10 Step Home Buying Process
Step 7: Making an Offer
REALTOR® working with legal counsel, have developed forms that are appropriate for real estate transactions in specific communities throughout New York and Connecticut. These documents include numerous terms and conditions and their wording should be carefully reviewed by you to assure that they reflect the terms you want to offer. Once an offer is accepted, the Offer to Purchase or Purchase Contract (depending on the region)are then review by your attorney. We can explain the general contracting process in detail depending on the location of your purchase.
While much attention is spent on deciding or settling on a purchase prices, the Offer to Purchase includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value or additional costs to the buyer. Terms are extremely important and should be discussed with your Professional Buyers Agent and carefully reviewed by all parties to the transaction.
How much?
You sometimes hear that the amount of your offer should be x percent below the seller's asking price or y percent less than you're really willing to pay. The people telling you this are not professionals. A Professional Buyers Agent will evaluate the home you wish to purchase and let you know if the asking price is within the range the current market will bear. They will let you know how much similar homes have recently sold for and what the likelihood of obtaining a mortgage at the specific price is. Your offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order. Then again, a seller may have aggressively priced their home for a quick sale which could cause a Multiple Offer situation even in a Buyers Market or the seller may have overpriced their house so much that even if you offered 15 percent less than asking, there would be no way to get a mortgage on the home without a substantial down payment over and above what you were approved for.
Once you begin working with a Professional Buyers Agent, you will begin to see all the value and services that go into properly representing a buyer.
How do you make an offer?
The process of making offers varies from county to county and state to state. In a typical situation, you will complete an offer to purchase, a purchase offer or a purchase contract that we will present to the sellers agent and in some cases the seller. The seller, in turn, may accept the offer, reject it or make a counter-offer.
Because counter-offers are common (any change in an offer can be considered a "counter-offer"), it's important for buyers to remain in close contact with their Professional Buyers Agent during the negotiation process so that any proposed changes can be quickly reviewed.
The most important thing to remember during the negotiation process is that unless you are an investor, price quickly takes a back seat to inclusions, exclusions, terms and conditions. Both Buyer and Seller will be extremely emotional during this process and it is both agents job to make sure their clients make rational and responsible decisions during this time. This is not a Win / Loose situation. You are not playing a game, but rather making an important financial and personal decision.
Home Inspection / Engineering
A number of inspections are common in residential real estate purchase transactions such as:
- WDI (Wood Destroying Insect Inspections such as termites, carpenter ants and bees.
- Structural Inspections.
- Water Quality Tests
- Septic Testing
- Radon Gas Testing
- Lead Paint Testing
- Asbestos Testing
Structural inspections are particularly important and often incorporate much of the testing process. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two to four hours, and buyers should attend and listen carefully to the inspector as he or she explains the workings of the home. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
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