If you discover a house that you want to buy, it generally is a good idea to submit a competitive offer. That way, you can move one step closer to acquiring your ideal residence.
However, the hours after you submit a home offer can be stressful, particularly for a buyer who fails to plan accordingly. Lucky for you, we're here to help you stay calm, cool and collected as you wait to receive a seller's response to your offer.
Let's take a look at three tips to help you get ready to handle a seller's response to your homebuying proposal.
1. Plan for the Worst-Case Scenario
Even the worst-case scenario is not the end of the world for a buyer who is awaiting a seller's response to a home offer. In fact, if a seller rejects your proposal, you can always reenter the housing market and continue your pursuit of your dream home.
As you await a seller's response to your home offer, you should not stop searching for available houses. Because if you continue your home search, you'll have no trouble moving forward in the homebuying journey if a seller rejects your home offer.
2. Consider All of Your Options
If you submit a home offer and a seller says "Yes," what should you do next? Consider how you'll proceed if a seller accepts your proposal, and you'll be better equipped than ever before to enjoy a seamless homebuying experience.
On the other hand, it helps to prepare for a potential counter-offer from a home seller as well. If you are open to negotiating with a seller, you may be able to find common ground with him or her and finalize a home purchase.
3. Consult with a Real Estate Agent
A real estate agent knows all about the stress that is commonly associated with submitting a homebuying proposal. He or she can help you minimize this stress and ensure you can achieve the best-possible results throughout the homebuying journey.
Typically, a real estate agent will work with you to submit a homebuying proposal. This housing market professional then will keep you up to date as you await a seller's response to your offer. And if you have any concerns or questions during this time, a real estate agent is happy to respond to them.
A real estate agent will make it simple to streamline the homebuying journey too. For instance, if a home seller accepts your offer, a real estate agent will be ready to help you move forward with a property inspection and appraisal. Conversely, if a home seller rejects your proposal, a real estate agent will be prepared to work with you to help you discover another house that matches or exceeds your expectations.
The waiting period after you submit an offer on a house may prove to be a challenging time. Fortunately, if you plan ahead for this period, you can maintain your confidence and continue to move forward in the homebuying journey.
If you’re thinking about buying a home, you’ve probably heard a lot about closing costs. Closing costs can come at a hefty price- up to 5% of your home’s purchase price. When that amount must be paid up front, you need to make sure you have a sizable amount of cash on hand.
There’s many different kinds of fees included in the closing costs. Your lender will give you an estimate of what your closing costs will be, but you may not know what any of the terms that are included actually mean.
The Loan Origination Fee
This is the fee charged by your lender that covers the administrative costs that are associated with creating and processing a mortgage. This could also be called an underwriting fee.
Title Search Fee
This is how much the title insurance company charges to perform research on the title of the home. In some cases, the title may have some issues associated with it, so this research is to protect you. There’s also title fees known as lender’s title insurance and owner’s title insurance. You need to have lender’s title insurance, but owner’s title insurance is completely optional.
Credit Report Fee
This covers the obtaining and review of your credit report.
There’s also a fee when it comes to reviewing your mortgage loan application.
This fee covers the appraiser who is chosen by your mortgage company in order to assess an accurate value of the home.
Tax Monitoring Fee
This fee supports tax research on the home to determine if property taxes have been paid.
The property survey covers all aspects of the property bounds including gas lines, roads, walls, easements, property improvements, and encroachments.
The attorney fees will cover all of the document reviews, the agreements, and the escrow fees.
When you close on a home, your entire first year of home insurance payments must be made at the time of closing. If you have bought your home with an FHA loan, you’ll need to pay mortgage insurance premiums at closing as well. You’ll also need mortgage insurance payments if you put less than a 20% down payment on the home.
Escrow Property Taxes
The lender requires that you pay your property taxes up front. This money will be held in escrow and the taxes paid from there.
