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News & Advice
A few weeks after cruising the Internet and scouring the newspaper listings for local home listings, you have found IT. You got that funny feeling when you walked through the door. This is the home that you can see yourself settling into.
Buying a home is an emotional process, and probably should be a little more logical, at least at the outset. Make sure that you have done your homework.
Get on the phone to your lender and ask her to print up a letter of mortgage pre-approval for you. This will be presented later with your offer. You will also need to discuss closing costs with your lender before the offer is made. These are determined by the type of loan that you choose.
The nuances of a home purchase can be confusing, especially if this is your first time in the game. If you aren't working with a Realtor who represents your interests only (not the seller's pocketbook), go find one quickly. This will need to be someone who you can trust and work easily with. If you have worked with a Realtor and that agent was not a good match for you, move on to the next one. Ask friends and relatives for a recommendation.
The first step is to get your Realtor to run "comps." This is a fancy way to say "neighborhood sales history." The comps, or "comparables" are accessible by your Realtor in the local MLS database. Information such as sales price, square footage, street address, lot size and year built will allow you to determine a fair bidding price on the home that you have just selected.
Without comps, your offer is just a shot in the dark. After all, the buyer determines the fair market value of real estate, not the seller.
Your Realtor will help you to prepare the written offer. The documentation is often referred to as a "purchase agreement." There are many facets to the purchase agreement, but the basic elements of the offer are:
1) the offering price
2) the buyer's loan type and finanacing terms
3) closing and possession dates
4) personal items included in the sale (appliances etc.)
5) inspection contengencies
6) additional contengencies
Your agent will submit the offer (usually by fax) to the seller's Realtor with a copy of an earnest deposit check. In Indiana, the earnest deposit is typically 1% of the purchase price. It is cashed and held in escrow by the listing office immediately upon acceptance of the offer. It is held in the escrow account and credited back to the buyer at closing unless the buyer terminates the agreement without legal cause.
The seller will accept, reject or counter your offer. Countering an offer is common because the seller may want to fine tune some items in the agreement. For example, the closing date may need to be adjusted to fit the sellers moving schedule. It is also common for the seller to counter the offering price. As the purchaser, you will then have the option to accept, reject or counter the seller's offer.
Once both parties have agreed to price and terms, you are on your way to home ownership. In the coming days and weeks, your Realtor will help you coordinate home inspections, bank appraisals, lender requirements and a myriad of steps to get you to the closing table.
(David Meek is a buyer's Realtor in Indianapolis. He is available to help home buyers and can be reached at 317-216-6335).
© Copyright
2003 by www.davidmeek.com
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