You found a home your family loves. But you’re not the only one who wants it. What’s the best way to make an offer on a home that other buyers are vying for as well? Here are some ways to put your best foot forward:
Start off with your best offer. This isn’t the time to start with a lowball offer and wait for the seller to mak
e a counteroffer before you offer more. If you have competition, you’ll want to consider making your best offer right off the bat. That said, don’t let a multiple offer situation push you into offering more than you’re comfortable paying.
Make sure you’re pre-approved. Make sure you’re pre-approved for a home loan before you start your home search, not just prequalified. Attach your pre-approval letter to your offer.
Don’t skimp on earnest money. An adequate earnest money deposit is a sign that you’re serious about buying the home.
Don’t waive the home inspection. In multiple offer situations, it’s easy to get caught up in the competition and do whatever it takes to win. To stand out, some buyers will even elect to not make a professional home inspection a contingency of their offer. Home inspections are an important part of the home buying process and can help you spot costly problems.
Relax. There are so many parts of a multiple offer situation you have no control over, so try not to let the stress get to you!
The appraisal is an important part of the home buying process. But what happens if the appraisal comes up short of the agreed-upon selling price?
Here’s an example: A home is listed for sale for $350,000. It’s a multiple bidding situation, so you offer a higher price of $370,000 to gain an edge over other buyers. Your offer is accepted by the seller. However, your lender’s appraisal comes back and it shows the value of the home is only $350,000. That means the lender is only going to provide you with a loan based on that amount.
When an appraisal comes in lower than expected, home buyers have a few choices. If you really want the home and have the cash on hand, you could make up the difference with a larger downpayment. You also could try to negotiate a lower selling price. The seller doesn’t have to lower the selling price, of course, and will understandably be reluctant to do so. In some cases, the buyer and seller each give a little, with the seller lowering the price and the buyer making a larger downpayment.
Another option is to see if it’s possible to order a second independent appraisal or to appeal the existing appraisal. Your lender can let you know if there’s any type of appraisal review process. You and your real estate agent will have to analyze the appraisal to make sure the appraiser included all relevant comparable sales on the report
Lastly, if you have an appraisal contingency in your offer, you have the option of walking away. It’s a last-ditch option if all other efforts fail.
Did you know that numerous studies over many years show a link between owning a home and happiness and overall well-being? For example, a report by the Consumer Financial Protection Bureau shows that homeowners generally have higher financial well-being than non-homeowners.
In the CFPB’s report, homeowners have an average financial well-being score of 58. That’s higher than both renters (with average of 49) and those who neither rent nor own (average of 50). The U.S. average financial well-being score is 54. You can read the entire report at this link.
Research studies have linked owning a home to a number of positive outcomes. Researchers at the University of Southern California and the University of San Diego, for example, have linked homeownership to a reduced risk of teenage pregnancy and a lower possibility that a child will drop out of school. A study conducted by Ohio State University found that children of parents who own their own homes are more likely to score higher in reading and math and have fewer behavioral problems.
At the very least, buying the right home can a key ingredient in being happy, according to a report by HomeAdvisor. The company’s research in the area has found that homeowner happiness boils down to an affordable and comfortable home in a safe and connected neighborhood and with a reasonable commute. Good things to keep in mind during your next home search.
When purchasing a home, your mortgage pre-approval is based on your current financial situation. That’s why once you are pre-approved, you should avoid making big changes to your finances. Here are several things you’ll want to avoid doing while you’re in the process of financing a home purchase:
1. Taking on more debt. Talk to your lender first before you open any new credit accounts, request a credit line increase or co-sign on a loan. As a general rule, you’ll want to avoid taking on any new debt before you close on your home.
2. Changing your job. Your pre-approval is based on a number of factors, including your employment status and pay.
3. Making a big purchase. Check with your lender before making any big purchase, either with credit or with cash. Wait to purchase furniture and other big-ticket items.
4. Making late payments. Stay up to date on all of your credit obligations and utility payments. Now’s not the time to have overdraft your checking account.
Part of the moving process is changing your address so that all of your bank statements, bills, magazines and other mail goes to your new home. The quickest and easiest way to do that is to hop online and go to the U.S. Postal Service website. You’ll need to verify your identity by using a credit card, and you’ll be charged $1, but the change can be done in minutes, and without leaving home. (You also can go into a post office and make the change without using a credit card.)
After your change of address is processed online, mail sent to your old address will start going to your new home. The USPS mail forwarding service lasts one year for most first-class mail. Magazines are forwarded for 60 days.
Certain classes of mail, however, will not forward to your new address through a change-of-address request. Companies and organizations you’ll need to contact directly to change your address include banks and credit unions, mortgage companies, insurance companies and utility companies. Don’t forget to notify the Internal Revenue Service and the motor vehicle department as well that you’ve moved.
“New car smell” is divine, but nothing quite like the smell — and look — of a newly-built home. Pristine carpets, unblemished walls, the smell of freshly-cut lumber lingering in the air — it’s hard to beat the excitement of taking ownership of a brand-new property.
Everything looks great, and you have been involved in the construction process every step of the way. Why would you need a home inspection?
Home inspectors are trained to spot problem areas, and identify issues that could cost you time and money down the line. Building a home is a massive undertaking, much like fitting together a big jigsaw puzzle. It involves many different trades, from plumbers and roofers to HVAC technicians and concrete masons. When should the inspection take place? Your home inspector may want to take a look at specific times during construction and when the home is completed.
A comprehensive home inspection is always a good idea, whether your house is the NKOTB (anyone?) or a centuries-old pillar of the neighborhood.
You found a home that’s in the right neighborhood and an easy commute to work. The only problem: It’s listed for sale in ‘as-is’ condition. What does that mean? A home that’s being offered for sale in ‘as-is’ condition means that the owner is making no guarantees about the condition of the property and will make no repairs or improvements. It means the price reflects the fact that repairs may be needed.
Being listed in ‘as-is’ condition doesn’t necessarily mean there is something wrong with a home. Most bank-owned properties are listed for sale ‘as is,’ but you also may find an individual seller lists a property this way because they can’t afford or don’t want to make repairs to the property. They just want to sell it.
While ‘as-is’ condition shouldn’t cause you to rule out a property, this is definitely not the time to skip the home inspection. If you decide to make an offer, you should make it contingent upon an inspection. (That’s good advice when buying any type of home.) Also know that you can still negotiate on price with a property being sold ‘as-is’. Just because a seller isn’t willing to make any repairs, doesn’t necessarily mean they won’t lower the selling price to compensate for what you discover during the inspection process.