky to make a low offer in a
strong market - another buyer may
appear suddenly and pay full price.
Review the Specifics of the Property
Does the home suffer from a lack of
curb appeal or other problems? If
so, you may want to be more
aggressive in your negotiations -
chances are there will be less
competition, even in a strong
market. If the house needs
make sure you know exactly what to
expect so you don't have any
unanticipated expenses after
closing.
How Badly Do You Want the House?
Will you (or your family) be
extremely disappointed if you lose
the house? If so, consider being
less aggressive in your negotiations
- especially in a strong market.
Conversely, if you are willing to
take a chance you may be able to get
a better deal.
Evaluate the Seller's Motivation
A homeowner who is under pressure to
make a sale is more likely to accept
a low offer. Recognizing a motivated
seller is a major step toward making
an advantageous purchase. Common
causes of pressure on a seller
include financial difficulties,
divorce, or the need to move by a
certain date.
Consult with Your Agent
Your realtor is an experienced
professional with deep knowledge of
the local market, so make the most
of this resource. Your agent can
tell you how long a home has been on
the market and can provide
comparable sales for review. It's
even possible that your agent may
know of a motivated seller.
Are You Buying a New Home?
Many builders have a general policy
of not negotiating prices
(particularly in major
developments), so if you are buying
a new house you may have to pay full
price. Nevertheless, you may be able
to get a deal occasionally -
particularly if the market is weak
or sales in the project are slow.
You have little to lose by trying.
Writing the Offer
An offer can be in the form of
either a letter or an actual
purchase contract (the preferred
format when working with an agent).
Whichever format you choose, make
sure that you clearly specify all of
the required information and terms
in the offer. If you are
pre-qualified for a mortgage, offer
to provide a copy of your approval
letter to strengthen your hand.
Counter-Offer and Negotiation
Instead of accepting your initial
offer the seller will probably
respond with a counter-offer. After
reviewing the counter-offer you are
essentially back to the beginning of
the offer process - but with a
better idea of the seller's
negotiability. Consider all of the
information and decide if you are
willing to increase your price. This
offer and counter-offer phase of the
negotiation is often done verbally -
through the agents or even at a
meeting of buyer and seller - with
revised contracts signed after price
and terms are accepted by both
parties. |
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Contract Details |
A properly written contract sets
forth the terms of the sale and
protects the interests of both buyer
and seller.
The Contract
The contract specifies the terms of
the sale and the rights and
obligations of the buyer and the
seller. A well-written document
protects both parties, while a
poorly drafted contract can cause
serious problems.
Get it in Writing
Oral agreements are usually
difficult or impossible to enforce,
so if you've negotiated your
purchase verbally make sure to have
contracts signed as soon as
possible.
Attorney Review
Always make sure that any contract
you sign has an attorney review
clause that allows you time (at
least three business days -
preferably five) to review the
document and have it checked out by
your lawyer if you feel it is
necessary. Many states specify a
mandatory review period, whether it
is specified or not, but don't take
any chances - make sure it's in
writing. This gives you the chance
to make sure all bases are covered
before you are committed.
Choose an Attorney or Escrow
Company
In some areas it is standard
practice to retain an attorney to
handle the closing. In others the
norm is to have the title or escrow
company handle the transaction. If
you do hire an attorney (which is a
good idea), try and find someone
local who specializes in real estate
closings. An experienced real estate
attorney can help you move quickly
to closing and sidestep any problems
or oversights. If you are using an
escrow company, make sure that they
have a solid track record.
Cover All Contingencies
Make sure that the contract covers
all contingencies of the purchase
and allows sufficient time for any
required activities or testing (i.e.
obtaining a mortgage, home
inspections, etc.). Reasonable
contingencies are essential to
protecting yourself in the purchase
- don't allow anyone to pressure you
into skimping on due diligence.
Learn About Deeds and Title
The deed is a legal document that
transfers ownership of the home.
There are several types of deed that
can be used for your purchase as
well as a number of special
provisions that may apply to your
new home. Your attorney or escrow
agent can answer any questions you
have on title and deeds.
Know Your Deposit Obligations
The contract should specify the due
dates and disposition of earnest
money and deposits. Typically a
small amount is posted at the
signing of the contract with the
balance of the deposit (usually 10%
of the purchase price) due within
1-3 weeks. Don't agree to a schedule
you cannot meet - if you need extra
time to line up the funds, specify
this in the contract. |
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