Negotiating the Offer

You’re ready to start shopping for a home, understanding that mortgage rates are low and the housing market has cooled. As a buyer, this could be a great time for you to snag a deal, especially if you have done your homework.

The Market: Hot or Not?

If you listen to the news, you may be under the impression that the housing market is in bad shape. True, overall sales have eased on a national level, but there are some markets which are very weak while there are also some that are quite strong.

In the northeast USA, home sales are down and housing prices are flat or dropping. In my area, Raleigh, NC, the market isn’t as hot as it was one year ago, but it is still favors the seller — lots of people want to move to Wake County. Therefore, if you are planning to negotiate the price of a home, you need to understand what the local market conditions are before you proceed.

Buyer v. Seller

Concerning real estate, it is truly a buyer v. seller market. The seller wants top dollar for her home and you, as a buyer, want to find a home that you can afford and is a decent buy.

In a strong selling market, you’ll likely be up against other buyers who can bid against you, driving the price of a home up and beyond the seller’s asking price. In a weak selling market, you may be the only buyer or at least the only one qualified to buy. You may not be able to shave ten or twenty percent off of the price of the home, but you could possibly save several thousands of dollars.

Making An Offer

When you are ready to present an offer, your real estate agent will provide you with the standard documents that list the terms of the contract. The agent should review the contract with you and understand what your purchase price is, the terms of the sale (e.g., is the refrigerator included or not?), your earnest money, financing, down payment, etc.

Before You Make Your Offer

Before making an offer, you’ll want to be clear what you are buying. You’re getting the house and the property, but does that include all fixtures, window treatments, appliances, etc. What if some work still needs to be done on the home? Who will pay for these repairs? Your contract should have a provision outlining what must be done before you close on the house.

Presentation and Counter Offer

If the seller accepts your offer, then you are done and the contract will be signed by both parties. If rejected, you’ll likely get a counter-offer which you can either accept or reject. Until you come to an agreement on the price, then the deal hasn’t been finalized.

Keep in mind that if a deal isn’t quickly reached, the seller has the right to entertain other offers. It is in your best interest to move quickly and craft a deal acceptable to both parties. Once the contract has been signed, then a binding contract is in place.

If you back out of the contract, you could lose your earnest money and even be subject to litigation. Conversely, if the seller backs out after the contract has been signed then the earnest money must be returned to you. Moreover, you can sue the seller for financial damages.

Work With An Agent

A qualified and experienced real estate agent can help you through the home buying process. The seller pays your realtor’s fees, but you get the wisdom and experience of an agent who can help your home close smoothly.

Happy house hunting!

Tags: for sale by owner, FSBO, Home Buying, new homes, real estate, real estate agent, realtors

Taking the Next Step: Finding A Home

There are two big reasons why many consumers are thinking about buying a home today: the weather is getting warmer and mortgage rates have stabilized.

Winter is the least favorite season for buying a home, while Spring is one of the best times of the year. Rising temperatures, fresh homes on the market, and the desire of many people to make their move before summer is over are some of the biggest reason’s behind a strong Spring market.

Mortgage rates have stabilized and have even dropped, making home ownership affordable once again. Prices are also down and the housing glut is still in place in many markets. Truly, right now it is a buyers’ market — a perfect time to get a good deal on a home.

How To Search For A Home

Realtors are an important avenue for finding out which houses are on the market, but you have other tools at your disposal including:

• Builder’s Websites — Perform a “Google” search to find all of the home builders in your area. Find out which builders are putting up the types of homes that you like and what incentives they are using to attract shoppers just like you.

• For Sale By Owner Websites — Homeowners who prefer to bypass realtors are motivated sellers too.

• Online Listings From Realtors — Visit Realtor.com for national listings, specific realtor network sites including ReMax, Century 21, and Coldwell Banker. If you have a favorite realtor, visit their site for current listings. Sign up for email notifications each time a change is made to their site.

• Home Foreclosure Sites Including HUD — If you are seeking handyman special and/or a great buy, foreclosure sites are the place to visit.

The internet has made it much easier to research and track the housing market, allowing prospective home buyers to find a home that interests them and take the steps needed to buy a home.

Warmer weather is on its way…will you be buying a home this Spring?

Tags: for sale by owner, FSBO, Home Buying, new homes, real estate, real estate agent, realtors

Analyzing the Numbers is the First Step in Buying a Home

You’ve been waiting for the housing market to stabilize and the funds for a down payment are on hand. 2008 is shaping up as a the year you make an important financial decision — purchasing a new home. Before you jump in, have you analyzed the numbers? Specifically, have you determined whether you have the financial wherewithal to buy a home, make monthly payments, and maintain your investment for years to come?

The first step in buying a home is understanding your financial picture, with five points to grasp before you take the next step:

Determine how much home you can afford. You may want to live in Beverly Hills but the numbers are indicating that a less tony L.A. suburb is much more affordable for you. Monthly payment and monthly affordability calculators can go a long way in helping you understand what you reasonably can afford.

What goes into the numbers. Your down payment, points, and closings costs must be considered. Weigh these costs against retirement funds, gift money, and other monies you can use and you’ll know whether you have enough money to get started.

Consider the tax benefits of home ownership. Could it be that you cannot afford not to own a home? If you are in a high tax bracket, the deduction of your monthly mortgage interest, closing costs, and property taxes can reduce your overall tax burden. Taxes for high net-worth people is expected to go up following this fall’s presidential elections if certain politicians have their way. Check with your financial advisor to learn how what your tax benefits will be.

Get pre-approved from a mortgage lender. Realtors like to pre-qualify people when it comes to determining whether (in their minds) you can afford a particular home or not. However, only a mortgage lender can say for sure whether you can afford that home, not the realtor. Get a no obligation pre-approval letter from a your lender and bring that with you when you bid on a home.

Qualify for credit. Closely related to the pre-approval letter from a mortgage lender is qualifying for credit — lenders look at two things when it comes to lending money: your capacity to repay the loan and your credit history. Expect your credit reports to be pulled, credit scores obtained, and current salary information and other important documentation supplied.

Once you have analyzed the numbers, the next step is to search for a home. We’ll be discussing the second through seventh steps in the home buying process over the weeks ahead.

Tags: buy home, buying a home, home buy, Home Buying, home purchase