Here I will go through steps to finding a home and knowing what to do when putting in an offer. There are a lot of steps to this process, it is important you have a Realtor that can help you and inform you on what can and will happen.
First steps on finding the home:
For a Realtor to show you a home, first, you will have to understand your budget. Getting a pre-approval letter from your lender will ensure any home you see is within budget and you can put in an offer as soon as you want. Once you are sure this home is within your budget, determining your offer price is the next step. There are many directions you can go to picking what price you will offer. You can offer what the home is listed at, a lower or higher. You should base this information off of your pre-approval letter, the housing market, and the competition for the house. Multiple aspects go into writing your offer such as; adding contingencies, needing seller subsidy, the housing market, paying with cash or going through a loan, etc. At this step, talk to your Realtor to ensure you have the highest opportunity in getting the home you love.
How the housing market will affect your offer:
You should not only focus on the housing market when preparing your offer. Although it is very important to know what is going on, the market is in constant change and should not 100% determine when you are looking to buy. With that being said, here is how it can affect your offer. There are terms in the housing market called a seller’s market and a buyer’s market. A seller's market is known to benefit sellers more and vice versa. The goal with the market is to have it balanced in the middle, neither a sellers nor buyers market. When it skews to one direction, movement is made to bring it more to the middle.
Within a sellers market there is typically more competition, rising real estate prices, and less available homes. In a buyers market there is less competition, seller subsidy acceptance price declines, and more available homes.
Contingencies to consider:
As an agent, I would never recommend buying a home without an inspection or appraisal, this is a conversation you should have with your Realtor. It is extremely important for you to know what you are buying with such a big investment. An inspection will formally check everything from the foundation to the trees above the home. This ensures that you are buying a home in working condition and livable to the best standards. An inspection is not a pass or fail situation, you will get a detailed list of what should be fixed and to what level. Afterwards you may send it to the seller and negotiate items that will be fixed and paid for by you or the seller.
An appraisal is done by an appraiser that works for the state you reside in to determine if the home is listed at fair market value. If you are buying a home that appraised for more than the agreed upon price, you will have immediate equity! If it comes in lower, you can go back to negotiating with the seller to protect yourself in buying a property at market value. If it appraises for the same price, you are good to go! After knowing this, wouldn't you want to get the inspections and appraisals done?
Submitting the offer:
Submitting the offer is the easy part! Your agent will write the sales contract for you to sign, and forward it to the selling agent. The seller's agent then presents your offer to their seller. There are three things that can happen with your offer. First, it gets accepted. Great! The second, it gets rejected. Third, the seller rejects your offer but sends a counteroffer. This is where negotiations occur, all of which are normal and your agent is prepared for. This is completely dependent on the situation of the transaction. The bottom line is to meet on a common ground so all parties are happy and comfortable in the solution.
Have fun house hunting! Knowing that you have power as a buyer in any market will benefit you greatly. Get knowledgeable about the process and be prepared.
