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Overview of the Buying Process

HOW TO CHOOSE A HOME

Here are some tips to help determine which house is best for you.

Once you’ve settled on a couple of preferred neighborhoods for your home search, it’s time to pick out a few homes to view. Having a house features “wish list” keeps you focused on which features are most important to you.

When narrowing down your home search, consider the following:

  • know what types of home you want to buy
  • determine what age and condition of the house you want to buy
  • consider resale potential
  • use a features wish list to keep focused
  • use a home search comparison chart to keep organized
  • act decisively when you find the right home

DETERMINE WHAT TYPE OF HOME YOU WANT TO BUY

There are several forms of home ownership: single-family homes, multiple-family homes and condominiums.

Single-family homes: One home per lot.

Multiple-family homes: Some buyers, particularly first-timers, start with multiple-family dwellings, so they’ll have rental income to help with their costs. Many mortgage plans, including VA and FHA loans, can be used for buildings with up to four units, if the buyer intends to occupy one of them.

Condominiums: With a condo, you own “from the plaster in.” You also own a certain percentage of the “common elements” – staircases, sidewalks, roofs, etc. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowner’s association administers the development.

DECIDE WHAT AGE AND CONDITION OF HOME YOU WANT TO PURCHASE

Weigh your needs, budget and personal tastes in deciding whether you want to buy a newly constructed home, an older home or a “fixer-upper” that requires some work.

CONSIDER RESALE POTENTIAL

As you look at homes, you may want to keep in mind these resale considerations.

  • One-bedroom condos are more difficult to resell than two-bedroom condos.
  • Two-bedroom/one-bath single houses generally have less appeal than houses with three or more bedrooms, and therefore have less appreciation potential.
  • Homes with “curb appeal,” i.e., well-maintained, attractive and with a charming appearance from the street, are the easiest to resell.
  • The most expensive houses on the street, or ones with anything unusual or unique are not suited for resale. The best investment potential is traditionally found in a less expensive, more moderately sized home.

USE A FEATURES WISH LIST TO KEEP YOUR SEARCH FOCUSED

Make a features wish list to clarify which features are most and least important to you when looking for a home. Using this features wish list will keep your house hunt focused and effective.

USE A HOME COMPARISON CHART TO KEEP YOUR OBSERVATIONS ORGANIZED

While house hunting, it’s a good idea to make notes about what you see because viewing several houses at a time can be confusing. Use a home comparison chart to help you keep track of your search, organize your thoughts and record your impressions.

ACT DECISIVELY WHEN YOU FIND THE RIGHT HOME

Before you begin the home buying process, resolve to act promptly when you do find the right house. Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then said, “We always promised my Dad we’d sleep on it, so we’ll make an offer tomorrow.” Many times the story had a sad ending – someone else came in that evening with an offer that was accepted.

Resolve that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or underpriced.

THE BASICS OF MAKING AN OFFER

A written contract is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract that not only specifies price, but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that’s included in your contract, or you won’t have grounds for collecting it later.

Your REALTOR® will guide you through the offer, counteroffer, negotiating and closing processes.  Certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.

If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items.

After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent or by the seller’s real estate agent, if that’s a different agent, or often by the two together.

WHAT IS IN AN OFFER?

The purchase offer you submit, if accepted as it stands, will become a binding sales contract, so it’s important that it contains all the items necessary. The purchase offer includes items such as:

  • property/ legal description of the property
  • purchase price
  • terms: for example, all cash or subject to you obtaining a mortgage for a given amount
  • seller’s promise to provide clear title
  • closing date
  • amount of due diligence money accompanying the offer
  • amount of earnest money deposit accompanying the offer and disposition upon default
  • information about any Home owners Association
  • provisions about who will pay for title insurance, survey, termite inspections, etc.
  • type of deed to be given
  • disclosure of specific environmental hazards
  • a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
  • a time limit (preferably short) after which the offer will expire
  • contingencies, which are an extremely important matter and that are discussed in detail below

CONTINGENCIES – “SUBJECT TO” CLAUSES

If your offer says “this offer is contingent upon (or subject to) a certain event,” you’re saying that you will only go through with the purchase if that event occurs. Here are two common contingencies contained in a purchase offer:

  • The buyer obtaining specific financing from a lending institution: If the loan can’t be found, the buyer won’t be bound by the contract.
  • A satisfactory report by a home inspector: for example, “within 10 days after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.

