When buying a house in Austin TX, there are several steps to follow, but if broken down, it's much less intimidating. What else helps? Doing the steps in a particular order.
For example, Part 1 of buying a house in Austin TX talked about getting Pre-Approved for a mortgage, while Part 2 talked about how to start looking for houses and neighborhoods. Part 3 talked about actually looking at the insides of houses.
This next part will address writing an offer.
Before writing an offer, you need to have your REALTOR® pull up the history of the property along with recent activity in the immediate neighborhood. And I mean immediate neighborhood, not 2 miles away or even 1 mile away, unless those houses are in the same subdivision and it's a large subdivision.
As for the history of the property, you're going to be limited to information in states like Texas, as we're a non-disclosure state, but other states have lots of information readily available.
When you write the offer, you need to write it based on the neighborhood activity as well as the current asking price of the sellers. If the neighborhood is averaging $350,000 with an average of 60 days on the market at a 98% listing to selling ratio; and the seller is asking $350,000 and has been on the market only a couple of weeks, do you really think you can offer him $325k and he's going to accept it?
If the seller is asking $350k and it's been on the market above the average, like 90 days, then yes, a $325k offer would be a nice starting point, but you should always be prepared with a counter offer and determine what you feel is your best and final price you would pay for that house.
Offers must be written. You cannot submit a verbal offer as they carry no weight. You must also submit your pre-APPROVAL letter with your offer.
What else do you need for your offer? You need to know how many days you're going to need to run inspections on the property. In Texas, averages are approximately $100 for 7 days. If you need more than 7 days, as many buyers are asking for 10 days in today's market, then most sellers want $150-200 for the Option Fee (inspection period).
You'll also need to figure out how much money you want to put up for earnest money. No, earnest money is not legally needed for a contract, but no smart REALTOR® is going to allow their seller to accept an offer without the buyer putting up some kind of "good faith" in case they don't perform according to the contract.
Earnest money is your money, but held at the title company until closing. Putting up only $1000 might insult a seller, but doing just a little more like $1500 looks better. In higher price ranges, like the $350k house I mentioned above, you should be prepared with a minimum of $2500-4000 for earnest money. As you go higher in price, some people use a rule of thumb of 1% of the contract price, but it's all negotiable.
Other things that are negotiable in the contract are the title company and who pays the owner's title policy. It's tradition for the seller to pay for this as they're ensuring clear title for the buyer, but it's still negotiable. Home warranties, closing costs, and surveys are also other negotiable items in the contract.
It's tradition for the seller to pay for the buyer's first year of a home warranty, and it's also tradition for the seller to provide their current survey and the buyer to buy a new one if the seller's isn't acceptable, but they're still negotiable.
As for closing costs, this is always a touchy subject, but I'll just say this: NO SELLER ACTUALLY EVER PAYS CLOSING COSTS! THE BUYER IS FINANCING THEM!! To break that down, if you offered $325k for the example house above and then asked the seller to pay $5k in closing costs, that really means you're only offering him $320k. You are financing the additional $5k into your mortgage. Call or email me if you need further explanation as this topic get misunderstood a lot!
No offer is a contract until everyone signs every last item that has been marked and changed, so no one can go back and claim they have a different version of the contract. The last party to initial or sign anything is the one to put the execution date on the contract.
Just a side not, if many items changed during negotiations, it's sometimes best to write a clean and clear new offer and present that for initials and signatures so the underwriters don't have to look at your mess.
If you have any questions about writing an offer, please feel free to email or call me at any time.
Part 5 talks about the home inspection when buying a house in Austin TX.
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Copyright© 2009 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
* Real Estate - Buying a House - Austin TX- The Simple Steps to Follow- Part 4 * was first published on donnahomesblog.com