This is where our Realtors shine. Having closed more deals than 90% of Realtors out there our agents specialize in negotiating the best possible terms for our buyers. We offer clear, concise, and unbiased advice including you in every step of our thought process.
When you are ready to make an offer the best thing you can do is arm yourself with data. Your Realtor will provide you with a Competitive Market Analysis and help you understand what it all means.
Elements of a CMA
· Location in relation to your target home, you generally want to keep comps within 1-2 miles. (this will not apply to unique homes)
· Time Frame: In most normal situations you do not want to compare comps over six months old if there is more recent data available.
· Size: You want to compare finished square feet in a home to one another. Add or subtract value based on the size of the home.
· Renovations: Make sure you try to see pictures of comparable homes that have sold (so you don’t miss that $50,000 addition in the back). Have your Realtor send you the old MLS listing for comparable homes.
· Market Trends: Have homes in your target area gone up or down in the last six months? Make sure you understand what is happening in your market on a local level.
· Active/Under Contract: Make sure you know what comparable homes are under contract and available in your target area.
Besides the offer price, there are several other important terms that can make your offer more or less appealing. Below are the variables that are usually included in an offer:
1. Type of Financing: This is where you break down the type of loan you intend on getting and what your down payment will be.
2. Seller Subsidy: You can ask the seller to contribute to your closing cost. At the end of the day, the seller’s net take home is what is important. An offer of $515,000 with a $15,000 subsidy is the same as an offer of $500,000.
3. EMD or Earnest Money Deposit: Known in some markets as a “Good Faith Deposit”. This is intended to show the seller you are earnest in your attempt to purchase the property and is what you are putting on the line if you default. Generally 2-5% of the sales price, but there is no fixed or ‘traditional’ amount.
4. Settlement Date: Check with your lender on how long you can lock your rate; this will help you determine a closing date. Generally 30-60 days from contract is normal for closing.
5. Termite and Wood Destroying Inspections: In most areas the sellers are contractually obligated to remedy any wood destroying pest and repair any damaged caused, this is not negotiable from the seller’s perspective. This does not apply to “As-Is” sales. Done within 30 days of settlement.
6. Finance Contingency: This is the amount of time you have to ensure your financing is in order. The shorter the time frame, the better. You do not have to get your loan at this time, you just have to get a commitment from a lender that they will give you a loan. Generally 7-21 days
7. Appraisal Contingency: This is the amount of time you have to ensure the home will appraise for your sales price or higher. Your lender is responsible for ordering the appraisal and you should generally order it as soon as possible. If the home appraises for less than the sales price you have the right to request a lower sales price and if the seller declines you can void the contract. A minimum of 21 days is suggested for an appraisal contingency.
8. Inspection Contingencies: Many homes will only need a general home inspection but sometimes other inspections are necessary. These include but are not limited to Radon, Well, Septic, and Pool inspections. Depending on the amount of inspections necessary, 7-10 days is generally suffice to get inspections done.
9. Common Misc Terms: Other common items in a contract include the breakdown and payment of Government fees and taxes, home warranties, and response deadlines.
Once both parties come to an agreement and there are no further changes to the contract you will be ratified. All contingency deadlines start the day of ratification.
