Searching for the perfect South of the River home consumes the attention of every buyer. The thrill of the hunt kicks in as we scour the computer for a hot new listing. Our senses are on red alert as we drive through a new neighborhood for the first time, scanning for swingsets, bikes and kids. We notice parks and commute routes, roofs and siding, backyards and decks like we have never seen them before. Then we spot it, the perfect house and race back to the office to put in an offer.
Bam! Reality hits us and the thrill of the chase turns into a never ending string of questions and decisions to make. Your agent peppers you with questions; how much Earnest Money do you want to put down, what type of financing to use, when do you want to close, which personal property to include, do you want to make the offer contingent upon inspection, and the big one, how much money to offer for the home.
Knowing these 5 fundamentals will help you make confident decisions and keep your focus on the ultimate goal, buying the home.
1. Do your homework! Look through listings online and visit enough homes to gain confidence in your judgement of value. Stay focused on solid features of homes instead of enticing photos. Compare homes based on square footage, locations, updates to mechanical systems and items like bedrooms, baths and garage space. Look past wall colors, carpet and other flooring.
2. Know your Mortgage Type, talk to your mortgage officer about loan types until you are comfortable with your level of understanding. Ask your agent or loan officer to help you calculate several scenarios regarding purchase price, downpayment and interest rate levels. Keep these examples and refer to them for a good approximation of your house payment.
3. Prepare your initial funds, set aside your Earnest Money, have the funds available and dedicated in a checking account. There are no minimum Earnest Money requirements. A common amount for homes in Apple Valley, Burnsville, Eagan, Farmingon, Lakeville, Prior Lake, Rosemount and Savage is about 1% of the amount you are offering. Round up to the next $1000, it makes a slightly stronger offer.
4. Understand Value, it’s not the same as cheap, especially in home purchases. The entire marketplace is ripe with really good values. Every buyer purchasing in 2011 will get a great value! Some will get a great value because they negotiate many $1000′s off the list price. Others will get their great value when they select a home listed for a nice price and pay close to asking price. A third group of buyers will achieve value by offering on a home which is underlisted, and may even pay many $1000′s over the asking price. Don’t be afraid to pay the full price or more for a listing, if you see it’s value. This is where your homework pays off.
5. Be flexible! I see it all the time, buyers know they may receive a counteroffer from a seller and even talk about it as they write their offer. A counteroffer comes back from the seller and buyers’ enthusiasm and interest in the home deflates rapidly. When we write the initial terms of an offer it seems to take root in our minds and we bond with the numbers. Anticipate a counteroffer, especially on the terms of price, closing date and financing commitment dates. A counteroffer is good, it guarantees you are not overpaying for the home or leaving money on the table.
Searching for a new home is an adventure, the offer process requires focus and detailed decisions, follow the 5 fundamentals and capture the home of your choice.