At this time, you have found a new home and have decided to make an offer to buy it – but what’s next and how do you go about making the offer? Buying a house is a big financial commitment, and can be a lengthy process filled with an abundance of paperwork. Below is a general guide that provides an outline to help make the home-buying process as easy and problem free as possible.
Make Sure You’ve Done All Your Final Research!
Now that you have found your perfect home and it seems to meet all of your requirements, you should research the property and seller even further to make sure you are getting the home at a good price and in good condition. Don’t let the excited trump being a smart buyer. Working with your agent will help avoid missing any crucial items that could cost you a lot of money if not properly addressed. There are a variety of checklists and research criteria you can use but again, work you’re your agent to make sure the property, neighborhood, sellers, price, and condition all line up.
Negotiate An Offer!
With all your research complete, you are now positioned to negotiate a better price or terms with a clearer understanding. Your agent should instill in you confidence to feel comfortable signing the purchase agreement for submittal and at this point you should have discussed the strategy of the offer with your agent to know:
- Where the offer is starting at;
- What to expect back from the Seller/Seller’s Agent;
- How to respond to a counter offer; and
- What to do next once an agreement is reached.
All terms and conditions of a purchase agreement must be accepted by both Buyer and Seller before the agreement is finalized and before escrow can be opened. Our office uses standard California Association of Realtors (“CAR”) forms to put together an offer package. The offer not only includes the purchase agreement but it also includes several important addendums that are put in place to protect you as the Buyer.
Basic Terms of an Offer:
Both the Buyer and the Seller need to agree on what stays in the home and what goes with the Seller.
Conditions of sale
Conditions of sale are terms inserted into the Offer to Purchase by both the Buyer and Seller. These conditions of sale include: subject to a loan approval, subject to a sale of another property, and subject inspection approvals.
Most offers include a condition that the sale is subject to a loan and appraisal being obtained which will need a realistic amount of time. Once a home loan has been approved by your Bank, you should notify the Seller/Seller’s Agent to ensure that your offer becomes valid and this will enable the buying process to continue.
Property is normally sold ‘As-Is’, meaning you buy the property with all defects and faults. However, a condition of sale can often include the repairing of faults by the Seller, should the Buyer wish to negotiate this in the Offer to Purchase
Fixtures or fittings
These are items found in and around the house that are included in the purchase price of the property. For example, items such as curtains, light fittings and mirrors are considered to fall into these categories. As a rule of thumb, all items, which are fixed to a surface, remain in the house, unless both the Buyer and Seller agree otherwise.
The standard deposit amount is3% and it is placed into the escrow account and put towards the purchase in the event the transaction closes.
Purchase price and other small clauses
The most anticipated point of the Offer is the purchase price. This is the price offered by the Buyer to purchase the house. The offer should have a time limit for the Seller to accept, reject, or make a counter-offer.
Proof of Funds & Pre-Approval
Most Sellers/Seller’s Agents will require the buyer to provide bank statements showing proof of funds that they have enough money to put down for the purchase. Additionally, they will ask for a pre-approval letter from a lender showing the Buyers has initially been approved for a loan.
Submitting the Offer Package!
Once all the information is gathered, your agent will package the offer nicely and submit it to the Seller/Seller’s agent for review. At that time, the Buyer will wait the designated time outlined in the offer for a response from the Seller. Once the deal is consummated, escrow will be opened and you will need to submit the deposit of 3%, and we will begin performing all the inspections of the property.