So you've met with an agent, received a preapproval from a lender, went out and toured houses… Now you've found the one you want, what's next?
Saving you the time of all the documents you have to sign (which we will go over when its actually time to offer), there are a few things we have to decide upon together. Below is a breakdown each:
The most common known item in the purchase agreement, this is the price you are willing to pay for the house. It will typically be decided upon by a few factors; The list price, comparable properties, and competition. Based on the property location, I will find comps and let you know what I believe a fair price to be. From there, we will determine what you want to offer depending on how long its been on the market, if they have other offers, and what you are willing pay.
Earnest money is usually about 1%-3% of the purchase price. All it does is keep the buyer 'earnest' in the transaction.
If you back out of the transaction after the inspection period for a reason not related to a contingency in the contract, you forfeit the money to the sellers. If you stay in the transaction all the way through close, the money is applied to your down payment and closing costs.
This is a two part decision.
- Do you want an inspection? I always recommend doing one but at the end of the day it is up to the buyer. No inspection can make an offer stronger but it is a risk because you are not able to inspect for defects in the house.
- If yes, how long of an inspection period do you want? Inspection periods are typically 10 days but can be any period of time. A shorter inspection period is better for the seller and a longer period is better for the buyer.
Seller Paid Closing Costs
With any real estate transaction, there are closing costs that the buyer has to pay. These are used to pay the title company, the lender, and any brokerage fees. In the end, they are roughly 3% of the purchase price. They can be negotiated within the deal to be paid by the sellers, this allows the buyer to bring less cash to closing. Seller paid closing costs would usually make an offer less attractive, unless the price is raised. Here is an example:
$200,000 list price + 0% seller paid closing costs = $200,000 net to seller
$200,000 list price + 3% seller paid closing costs = $194,000 net to seller
$206,200 list price + 3% seller paid closing costs = $200,000 net to seller
This is simply when you close on the house. Normally it is roughly 40-50 days but can be negotiated to more or less. It is hard for a lender to get all of the necessary financing in place in less than 30 days but it possible. Timing on both sides is mostly what affects this, whether or not you are selling a house, your lease is ending, or the seller is buying a house. This is a very negotiable item but something that we will need to decide upon before submitting an offer.