Making the Offer
You're euphoric. Then tense. You've found "your" home and now you're ready to make an offer. As your professional REALTOR®, my role is to present to the sellers whatever offer you choose to make, at whatever terms you decide and to try my best to negotiate it for you.
Should you "low ball"? That's up to you. Some sellers will react with a counter offer; others might dismiss your offer outright and wait to see if you come back with something more in line with what they are asking. In an active market, you may lose out on a home by making a low bid. In today's slower market, you can certainly begin at a lower level than was common only a few years ago but starting too low can work against you if it creates a negative atmosphere for negotiating.
How do I decide what to offer? Almost every client asks me this question and there's only one answer - with information. It is absolutely essential that you are fully informed on the market in general, on comparables for the home you like, on mortgage options and on the buying process. Once you have the knowledge you need, you'll be operating from a position of strength which is exactly where you want to be. This is why I spend a lot of time and effort getting you the data you need.
Written Offer With Deposit
I will present your offer in writing. To show that your intentions are serious, it is customary to submit the offer with a deposit. If your offer is accepted, your deposit check will be placed in a trust account. If you and the seller are not able to reach an agreement, your deposit will be returned to you.
If the seller counter offers, you may agree to that price, or make your own counter offer. Once you and the seller agree on the price and terms and initial all changes, you now have a contract.
The final contract will specify terms such as what in the home is included or excluded in the sale, as well as any additional provisions either side wants to have as part of the contract. Dates for contingencies such as the home inspections and obtaining financing are also filled in before the contract is signed. The closing date is also specified.
Attorney Review
The signed contract is faxed immeidately to both buyer and seller attorneys. The contract includes the Attorney Review Clause which gives you the right to have an attorney of your choice review and amend it as he/she sees fit to properly represent your interests. This is a very good system - you are signing a contract without benefit of an attorney so you need the ability to consult one before the contract is irrevocable. This system was developed in New Jersey to expedite the process. In Bergen County it is common practice to hire an attorney when you purchase a home and I strongly support this.
Additional Deposit
Depending upon the price of the home and the size of your down payment, the contract may specify a date when additional monies would be placed into the trust account. Title insurance should then be ordered.
Mortgage contingency - Unless you are an all-cash buyer, as part of your sales contract, you agree to obtain financing within a secure specified period. This period may be extended with the seller's agreement. If you are unable to secure financing the contract becomes null and void but typically your attorney will contact the seller's attorney and negotiate the extra time your bank may need.
Inspections - Some inspections are required. Mortgage lenders, for example, will require an inspection for wood-destroying insects. Other inspections may be required by state, county, or local regulation. Your contract also gives you the option to have additional inspections conducted, as indicated in the contract.
Other than those government mandated and the responsibility of the seller, these inspections are paid for by the buyer and must be done within a specified time frame, as indicated in the contract.
What if the Inspections Turn up Problems?
Few homes are perfect. Some problems may be a matter of simple cosmetics; others may be more serious and call for costly repairs. The good news, however, is that in most cases the seller and the buyer are able to come to terms. You and the seller may decide to compromise, with both sharing the costs of repairs, or the seller may pay for any repairs. Or you may decide that the issue is not important enough to risk losing the home.
Final Checklist
You will need to bring to the closing what your attorney advises. Most often you will need to bring a certified check for the balance of the deposit and closing costs. Before the closing you will have arranged for a homeowner insurance policy; I will alert you to this need but your attorney will also discuss it with you.
Final "walk-through"
The final "walk-through" is typically scheduled within 24 hours of the closing/settlement but I prefer that it be done on the way to the closing. I will accompany you on this final inspection, which give you one last opportunity to make sure that the home about to be turned over to you is in the condition that you and the seller mutually agreed to in the sales contract.
Should a problem be apparent, we will call your attorney immediately. Sometimes your attorney will advocate on your behalf exclusively and sometimes your attorney will ask me to be involved. The reason I prefer to do the walk through on the way to the closing is because this gives the seller no lee way to get things done - it must all be done by then. Normally issues that present on a walk through are resolved amicably but you discuss this with you attorney and take his/her direction.
At last, the closing
You're now at the closing with your attorney and I'll be there as well. Actually, there are 2 closings you'll do - you'll first close on your mortgage and then you'll close on the house. When you think of it, this sure makes sense because you can't buy a house without a mortgage unless you're making an all cash purchase. Your attorney will go over the closing statement which specifies how every penny is disbursed for both buyer and seller and shows how adjustments are made for such things as property taxes (if the seller has prepaid them, he get's a credit; if not you get a credit for example) and all documents are signed and finalized such as the deed, title, etc. Once title is passed on to you and the deed is conveyed to you, you are given the keys to the house becuause you are now it's new homeowner.