I have received an offer on my house – Now What?

j0305899 Your Realtor has just informed you that he/she has received an offer on your property! Now what?!

I know your head is full of questions that you want ask your agent but it is best to just sit down with your agent and go through the entire offer. Your agent may send you a copy and go over on the phone with you, either way – be sure you cover all the details and understand exactly what the buyer is offering. There are several things you should pay close attention to on the offer:  The purchase price, the due diligence date and fee, the closing date, the earnest money, requested closing costs, type of financing the buyer is getting, fixtures and personal property, warranty requests and any additional addendums.

Offer Price:

Of course, the price is the first item to check. Don’t be shocked when it is not what you expected right off the bat.  In many places it is still a buyers market and the buyers are doing their best to get the lowest price possible – even to the extent of coming in at an insulting low ball price.  Don’t be offended, at least the door is opened for negotiations.  Take a look at the entire contact with all terms before rejecting or send back a counter offer.  The best case scenario would be that you love the price and just accept the offer without any negotiation, but that rarely happens.  Be sure to check and see if the buyer is also requesting closing costs be paid on their behalf. You will need to consider this as part of the offer price.

Due Diligence:

In North Carolina, we have a fee that is paid directly to the seller that enable the buyer to have a set period of time to get all their “due diligence” done on the property that will include but is not limited to: Home inspections, surveys, septic inspections, review of covenants and bylaws, financing and water testing.  The fee paid for this period is negotiable between buyer and seller and will be credited to the buyer at closing.  The due diligence date is a critical date that allows the buyer to make the decision to move forward or terminate for any reason or no reason.  If the buyer terminates, the due diligence fee is forfeited. :

Earnest Money:

Earnest money is another “good faith” fee that is offered by the buyer to let the seller know they are serious about purchasing the home.  It is usually between 1-3% of the purchase price and is held in a trust fund by the listing agent or buyers agents broker.  This money will go to the seller if the buyer breaches the contract and will be credited to the buyer at close if all goes well.  If a dispute arises and the buyer terminates, you must request in writing that the seller release the EM.  If they refuse, the money is held in the trust fund until settled or sent to the clerk of court for resolution.

Closing Date:

The buyer should have specified a closing date on which the closing will take place on or before. This date is likely 4-5 weeks from the date of the offer. If the buyer is not using a mortgage and is offering “all cash”, the closing date could be 1-2 weeks away.

Fixtures and Personal Property:

Be sure to check as see if the buyer is asking for you to leave any fixtures you had excluded from the offer (like a Shed or light fixture you planned to keep). Also check to see if they are requesting any personal property such as a refrigerator, playset or anything that is not affixed.  These items should convey at no value.  If you decide you would like to sell some of your personal property, you would need to do this with a bill of sale and not include as part of the offer.  Lenders do not like to see personal items as part of the deal.

Home Warranty:

Check to see if the buyers is requesting a home warranty and if they are, who is paying for it?

Additional Addendums:

There may be other addendums that apply to the offer such as a contingency that the buyer may need to sell another house or the buyer may ask for deadline for the answer, or even ask for certain repairs be done in advance of inspections.  Check to make sure you have gone through ALL forms in detail.

Pre-Approval Letter:

Be sure that the buyer has included a pre-approval letter from a bank or proof of funds if paying cash along with the offer.  Do not even consider an offer until you know they are qualified to buy.  Pay close attention to the type of loan they are getting, this will help you see if they have put money down or if they need 100% financing.  Keep this in mind if they are requesting closing costs.

Make a decision:

After you have reviewed all the terms with your Realtor, it is time to make a decision.  You may decide to accept the offer as written, reject it outright or offer a counter to their terms.  In NC, we have a “response to buyers offer” form that is wonderful for going back to the buyer and suggesting more favorable terms. This form rejects the original offer but in a gentle way to encourage a new offer.  This also keeps you open for other offers to come in. It is best to try and keep the door open to negotiate a win-win situation rather than just reject outright.  Once you respond, give the buyer a couple of days to come back with another offer.

