Selecting a Home  |  Making an Offer  |  Contract Details

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.

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.

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.