The Homebuying Process: Step 3

It's the one.  You got that little spike of excitement when you walked in the front door, and the rest of the house was just as wonderful.  You've studied the comps I've provided to decide on an offer price, you have your pre-qualification letter and your earnest money check is ready.  Time to fill in the blanks on the Colorado Contract to Buy and Sell.

There are a few things to think about as you're working out the details of your offer.  How long has the property been listed?  If it's a great house and it's brand new to the market, there may be other offers being prepared as well as yours.  How competitive do you want to be?  If the house has languished on the market for a while, you may be able to negotiate a better discount or terms.  When do you need to close and move in?  If that's not that important to you, can you find out what the seller would prefer to make your offer more palatable?  Do you need to ask for closing costs from the seller?  Perhaps you have the down payment but can't afford anymore costs up front.  Keep in mind that the seller will subtract those costs from the purchase price when he is figuring out his net gain from the sale.

If the seller finds your offer acceptable before the expiration date you wrote in, he will sign and send back, making you officially under contract.  If he doesn't, he's likely to write up a counter-offer, adjusting those terms he finds unsatisfactory.  This is very common, so don't let it worry you.  Decide if you can live with the new proposal, or counter again until you both come to an agreement.  Sometimes these negotiations can become emotional, but it's important to keep your goals in mind and remember that this is a business deal.  Don't take the seller's comments or needs personally; he doesn't know you or your intentions, he's trying to get the best deal - just like you.

Once you're under contract, you have time to inspect the property to make sure it is what was represented and what you want.  Some issues are obvious, like peeling paint on the exterior, some are not, like a cracked heat exchanger in the furnace.  I always recommend a professional inspector to start, and then follow up with any other specialty inspections like roofers or plumbers if needed.  Should something prove to be too expensive or too much of a hassle to accept, the contract can be terminated by the buyer.  Other issues, such as the appraisal coming in below the purchase price or the inability to qualify for the right financing, also allow the buyer to terminate the contract.

I should qualify the statement, "terminate the contract."  While a buyer has several opportunities to cancel a deal and regain his earnest money, the transaction should not be entered into lightly.  The earnest money that is offered to the seller is intended as a gesture of good faith, risking some of your hard-earned cash to show that you intend to follow through with what you started.  And while you are not obligated to give the seller a ton of details about why you terminated, you had better have some.  The contract you sign states that you are moving forward in good faith, and if the seller believes you are just trying to capriciously skip out he may contest the return of your earnest money.

It's important to inspect the property thoroughly, including checking out the neighborhood, the homeowner's association if there is one, any construction permits that were filed with the city, etc.  Having knowledgeable, experienced professionals guiding you is the best way to achieve peace of mind about your purchase.  After all, buying a home is the largest financial decision a lot of people make, and a few hundred dollars up front to know what you are buying is money well spent.  I have a list of trusted service providers I work with on a regular basis that want to do a good job for me and my clients and would be happy to put you in touch with them.

image:  apbeatty 
 

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I would love to help you with your real estate journey. 

Please contact me at 303-917-7143 or robbin@stauferteam.com

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