 

Other titles in the seller series:

Article #1: Seller Questions Answered – A preview to Listing your home for Sale
Article #2: What do I need to do to prepare my home for sale?
Article #3: Why do I need an Real Estate agent and how do I select one?
Article #4: I have signed the paperwork, now what? -What to expect during the listing period
Article #5: A buyer wants to see my home -How can I maximize showing opportunities?
Article #6: I have received an offer – now what?
Article #7: My home is under contract – What are the next steps?
Article #8: What can I do to prepare for my move?
Article #9: What can I expect at the closing table?
Article #10:  What happens after my home is SOLD?

 

 

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Home Style Title card

Sonya Leonard –Keller Williams Realty – Mooresville NC.  The Home Style Team provides free access to individualized home searches for all homes in Statesville, Mooresville, Troutman, Lake Norman and the entire Lake Norman Area.  Explore buyer and seller reports, community resources, new home communities, and be sure to sign up for instant alerts to help find your dream home.  Let Sonya help you INVEST in Real Estate and your Future! (704) 450-0588.

Negotiating the deal! What to know BEFORE you place an offer.

Realtors_Care_Day

This article is an excerpt from my weekly buyer blast that I send every Friday.  I have been experimenting with other days of the week but you will receive it at least once per week.  I send out a List of area Foreclosed and Distressed Properties in the Statesville, Mooresville, Troutman areas of Iredell County.  I also include Charlotte and Catawba on occasion.  If you would like to receive my weekly article and Foreclosure listings, please SIGN UP on my website and I will add you to my list.  I will not call or bother you, just provide you with helpful, useful information.

Today I am out working in the community as a site captain for Realtors Care Day 2011.  Our local Realtor Organization will be working on over 20 homes from Statesville to Charlotte.  Over 600 Realtors will participate and help out our fellow residents that are unable to maintain their homes.  It is always a pleasure to see my fellow Realtors come together for such a good cause! 

You can keep up to date on happenings in Statesville by "liking" my Fan page on Facebook.  I try to post timely articles of local events, new listings, new businesses, market updates and much more. 

 

This week I would like to talk about the negotiation process.  Many first time home buyers are unsure of what happens when you finally find a home you like and want to make an offer.  It used to be a much easier process before the "foreclosure" and "short sale" era (as I call it).  Normally you would sit down with your buyers agent and look at area comps to find a good price to offer initially, decide on the amount of earnest money to deposit (this is your "good faith" money), set the proposed inspection and closing dates, decide if there are any other conditions you want to include, sign and present the offer to the seller along with your pre-qualification letter.

Here is a link to the basic process offered by REBAC (Real Estate Buyers Agent Council):
Negotiating Process for Buyers

Today, however, you need to know much more about presenting offers such as:

Is it a HUD house?  This process is completely different and involves submitting a bid online to HUD on their paperwork and adhering to a VERY strict timeline.  Your buyer’s agent will need to understand the different types of HUD home offerings, the required timelines and earnest money, any "escrow" amounts for repairs and type of finance programs. 

Is it owned by Fannie Mae or Freddie Mac?  These homes may offer specialized finance programs with other incentives and home warranties.  They will have their own bank addendums and instructions for submitting offers to them.  They prefer shorter closing times but are relatively easy to work with.

Is it a Short Sale?  These homes are much more difficult to work with.  The home has not foreclosed and the lender may agree to accept less than is owed on the home however, the process is painfully slow and may take 4-6 months to get an answer.  Please be sure you have an experienced agent before attempting one of these!  Your offer is submitted to the seller for acceptance first and then to the bank for approval, then the mortgage insurance company and then possibly Fannie Mae or Freddie Mac or HUD.  If there is a second mortgage on the home, it gets even more complicated.  Get an attorney upfront to do a title search and know what you are walking into.

Is it owned by another bank?  All banks will have their own addendums that will need to be signed after your offer has been accepted.  You need to be sure you read them thoroughly and know what you are signing.  It is a good idea to have your attorney read them over before finalizing them.
Here are some links from some of my past Blogs that offer additional information:

A few things to consider before purchasing a distressed property

03-10-2011 23:58:47 PM

I have been working with lots of buyers of foreclosed or distressed homes lately and wanted to give you some hints on how to make this type of purchase a little easier.  First, let’s talk about Short Sale Properties:  A … Continue reading →…»

How to Purchase a HUD home in North Carolina

02-10-2011 14:23:57 PM

How to Purchase a HUD home In recent months, there was a huge backlog of HUD homes that were held up for closing in NC and changes were made to try and streamline the entire process.  There are now three … Continue reading →…»

What is this new "Due Diligence" Fee in North Carolina and how does it affect me?

