What to Know Before Your First Offer

There it is! The perfect house! It just popped up on Zillow. You can barely contain yourself as you text your Realtor® the address and ask if you can see it tomorrow. Your Realtor agrees and by 10 am the next day you’re standing in your (hopefully) soon-to-be dream home. You and  your S.O. love it so much you’re ready to write the offer right there in the kitchen. As she starts reviewing the terms of the contract you start to become overwhelmed by the number of questions and prompts she asks you all. Suddenly this really exciting moment is a little confusing. Don’t worry, you are not the first person to be confused by the questions in your Purchase Agreement. Realtors are here to guide you through the process but the decision of the terms under which you buy the home are ultimately up to you. There are a few things you should determine before you write that first offer to make the process smooth and keep the excitement up!  Banks look at your joint credit. If more than one person's name is going on the deed of the home the bank will run a credit check on both of you. Know who’s name (one or both) the house will be purchased under and who the bank needs to provide a proof of income letter or pre-approval letter for. This letter will be requested by the seller before they agree to a contract nine times out of ten.  Closing dates are typically 30 to 60 days from the purchase date.If you are renting or selling your current home know your timeline for moving out. Your contract will state the day of your closing and most sellers are hard to convince to hold onto their house for more than 60 days after it goes under contract. That said, every case is different. Your first mortgage payment on your new home is typically 30 days after you close. This could be the difference between you making overlapping payments for your leased apartment and having a month free of a mortgage/rental payment. It's best to check with your loan officer to see when your first mortgage payment would occur.  VA is a Buyer Beware state.A Buyer Beware state means that your inspection is voluntary and 100% up to you to complete. In your contract you’ll be asked if you’d like an inspection contingency, meaning you can either ask to have an inspection or you can forfeit the right to have an inspection. Some people forego the inspection as a way to make their offer more enticing. If you choose to purchase a home without an inspection contingency you may win the home but the unforeseen costs could add up quickly. Having a home inspection allows you to have a third party person (inspection company) come in to review every nook and cranny of the home and inform you what is wrong with the home and what looks perfect. This will help you determine what you would like, if anything, to ask the seller's to fix before the closing date and submit an inspection addendum.  The inspection is on the buyer.As the buyer in a Buyer Beware state it is up to you to schedule and pay for the home inspection should you elect to have one. The typical cost of a home inspection is between $300 and $500 depending on the square footage and any additional testing you may have done, like raydon or additional buildings/structures.  Closing costs can be covered, split, or all on you.Closing costs tend to be about 5% of the purchase price of the house and are not automatically covered by the seller. In your contract you can ask that the seller cover the closing costs, you can offer to split the closing costs by determining a dollar amount you will pay, or you can not ask for them to cover any of your portion of the closing costs. This can also be used as a way to make your offer stronger and stand out against other offers should you find yourself in a multiple bid situation.  BONUS: Buyers have to supply an EMD.Bonus Point: Once your offer is accepted you will mostly likely be required to give a Earnest Money Deposit (EMD), typically in the form of a check, to your brokerage within 3 days on average. This money will be taken out of your account and held in an escrow account until you close on your new home. This money is then applied to your closing costs or returned to you. Know the amount you’re willing to have held for your EMD as it goes into your contract. Some contracts require more but on average a home that is between $150,000 and $450,000 hold $1,000 to $3,000 EMDs.