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Writing the Offer

Posted on January 11, 2010 by tim in Buying, First Time Home Buyer, Mortgage, Negotiation, Pre-approval

There are several things you will need to consider when writing an offer to purchase a home:

Price – ultimately, what you decide to pay for the home is your choice. Your real estate agent will be there to provide you with the information you need to make a decision. Knowing what similar homes have sold for in the neighborhood over the past 6 months will be the key indicator of a fair price. However, you can also take other items into consideration such as days on market, number of price reductions, seller motivation and whether or not there are any other offers being considered.

Earnest Money – this is the portion of the down payment that will be put into escrow upon acceptance of the offer. Essentially, Earnest Money is deposited as the buyers promise to the seller to purchase the home. If the buyer decides not to purchase the home, there are a set of contingencies that will allow them to receive the earnest money back. Some of these contingencies are an unsatisfactory home inspection or a setback in financing.

Financing – what is your plan for purchasing the home? Have you decided upon an FHA or Conventional loan and is it a fixed or adjustable rate? These are all important factors that will need to be disclosed in your offer. Be sure to discuss these key items in detail with a lender prior. In addition, it will be to your benefit to provide a pre-approval letter to with your offer. Click here to read our blog post on pre-approvals.

Closing Costs– you can decide whether or not you want to ask the seller to provide concessions to cover all or some of the closing costs. This must be negotiated as part of the contract. Closing costs are all fees associated with purchasing the home including: lender and county recorder fees, appraisal fee, attorney and title company fees, pre-paid property taxes, and prepaid interest.

Personal Property – would you like to ask the seller to leave the refrigerator, washer or dryer? Items of personal property can also be negotiated as part of a sale.

Home Owners Associations – If the property you are considering belongs to a neighborhood with an HOA, you will indicate in your offer how many days you would like to review the HOA documents. This is a contingency in the contract. If you are not satisfied with the HOA documents, you can back out of the contract – and thus, receive back your Earnest Money deposit.

Home Warranty – As a negotiable item in the purchase contract, you can ask the seller to pay for a 1 year home warranty.

Inspection – You will need to decide in your offer if you will have a home inspection, and provide a given time frame in which you will have it performed. You will also indicate in your offer how long it will take you to negotiate any items that arise from the inspection report. If you are not satisfied with the items, you may back out of the contract, and Earnest Money(see #2) is returned.

Title Insurance – you will indicate if you are purchasing an owner’s policy for Title Insurance on the home or if you would like the seller to pay for it. It is not customary in the Cincinnati market for the seller to pay for the buyers policy.

Closing Date – your lender should be able to give you an indication of how long it will take to process your loan to closing. Typical time frame will be 30-45 days, but this is also a negotiable item in the contract. As an example, if you know that the seller needs some additional time to find a new home you might consider negotiating a longer time frame for closing.

Expiration Date – how long are you going to leave your offer open to the seller? Is it a HOT property? If so, you might consider giving the seller a shorter amount of time to respond.

If you have additional questions about the offer process, please feel free to contact Team Annett anytime at teamannett@gmail.com .


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