NEGOTIATING TIPS

You’re in a strong bargaining position, that is, you look particularly welcome to a seller, if:

  • you’re an all-cash buyer
  • you’re already have a preapproved mortgage and you don’t have a present house that has to be sold before you can afford to buy
  • ​​​​​​​you’re able to close and take possession at a time that is especially convenient for the seller

In these circumstances, you may be able to negotiate some discount from the listed price.

On the other hand, in a “hot” seller’s market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.

It’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:

  • every month a vacant house remains unsold represents considerable extra expense for the seller
  • if the sellers are divorcing, they may want to sell quickly
  • ​​​​​​​estate sales often yield a bargain in return for a prompt deal

EARNEST MONEY

This is a deposit that you give when making an offer on a house. A seller usually will not take seriously, an offer that is not accompanied by a cash deposit to show “good faith.” A real estate agent or an attorney usually holds the deposit, the amount of which varies. This will become part of your down payment.

BUYERS: THE SELLER’S RESPONSE TO YOUR OFFER

You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that’s that – the sellers can not later change their minds and hold you to it.

If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a counteroffer with the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, “We accept the counteroffer with the higher price, except that we still insist on having the pool table.”

Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.

BUYERS: WITHDRAWING AN OFFER

Can you take back an offer? The answer is yes, right up until the moment it is accepted, or even in some cases, if you haven’t yet been notified of acceptance. Even if the contract has been accepted and you have been notified, if you are in a due diligence period you can back out any time prior to the expiration of the due diligence period without loosing your earnest money deposit.

​BUYERS: DUE DILIGENCE PERIOD

A period of time, commencing on the effective date of the contract, and ending at 5:00 pm on the date inserted in the contract.  The process of a buyer investigating a property being purchased in a diligent manner, within a period of time specified in the purchase contract, to determine if the buyer is satisfied with the property and wished to proceed with the purchase.  Some sellers and their agents will ask for a due diligence deposit.  This money is turned over directly to the seller and is non refundable if you do not go through with the purchase.  It IS however, credited back to you upon closing. The due diligence period is also used to secure a mortgage.  If you do not have a mortgage commitment prior to the expiration of the due diligence period, it is recommended that you ask for a extension.  If you are not approved for the mortgage and the due diligence date has passed, you will not receive a return of your earnest money or your due diligence deposit (if there is one)

SELLERS: CALCULATING YOUR NET PROCEEDS

When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response) or make a counteroffer to the buyers with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you’ll walk away with when the transaction is complete. For example, when you’re presented with two offers at the same time, you may discover you’re better off accepting the one with the lower sale price if the other asks you to pay points to the buyer’s lending institution.

Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you can subtract the following costs:

  • payoff amount on present mortgage
  • any other liens (equity loan, judgments)
  • broker’s commission
  • legal costs of selling (attorney)
  • transfer taxes
  • unpaid property taxes and water and other utility bills
  • ​​​​​​​if required by the contract: cost of survey, termite inspection, buyer’s closing costs, repairs, etc.

Your present mortgage lender may have maintained an escrow account into which you deposited money to be used for property tax bills and homeowner’s insurance. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.

SELLERS: COUNTEROFFERS

When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer is free to walk away. Any change you make in a counteroffer puts you at risk of losing thaT buyer.

Who pays for what items is often determined by local custom. You can, however, negotiate with the buyer any agreement you want about who pays for the following costs:

  • termite inspection
  • survey
  • buyer’s closing costs
  • points paid to the buyer’s lender
  • repairs
  • ​​​​​​​home warranty

You may feel some of these costs are none of your business, but many buyers – particularly first-timer buyers – are short of cash. Helping them may be the best way to get your home sold.

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Laurie Stuhrcke
Sold Buy The Sea Realty
Hampstead, NC 28443

203-470-5040
Contact Me

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Laurie Stuhrcke | 203-470-5040 | Contact Me
15200 US Highway 17N - Hampstead, NC 28443
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