Learn About the Buying Process
During this time period, property values may decline slightly due to a myriad of factors, however, that decline will be reversed and the value will increase.
Prepare Before Purchasing a Home
Getting all your ‘Ducks Lined Up’, before making an offer, puts you in the strongest position, regardless if we are in a Buyers or Sellers market.
A quick check list
• Pre-approval letter from your Mortgage Lender
• Firm price range
• Know the Maximum you are willing to spend for the right property
• Understanding of all requirements from lender for final approval
• Preview of the Purchase Contract to be used
• Be familiar with the Terms & Conditions
• Discuss ‘Buyer Contingencies’ with your Realtor
• List of ‘must haves & nice to haves’
• Areas and communities desired
• Type of property
• Check book
• If applicable:
• Applications for Public Employee grants (if applicable)
Determining Your Offer Price
When you prepare an offer to purchase a home, you already know the seller’s asking price. The question is;
What price are you going to offer and how do you arrive at that figure?
Is this your ‘opening’ offer or your ‘best’ offer. Discuss the strategy with your Realtor, however you don’t have to reveal what your ‘best & final’ price may be.
Guidance and information from your Realtor are key. Your realtor will be able to provide information about what other similar actually homes sold for in the past 12 months. These are called ‘Comparable Sales’ and come from three primary sources.
1. The Local Board of Realtors MLS historical database (only available to member Realtors).
2. Public tax records.
3. Pending Sales the local MLS has recorded as scheduled to close in the near future.
All of these, combined together, give you real-time, factual, information to base your offer on.
Let your Realtor explain all of the relevant information about these sales and pending sales. Review the trend of prices, the number of days it took to sell the property, a review of the description of the property that includes its condition, the amenities and special features. Ask your Coral Shores Realtor to take you on a tour of the community so you can see the most recently sold or pending sales.
Other Factors that can Influence your Offering Price:
• Overall condition of home
• Age of Roof, HVAC, Kitchen, Baths
• Curb appeal
• Location, Location, Location
• Upgrades and Home Improvements
• Lot size
• Market condition (Buyers or Sellers Market)
• Seller motivation
Contingencies in a Purchase Offer
In most purchase transactions things will go quite smoothly. However, you can’t always anticipate potential hurdles that may cause you to re-think your purchase. That is why you include specific conditions that must be met in order to proceed. these are called contingencies.
The most common contingencies
• A satisfactory inspection report within a specified period of time
• A Final Approval, in writing, from the mortgage lender
• A satisfactory appraisal from an independent third party
• Home Owners or Condo Association Approval
• Clear & marketable title to the property.
These are all common contingencies and should be included in the Purchase Contract. Coral Shores Realtors use only the most current Florida Association of Realtors pre-approved, pre-written contracts. These assure you of consistent Terms & Conditions that meet all State & Local laws pertaining to Real Estate transactions.
Earnest Money Deposit
After you have come up with an offer price, the next step is to determine how large a deposit you want to make with your offer. You want the “earnest money deposit” to be large enough to show the seller you are serious, but not so large you are placing significant funds at risk.
One recommendation is to make sure your deposit is less than two to three percent (depending on your location) of your offered price. The reason for this is that if your deposit is larger than that, the lender will pay particular attention to how you came up with the funds. You might have to provide a copy of a canceled check along with a bank statement showing you had the money to begin with. Normally, this is not a problem, but if you have a short escrow period or are barely coming up with your down payment, it could pose an inconvenience.
Another reason to limit your deposit is “just in case.” Although significant problems are the exception and not the rule, they do occur. “Just in case” there is a nasty or prolonged dispute between you and the seller, the less money you have tied up in a deposit, the fewer funds you have placed at risk.
As with practically everything in real estate, there are exceptions to this rule, too. During a hot market there may be multiple offers on the property that interests you. A large deposit may impress a seller enough so they will accept your offer instead of someone else’s, even when your unknown competitor is offering the same price or slightly higher.
Since large deposits do impress sellers, you may also find that by making a large deposit you can convince the seller to accept a lower offer. More money up front may save you money later.
There are also times when closing can be delayed by weeks, through no fault of your own. Have back-up plans prepared for such a contingency.
The Closing Date
It is absolutely essential that you include a closing date as part of your offer. This way both you and the seller can make plans for moving, and the seller can make plans for buying his or her next home. Though most transactions actually do close on the right date, do not be so inflexible that a delay creates insurmountable problems.
For example, if you are renting and need to give the landlord notice that you are moving out, you may want to allow a little flexibility. Otherwise, if your purchase closes a few days late you could find yourself staying in a motel with your belongings packed in a moving van somewhere while you pay storage costs.
There are also times when closing can be delayed by weeks, through no fault of your own. You should have back-up plans prepared for such a contingency.