NEGOTIATING AND CLOSING ON YOUR NEW HOME
Congratulations are in order…
You are almost there! After seeing a lot of homes on the internet and being shown some homes in person, you have found the home that is just right for you. There are some simple steps to take now that you have made appropriate preparations and have decided. It starts with making an offer and ends with the closing officer handing you keys and garage door openers!
Placing An Offer
All valid offers in real estate must be made in writing. The best and simplest way to make an offer for a property is simply to write a contract. The buyer then executes their side of the agreement hoping the seller will agree and sign their side. Sometimes, the offer is accepted right away. Most often a negotiation then takes place. We will prepare the offer for you electronically based on your requirements. We will then deliver it to you electronically. Once you execute the agreement we will deliver it to the seller in a prompt fashion.
Negotiating Sale Price & Terms
A real estate transaction can be negogiated three times before closing. First, during the offer stage. Then upon inspections. And a little more rare, upon appraisal if it is low or has repair requirements. It is possible to have other negogiations but it is important for both buyer and sellers to be aware of when during a contract negogiations take place. At this stage the major items to be negogiated are sale price, the closing date, earnest money, the length of inspections, additional items (i.e. an existing refrigerator) and a residential services agreement. Once buyer and seller agree to all the terms a contract is executed by all parties. The listing agent then changes the status of the home in the MLS to “pending” and no other buyers are able to walk through the property.
During this stage, usually ten days, the buyer has the opportunity to throughly inspect the property. The buyer must be accompanied by a licensed real estate professional if the owner is not present. Inspections can range from the buyer simply looking over the property themselves (not recommended) to licensed home inspectors, electricians, plumbers, heating and air professionals, pest inspectors, mold, lead based paint and others. We have worked with some great inspectors and wish to share them with you.
Once inspections have taken place, they will provide for the buyer a report of items that they found. They will reveal any and all possible concerns with a property. There job is not to provide the buyer with a list of repairs that the buyer gets to demand of the seller. This now becomes a negogiation. With an older home, there is typically a longer list. Once the list is recieved, the buyer has the option to ask for a repair of any defect “outside of normal working order”. If something is aesthetically displeasing but works well, that does not qualify. An item must not be working if one is to ask the seller to respond to it. Once buyers and sellers agree to the repairs to be made, the seller has up until closing to address the agreed upon list.
Ordering Your Appraisal
As soon as the inspections are done, it is appropriate to immediately order the appraisal. If the buyers are really confident in their purchase it maybe advisable to order the appraisal prior to inspections. Typically buyers will order the appraisal through their mortgage lender. If one waits too long, this could delay closing as a lender will not issue clear to close unless the property appraises at or above the agreed upon sale price. If it appraises below the agreed upon price, the buyer most likely will desire a renegogiation.
Receiving Clear To Close
“Clear to Close” is an official term lenders use to let all parties know that they will fund a loan for the purchase of real estate. It is a joyful moment to hear those words. Certain rules dictate that this official distinction will not be made until three days prior to closing. This is the reason that buyers must be vigilant in their responses to lenders and the underwriting staff. They want to give their lender plenty of time to get all of their processes complete so that they can issue clear to close.
This walkthrough is where the buyers confirm that they sellers executed upon all of the agreed upon repairs. In addition, they are keeping a close lookout for any additional defects that may have taken place in the period between inspections and closing. At any given point a buyer can simply decide not to purchase the property. They may forfeit their earnest money in certain situations but none the less, the choice is theirs. For this reason, sellers are motivated to do repairs well. Buyers are motivated to recieve a home in the agreed upon condition. This walkthrough of the property is typically done a few hours before closing.
Closing typically takes place at the buyer’s title company. Seller’s have the option of signing their documents up to three days prior to closing. It is now common to the buyers to not actually ever meet the buyers at closing. The lender sends all of the neccessary documents for the loan, in addition to the closing company provides the deed, any title insurance, home warranty documents etc into a “CD”. This packet is what buyers will methodically sign in front of the closing officer. Once all documents are executed by all parties, the keys, gate codes, security codes and garage door openers are handed over to the buyers and the are officially property owners!