• Adulting Is Easy (Lauren)

How to Find a Home and Make an Offer

The first step in the home buying process isn’t actually to start searching for homes, as discussed in an earlier blog post. When you are ready to start looking, there is a smart way to go about it. Here are some of my tips.

Hopefully, you took the time to find the right agent for you. Someone who came highly recommended by a friend or family member. Or someone who specializes in the areas or type of purchase you’re making. The first thing to do when you’re done with your preparation is to work with your agent to create a list of homes you’re interested in, using your criteria, like number of bedrooms and bathrooms, whether it has a garage or not, location, price, etc. Keep in mind the sales price you’re comfortable paying. Sellers typically come down in price when they sell, but be realistic. If you’re approved for a $300,000 house, it’s probably safe not to look at any listed for $500,000. On the flip side, try not to compromise on what you’re looking for. If you want a garage, only look at houses that have garages (assuming these are available in your price range). Your agent will set up showings. If possible, ask for them to cluster them in terms of timeframe and location for ease.

As you go through a showing, take a minute and see how you feel in the neighborhood and in the home. It has to feel good! Either remember or have a list of your requirements. Does the house meet them? Notice the finishes. Are there updates you want to make? You should know how much remodeling or updating you’re willing and able to do. Again, be as realistic with yourself as you can. At the end of the day, it’s about being able to afford to live in the home and being able to actually picture yourself living there.

If you find a home you like, make an offer on it. If you didn’t find one you like, don’t make any offers! Buying a home is one of the most important decisions you’ll ever make, so be patient. When deciding what to offer, my advice is not to be anchored to the list price. If a home is for sale for $250,000 and you do not want to pay more than $200,000, then offer $200,000 or less, even if you arbitrarily think they’re hoping to get $240,000. The seller can always make a counteroffer (in my experience, they almost always do). You never know what the seller will accept. You can make an offer by submitting an executable contract or through your realtor (or they could make a verbal offer). If you submit a written offer, all the seller has to do is sign the contract and you’re under contract for the home.

This process can be nerve-wracking at first – especially once you see how long the contract is. In addition to the price, the contract will include fillable fields regarding your loan type, close date, earnest money amount, and other miscellaneous items. For example, in Florida the washer and dryer are not automatically included, and you must write this stipulation in if you want them. It will also contain pages of other legalese that you should review with your agent (and an attorney if you’re not using a standard contract). If you’re getting financing, include an appraisal contingency too.

Note that in addition to your down payment, you’ll be responsible for closing costs that can total about 3% of your loan. In a recent offer, we asked for and received closing cost assistance of $5,000. If you don’t have cash or simply want to hold onto as much of it as possible, you can offer a higher purchase price with closing cost assistance. Using the above example, you could offer $207,000 with 3% in closing cost assistance, which would mean you’re basically offering $200,790. Alternatively, you could offer $205,000 with $5,000 in closing cost assistance, which is like offering $200,000. (Note that the home will have to appraise for the contract purchase price.) Don’t be afraid to get creative! One real estate book I read said to offer an odd number, like $201,100, to make your offer stand out and cause the impression that some high-level analysis went into it.

Your first offer may not be accepted. Eventually, though, one will! Now the real fun begins. Check out the next steps next week.

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