This is week 3 of the Road to Home-Ownership Series.
Today, I’ll go into more details about Phase II - Finding and Securing Your Dream Home.
As with Phase I, there multiple steps associated with this phase.
Step 1: View Your Favorites.
I love technology, what about you?
It’s convenient, it saves you time, and it saves you money. Can you imagine 10-15 years ago when you needed to go in a physical office, look into a book of houses, use the physical map to find each property…
Now, you can sit in the comfort of your own home and look at houses, pictures, the satellite view of the house, and even the street view.
If the homes you like are close to your job or on your way home, you can actually drive by and see if you like it from the outside, if you like the neighborhood, etc. Do you know how much time you can save later if you did a drive-by of the homes you like instead of organizing your entire family to go on a show homes trip? A lot of times the pictures don’t say if the driveway is so steep, or if there are many trees around that you don’t want to be there, the roof and siding actually needs repair, and so many other things you could discover just by driving by that can eliminate this home from your list of homes to be seen on your showing tour.
When you have your list of favorites, let your agent know so they can schedule them to be seen. It’s good to have 3-5 homes, not more, to look in one day.
Step 2. Find Your Home.
Let’s say you found a home or two you like, what now? Let’s look at the Pros and Cons for each one. Most times you will compromise with something unless you are building your dream custom home.
You need to know what the top 3 things are that you must have and go from there.
Once you have identified the best home for you, you're ready to move to the next step.
Step 3. Market Analysis.
A great real estate agent will prepare a Market Analysis for you which consist of the recent comparable sales of homes similar to the one you’ve just found.
Based on this, you’ll make an educated decision of what offer to put in.
Step 4. Write Your Offer.
Your agent will help you put your offer in writing.
This is where you not only put your price but you spell out all contingencies, such as time for inspections, appraisals, financing, closing, earnest money you put it, who holds the earnest money, how are they disbursed in the event you decide to terminate, closing costs, who pays what, closing attorney, community association disclosures and who pays what to transfer to the new home-owner and to do the search, termite letter, surveys, title work, seller’s disclosures, other contingencies..
This is where you offer your best terms you want to get as a result.
Step 5. Negotiations & Counter Offers.
Your agent will present and help you negotiate the best terms possible for you.
They will be the liaison between you and the seller or the seller’s agent.
The negotiations usually take about 48-72 hrs going back and forward between the Buyer and the Seller by doing counter offers.
Because everything must be in writing for a real estate transaction to be valid, we use counter offers for a method of communication, where each party agrees or counter on a term that they don’t until they both come to agreement.
Also, time is of essence. Once you make your offer you also ask for the seller to respond in a certain time. If they don’t respond, the offer is null and void. You can either make another offer or just move one.
If the seller decides to respond within the time frame you gave them, they can either accept your offer with no change or agree to some and counter or offer new terms. This is called a counteroffer. They also will give you a time frame to respond, and you can repeat the above: accept as is or counter… You can go back and forward until you all agree or not.
Either you’ll agree and become Binding or you won’t and you’ll start looking to find another home and the seller will start looking for another buyer.
Step 6. Offer Acceptance.
The last party to accept all terms without changing a thing has accepted the offer.
There is a misconception a lot of agents are not aware because of lack of education and training, and they confuse offer acceptance with binding agreement.
Step 7. Binding Agreement.
In order to have a Binding Agreement, the party that has accepted( their representative) needs to give notice of acceptance to the offering party, and the last party who receives the notice, will be the one who ‘s going to fill out the Binding Agreement Date(BAD) into the Purchase & Sale Agreement.
This is very critical date because we count all contingencies in the agreement from this date and we as agents need to be cautious for the sake of our clients about that.
For instance, let’s say the seller has accepted the last counter just before Midnight on May 28th and filled out May 28th as a BAD, the buyer will count all contingencies from this date, when actually the seller agent needs to send over the Accepted Offer and when the Buyer’s agent receives it (ex. The morning on May 29th) then they should be the ones who fill out the BAD, and they’ll be giving 1 more extra day to their buyer to work with.
Alright, now you’ve secured your perfect home. Next week, I’ll go over the last phase, from Contract to Closing, and all the steps in there.
Thank you for stopping by and let me know your questions in the comment section below.
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