Making an Offer 2017-05-01T18:51:10+00:00

MAKING AN OFFER

  1. Gross Sales Price
    1. Consider comparable sales and find similar homes in the price range
    2. Consider personal budget
  • Mortgage Approval needs to be for percentage of gross sales price (unless paying cash)

 

  1. Net Sales Price
    1. Gross Sales Price – Seller Assistance = Net Sales Price
    2. Any seller assistance will reduce your closing costs/cash closing, and reduce the net amount of money the seller receives

 

  1. Pre-approval letter
    1. Best from a local lender that understands the area market
    2. Lender choice may affect closing date (larger banks tend to take longer to process a file)

 

  1. Down Payment
    1. Depends on loan options
    2. Talk to lender about DP options and understand your choices before making an offer

 

  1. Earnest Money Deposit
    1. This is money that will be credited back to you at closing
    2. This shows the seller how serious your are – important in a competitive situation
  • This is at risk if you don’t perform on the contract (ie walk away because you changed your mind)
  1. The EMD check should be made out to the settlement agent/title company
  2. The settlement agent is required to cash the check within 5 business days of ratification

 

  1. Contingencies
    1. Home Inspection Contingency
      1. This decision is very property specific – talk to your agent to determine if you want to make the contract contingent on a home inspection
      2. Deciding that it’s non-contingent does not prevent you from getting a home inspection
      3. Important if in a competitive situation, you can adjust the contingency to fit your needs and be amenable to the seller (ie tell them you’ll forgo any repairs that are less than $1,000)
      4. Number of days to complete the inspection
      5. Number of days to negotiate any inspection items

 

  1. Financing Contingency
    1. It is standard to include a financing contingency, however, your agent and lender should talk to see if it’s possible to forgo this contingency
    2. If you’re loan and approval are strong, you may not need to include a financing contingency
    3. Number of days it will take the lender to obtain bank approval of loan and transaction (they cannot start this process until you have a ratified contract)

 

  • Appraisal Contingency
    1. An appraisal contingency is standard, may not always be required
    2. You’ll need to talk to your agent about whether you’re OK with paying any cash difference
    3. Competitive bidding wars is where you’ll usually see a contract without an appraisal contingency, generally not required in ‘standard’ negotiation
    4. Number of days you commit to having the appraisal contingency lifted (this is dependent on your lender who orders and manages the appraisal process)

 

  1. Choose Title/Escrow Company
    1. Your agent can recommend someone reputable
    2. The seller may express a preference, however, the choice of settlement agent is always the buyer’s choice
  • It’s possible that the buyer and seller will settle with two different settlement agents

 

  1. Include or exclude any personal property – ie chandelier, fireplace screens, extra freezers, etc.

 

  1. Ask seller to pay for something else for you, for example condo dues, or homeowner’s association dues for a period of time

 

  1. Closing date
    1. The seller may express a preference in closing date
    2. You may need to arrange a dual settlement if selling a property, or extend to give notice to a landlord
  2. Early possession
    1. Do you want to rent from the seller before closing?
  3. Rent back
    1. If either party needs to settle on a certain date, but the seller cannot move out of the property, they can rent back from the buyer
    2. Includes a security deposit and a prorated daily rate
  4. Escalation Clause
    1. Do you want to offer over Gross Sales Price in case another offer is presented?
    2. You can choose any amount of incremental escalations up to a limit you choose
  5. Love Letter
    1. This seems silly, but it’s an important component of your offer
    2. Sellers are emotional about their homes, let them know you’re emotionally connected to your decision to purchase as well
  • Seriously YOU NEED A LOVE LETTER
  1. Early storage of items
    1. Some sellers will allow storage of your belongings in garages, empty rooms or basements
    2. It’s OK to ask, not recommended in a competitive situation

 

What happens after you submit an offer?

  • Acceptance by seller – you’re ratified!
  • Reject without a counter offer
  • Reject with a counter offer

 

No offer or contract is official until all parties have signed and ratified. There are often conversations that happen during the negotiation period, however, nothing is official until it’s in writing.

 

Your NoVa House and Home Agent is with you every step of the way and will explain in detail any and all of these factors before you submit an offer to purchase.

These are exciting decisions! You may feel a little overwhelmed when preparing and submitting your contract. Be sure to be open with your agent so all your concerns are addressed.

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