Welcome back to Home Buying 101 – Throughout this series I will be detailing the various parts of the transaction process for purchasing a single family home. My goal is to answer the many questions looming around purchasing, especially for first-time home buyers. If you are just beginning, I recommend starting with Part One: Understanding Equity.
At this point we've seen houses and whether it's the first or the tenth you have found the one... so we make an offer! Together we will review the comparison properties to determine what a fair sale price is. Things to consider when looking at surrounding properties are the number of bedrooms & bathrooms, lot/yard size, price per square foot, if there's a pool, garage size, total number of days on the market, and updates in things like counters, flooring, and fixtures.
But besides the price, did you know other parts of your offer can make it stronger and more appealing to a seller? These items are important to consider, especially if we find ourselves in a situation where we are competing against other offers. Outside of the offer price, the remaining parts to consider add up to about 2% of the offer price. In our market, the average home is just over $200,000 which means these additional pieces are a total leverage value of $6,000. Parts of the offer to consider are:
Down Payment: For those buyers that can increase the amount of down payment, it shows the seller that you are serious about their house and are more financially stable than some that you may be competing with. It also provides a cushion in the event that there's a difference between the appraisal value and the offer price.
Earnest Money: In our market, the Earnest Money is about 1% of the offer price. Essentially the Earnest Money is a deposit on the property, so by writing an offer with a higher amount you are showing the seller how much you are willing to leverage your desire to purchase their home.
Title Policy & Survey: Generally the seller would cover the title policy in our market, but if we need a stronger offer then you as the buyer can choose to pay for it instead. Based on our market's average sale price, you could be saving the seller about $1500 just with this change alone! Most properties have surveys already, but if the seller has made changes to the property without updating the survey, then the buyer can also choose to pay for a new one if it is needed.
Residential Service Contract: Also known as the home warranty, on average our vendors can issue a basic one year policy for under $500. Again, a buyer can choose if they want to pay for it or if they want to ask a seller to.
Closing date: When I was in middle school my family moved back from Michigan to Texas and my parents had two house payments for 19 months.. NINETEEN MONTHS! In a situation like this, a buyer that can move quickly and purchase the property can be highly advantageous for some sellers. The added bonus is the buyer doesn't have to pay anything extra to do so! On the other side, before we decide to shorted the contract timeline, I would confirm with your lender that the date we are choosing is feasible so that we don't have any hiccups and end up need to extend closing.
Settlement and Other Expenses: For as long as I've been an agent, our area is a seller's market. Not that it can't be done, but if the buyer can afford to not ask for closing costs, then it would be very helpful not to. This allows the seller to have a higher "take home", meaning they walk away from the sale with more money in their pocket. Who wouldn't love that?
Non-Realty Items Addendum: In some cases a seller is willing to leave behind or "convey" items in the house like the fridge, washer or dryer. If a buyer doesn't need them, not asking for these pieces contributes to a stronger offer. In the event a buyer does need items like these, this addendum can be added and the buyer can also ask for them at a cost in addition to the offer price.
Termination Option: Also known as the Option Fee, this amount is typically $100 in our market with the time period being 7-10 days. Depending on the day the offer is submitted, shortening the option period to 5 days shows eagerness to purchase.
There you have it! Coming up next is Part Eight: This or That. Also, please leave any comments or questions below!
Katie Langthorn | Real Estate Agent, REALTOR®
C: 281.850.7743 | O: 979.703.1979 | F: 979.703.1980
3091 University Dr. E. #230 | Bryan, Texas 77802
Your Source for Bryan/College Station Real Estate