01-26-2011 17:16:00 PM

I know I will be explaining this question for a long time to come!  As of January 1st 2010 in North Carolina, we no longer have just the Earnest Money deposit option on the Offer to Purchase Sales agreement.  Our … Continue reading →…»

First time home buyer in Statesville NC? Here’s a quick summary of the process.

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Spring is just around the corner and the weather is warming up in the Statesville NC area!   What a great time to print out a list of homes you like and take a drive by them to see what they really look like and if you like the area surroundings.

I have had lots of calls recently from first time homebuyers that are unfamiliar with the process of buying a home so I thought I would post some helpful tips to get you started.

1. The first step is to talk with a lending institution to review your financial situation and determine what you are able to qualify for.  If you do not have a contact, please email me and I will be happy to send you a list of some very good loan professionals.

2.  Next you want to find a good Real Estate Agent to represent you as your Buyer’s Agent (I am raising my hand).  NEVER, I repeat, NEVER drive around and call off the signs and here is why.  The agent listed on that sign is the Listing agent and they represent the Seller and the sellers interest.  They do not represent you.  They can become a “Dual Agent” and represent both sides but you are still not getting full representation.  Get a buyer’s agent to represent you and only you. That person will help you find homes and can get you into EVERY home listed for sale in the MLS, they will get you all the information you need and work to get you the best deal.

3. Start searching for homes!  Your agent will sit down with you and help determine what type of home will fit your needs based on what you tell them in your initial consultation.  They will set up a personalized search for you and will look everywhere to find the home of your dreams.  When can also search the internet on your own to find homes that you may like.  I would suggest printing out several homes and get a list from you agent and then take a day and drive by those listings to see if you like the neighborhood or location.  You will find you will throw out lots of homes you thought “looked good”.   Your objective is to find 3-5 homes that fit your needs and then take a good look at all they have to offer, preview the homes one or two times and narrow it down to the perfect one.

4.  Make an offer.  Your realtor will help you determine a fair offer price based on recent sales in the area.  You will draw up an offer to purchase and present it to the Listing agent for consideration by the seller.  Please note that you will need money for Down payment (depending on the type of loan you have), appraisal, credit report, earnest money and/or due diligence fee, inspections and closing costs.

5.  Once your offer is accepted, you will need to have inspections done on the home to make sure it is in good condition and there are no hidden surprises.  You will need a good Home Inspection, Pest Inspection and possibly Radon, mold and water tests.  You may also need a survey done.  Hire experienced contractors and ask your agent for recommendations.  Here is a list of professionals I use.

6.  If everything checks out with the home, you are headed into the home stretch – The closing. Your realtor will work with your lender to make sure all the paperwork get to the closing attorney you selected.  Your attorney will run a title report to be sure the property is free of liens and judgments and will prepare a settlement statement of final closing costs.  This form will tell you how much, if any, funds you will need to close on the home.  You will meet at the attorney’s office (or other agreed upon place) and close on your new home.  Once the deed is recorded, you get your keys!

This is just a quick summary of the entire home buying process but beware that there are lots of other things involved in purchasing a home and you need an experience professional by your side.  Do not go it alone, it will only cost you in the end.  The biggest piece of advice I can give you in this market is to have lots of PATIENCE, especially if you choose to purchase a distressed home.  There are lots of things that can go wrong and you need to be prepared for that.  Talk to your agent and have a back up option if things don’t work out on your first choice.

 

Here is a link to a webinar for First Time Homebuyers presented by Tami Bonnell, the president of Exit’s North American Operations.

Happy House Hunting!

Sonya 🙂

 

Other Helpful Links to home listings:

Bank of America Foreclosure Listings:  Equator  Sign up as a buyer and enter the cities you want to be notified of new listings.

HUD Listings: HUD HOME STORE