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Making the offer Contingencies Home inspections Finding a qualified home Inspector Getting an attorney Earnest money Counteroffers. Typically, when homebuyers are ready to make an offer, they meet with the real estate agent and complete the Offer to Purchase form together. You may also want to write your offer with the help of an attorney. Although you can prepare an offer yourself, it is not recommended.
An Offer to Purchase includes detailed, complex information. If you try to write an offer by yourself, you may make mistakes, omit or include items that would put you at a disadvantage relative to other buyers or trap yourself into an agreement that is not in your best interest. When you are ready to make an offer, get a copy of your state's form from the real estate agent and look it over carefully.
Have either the real estate agent or an attorney thoroughly explain every item on the form to you so that you understand exactly what you are committing to before you actually write an offer. Contingencies are conditions that must be satisfied or you will not be required to go through with the purchase after your offer is accepted.
Most buyers make an Offer to Purchase contingent upon their ability to obtain satisfactory mortgage financing. Without this contingency, you could risk losing your earnest money or worse if you cannot get a mortgage loan. A home inspection should not be confused with a property appraisal.
An appraisal is an estimate of value that is prepared by a professional appraiser. A home inspection is an examination of a property to determine the condition of the structural and mechanical systems.
How to Protect Your Earnest Money Deposit
This inspection should be completed by a professional home inspector. Although home inspections are optional, it's recommended that you include a home inspection contingency in your Offer to Purchase.
By making your offer contingent on an acceptable home inspection, you have the option to withdraw the Offer to Purchase if the inspection reveals major problems that neither you nor the seller is willing to correct. In fact, you may want to have the inspection completed before you apply for your loan.
That way, you will uncover any problems with the home before you spend money or time on securing financing. Usually, it is your responsibility as the buyer to pay for an independent home inspection.
Generally, a professional home inspection only takes two to three hours, and it gives you valuable information on the home's structural condition and mechanical systems. It's important that your home inspection be done by a qualified professional who has training and experience in a field such as engineering, architecture or construction.
To find a qualified home inspector, ask your lender or real estate agent for names of companies that have a good reputation. If you are unable to find a home inspector through a reliable recommendation, you may wish to look for someone who is a member of the American Society of Home Inspectors.
Earnest Money Deposits When Making an Offer - FAQs
The ASHI standards of practice require that inspectors judge the condition of a number of structural and mechanical components of a home and give a written report to the buyer. You should insist that each of these items be covered in a detailed report that you get to keep.
It is highly recommended that you go with the home inspector when he or she conducts the inspection.
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This will give you the chance to ask questions about any of the conditions that may exist in the home and get an estimate of the cost for repairing these items. It will also give you the chance to ask questions about home maintenance. Depending on your situation, other contingencies may be appropriate. This is another reason why it's a good idea to have an attorney look over your offer before you present it to the seller.
If any contingencies specified in the Offer to Purchase are not met, you have the option of not going through with the purchase.Home buying 101 Submitting an offer
Make sure when you are deciding upon the contingencies that you are adequately protected, but at the same time, be realistic. Consider the situation in your market and make sure your offer terms and price are fair. When you submit an offer, you'll likely be asked to make a deposit.
This deposit is often referred to as "earnest money. If the sale goes through, the amount of earnest money you put down will be deducted from the amount you owe the seller at closing.
How to make an Offer to Purchase
If the seller rejects your offer, or the sale falls through because one of your contingencies is not satisfied, your earnest money should be returned. Once you make an offer, the seller has the option to accept it as is, reject it or make a counteroffer proposal.
If the sellers want to change some of the terms of the offer, they will make a counteroffer. It then becomes your decision whether the counteroffer is acceptable or not.
For example, the seller may counter with a higher sale price. Or, they may change or delete some of your contingencies. Or, the seller may exclude a piece of personal property that you wanted included in the sale, such as appliances.
This is the negotiation process that leads to a final offer that both parties agree upon. How to make an Offer to Purchase Making the offer Contingencies Home inspections Finding a qualified home Inspector Getting an attorney Earnest money Counteroffers Typically, when homebuyers are ready to make an offer, they meet with the real estate agent and complete the Offer to Purchase form together.
How much you can afford How badly you want the house How many other buyers are interested How motivated you think the seller is How much work might need to be done on the house How the property compares with other similar properties top Contingencies Contingencies are conditions that must be satisfied or you will not be required to go through with the purchase after your offer is accepted.
Other common contingencies include: Getting a satisfactory home inspection within a specified period of time Obtaining a termite inspection Obtaining satisfactory well and septic tests Requiring evidence that the property meets building and safety code requirements Obtaining an appraisal with a value not less than the offered price Getting a satisfactory attorney review of your Offer to Purchase if offer was not prepared by an attorney top Home inspections A home inspection should not be confused with a property appraisal.
Central heating and air conditioning systems Interior electrical and plumbing systems Interior walls, ceilings, floors and stairs Visible insulation Ventilation systems Foundation, basement, attic and roof Exterior wall coverings, flashing and trim, gutters and downspouts Windows and doors Surface grading and drainage You should insist that each of these items be covered in a detailed report that you get to keep. Take the Homebuyer Test Financial calculators FAQs Glossary Resources. Quick Links Quick Links.
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