THE MECHANICS OF MAKING AN OFFER ON A HOME
A. Offer Stage:
When you, as the buyer, decide to give an offer to purchase a house, I, as your buyer’s real estate agent, need the following items to make an offer document:
- Offer Price: The purchase price you want to offer
- Type of Financing: Cash, conventional, FHA, or VA loan with interest rate and term (30 year fixed rate loan is most common); down payment amount?
- Closing Date: Move-in date (45-60 days from the offer date is common)
- Pre-Approval Letter: Loan pre-approval from your mortgage company
- Earnest Money Deposit: A personal check of 0.5-2% of the offer price.
- Inspections: Types of inspections you want to do. Home Inspection, Radon Inspection, Termite Inspection (usually required by the lender). Buyers pay these expenses. Home Inspection: $350-600 for up to $600,000 home, Radon for $120-200, Termite: $70-100. Home inspector may recommend additional inspections such as chimney, roof, mold, structures etc.
B. After Acceptance:
The seller can respond to your offer with: “accept”, “reject”, or “counter offer”. If the seller accepts your offer and sign the contract, we have a ratified contract with signatures from both buyer and seller. If the seller makes a counter-offer with different terms, you can either accept or make your own counter offer. This continues until both parties have agreed to and signed all terms. During this time, the offers from other buyers can come in and could be accepted. This process can take a few days to a week. The process may take much longer if the property is listed as Potential Short Sale, or REO/Bank Owned, which might require an approval of the additional parties including the legal team from the bank or underwriter that holds the mortgage on the house.
Once we have a binding contract, there are several deadlines which the buyer needs to fulfill before the settlement:
- Loan Application
- Home and Radon Inspections
- Repair Request -> ratification of home inspection repair items
- Termite Inspection
- Formal loan approval
- Walk-Through (usually one day before the settlement to make sure all the repairs are made and there is nothing broken since you saw last time)
Note: Within the contract of sale, the buyer and seller specify the time frame for each item such as the home inspection. The time frame is defined for the deadline of the home inspection, the buyer’s submission date for repair request if there is any, and how many days the seller has before the counter offer can be made etc.