How Do I Put An Offer On A House?
July 7, 2010 – 10:19 pm
Because the real estate market has yet fully to recover from the recession, you enjoy all the luxuries of “a buyers’ market.” You have time, and you have lots of choices. Shop around, carefully comparing and contrasting lots of properties, looking for all the amenities and upgrades you want in a home. “Curb appeal” is great, but the current market conditions empower you to be picky about the details. Especially look for energy-saving features in the homes you like: Do the houses have “energy-star” appliances, extra insulation in the walls, programmable thermostats, ceiling fans, and other little extras that will save you hundreds of dollars every year? Pay careful attention to location, studying the quality of the neighborhood and the home’s proximity to schools, parks, and shopping.
Take care of the preliminaries.
While you are shopping for just the right house, take time to arrange advantageous financing. Work with a mortgage agent—not your bank or your bank’s preferred broker, but an agent who works for you. Mortgage agents have access to discount lenders and non-traditional sources of funding, so that they often can save as much as 1.25% for well-qualified buyers. That 1.25% translates to several hundred dollars each month. If you are a first-time buyer, you also should work with your mortgage agent to capitalize on special opportunities: You enjoy higher limits on how much you may borrow from your qualified retirement account, and you may qualify for a reduced down-payment.
When you have found the most desirable financing, get proof of your pre-qualification, and lock-in your interest rate. Trustworthy lenders will guarantee your rate for 120 days, making provisions for lowering your rate if the prime rates drop. Your pre-qualification letter gives assurance that you can afford the homes you like, and it shows sellers that you can bargain in good faith.
Make your offer.
When you have decided on the house you want, arrange a meeting with the seller, letting him know that you are preparing to make an offer and would like to negotiate the details. As you have shopped around, you inevitably have discovered that everything in real estate ultimately is negotiable. Now, the time has come to use all you have learned about negotiating for closing costs and professional services.
During the negotiations, openly and honestly discuss what you can afford and what will present a hardship. Hold a few of your details as bargaining chips, and realistically estimate your costs, fees, and taxes. Your lender will require that you pay for an appraisal, and the seller must pay a professional inspector to certify that the home complies with the building codes. Provincial and municipal Land Transfer Taxes may be negotiable, and your seller may be willing to share attorneys’ fees and other incidentals. The seller must pay the realtor’s commission, and he may have to pay HST on the commission. Discuss everything until you and the seller feel confident you have reached an agreement.
Then, get all of it in writing.
You cannot rely on a promise and a handshake. You must present the seller with a bona fide offer letter, and the seller must endorse it. You must get all of it in writing, making certain that you have stipulated every detail and set a reasonable expiration period. If you have been working with a real estate agent, she will help you prepare an ironclad and air-tight offer letter. If you do not have a realtor but the seller does, trust the seller’s agent to prepare the letter. Then, have an attorney check it.
The devil is in the details.
Your discussions should have addressed all the details of your transaction with the seller, but you must make absolutely certain your certified purchase offer recreates all the details of your discussion. Realtors have a standard template from which they develop purchase offers, but the templates do not always cover all the codicils, caveats, and contingencies. Make sure nothing slips through the cracks, because changing the offer after the fact can erupt into an ugly dispute, or you may end-up forfeiting your opportunity to get the house you really want. The seller may not be your enemy in the transaction, but he is not your best friend either. Go patiently, scrupulously, and with extreme caution.
When the seller accepts all the terms and conditions of your purchase offer, you may proceed to closing the deal.
More Information:
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