As you can see, there’s a lot that goes on during the closing of a home. Make sure you have some water handy, it’s going to be a long process! Understanding what will happen at closing when you buy a home can help you to avoid any surprise fees or financial burdens.
Do you ever wish that they taught a class in high school called, “Things You’ll Actually Need to Know In Life?” You’d learn how to prepare your taxes, what investing is, and how to buy a home.
Unfortunately, all of these important life lessons tend to be self-taught; you pick them up along the way and learn from your mistakes.
However, it needn’t be that way. Our goal today is to give you an accurate idea of what to expect when you’re buying your first home. We’ll go over a typically home buying timeline and discuss how long each step can take. This will give you a better idea of how long it will take to close on your first home.
Step 1: Build credit and save for a down payment
Estimated time: 2+ years
The first step of buying a home is to make sure you’re financially secure enough to do so. While there are ways to purchase a home with low or no down payments (See FHA, USDA, and VA loans), generally it’s wiser to wait until you have a sizable down payment saved. This will save you money in interest and mortgage insurance in the long run.
Next, you’ll need to start working on your credit. If your credit score took some hits due to late payments when you were younger, now is the time to start fixing those mistakes by making on-time payments and paying off outstanding balances.
Step 2: Have a plan for the next phase of your life
Estimated time 6+ months
One of the most important, and least talked about, parts of buying a home is understanding what it means to own a home. If you have a spouse, partner, or family, you’ll need to be in agreement that you’re prepared to stay in one place for the next 5 or more years.
Buying a home is expensive and you won’t want to go through the process of closing on a home if you aren’t sure you’ll stay. This means making sure your career won’t bring you elsewhere in the near future.
Step 3: Get prequalified and preapproved
Estimated time 1-3 days (depending on how much initiative you take)
Getting prequalified for a mortgage takes minutes. You simply fill out an online form and the lender will give you an idea of the type and size loan you could qualify for. Be forewarned: they’ll also use this information to call and bother you about getting a mortgage from them.
Once you’re prequalified, it’s just a matter of working with the lender to provide the correct documentation for pre-approval.
Getting preapproved takes a bit longer (1-3 days), since it requires a credit check and some work on your part--namely, gathering and sending income verification.
Once you’re preapproved, you can safely start shopping for homes without worrying that you’re wasting time looking at homes that are overbudget.
Step 4: House Hunting
Estimated time: 30+ days
It’s a seller’s market. So, if you’re buying a home right now there is competition out there. You’ll need to dedicate a substantial amount of time to researching homes online, contacting sellers’ agents, and following up on calls. Like before, the amount of effort you put into this process determines how quickly and smoothly you’ll get through it.
Step 5: Making an offer and closing
Estimated time: ~50 days
Average closing times for buying a home has grown to 50 days according to a recent study. However, by securing financing ahead of time and acting quickly, you can drastically cut down the time of these process to as little as two weeks.
For homebuyers, finding a dream home may require many days, weeks or months. However, when the big day finally arrives, you'll want to submit the right offer to ensure you can secure your ideal residence quickly.
Unfortunately, making the right offer on a home can be tricky. If you submit a proposal that is far below a home seller's expectations, you risk missing out on your dream home entirely. Or, if you submit an offer that is above your comfort level, you may wind up paying more for a house that it is actually worth.
So what does it take to make the right offer on a home? Here are three tips that every homebuyer needs to know to ensure he or she can submit the perfect offer on a residence.
1. Use Housing Market Data to Your Advantage
The internet is a powerful tool, particularly for homebuyers. And if you search for housing market data, you should have no trouble finding the information that you need to submit an offer that matches your budget and satisfies a home seller's expectations.
For example, a homebuyer who finds a two-bedroom home that he or she would like to buy should consider the prices of comparable houses in the area. Also, be sure to look at what other homes in the same neighborhood may be worth and tailor your offer accordingly.
A wealth of real estate market data is readily available across the web, and homebuyers who use this information to their advantage can submit a reasonable offer on a house at any time.
2. Get Pre-Approved for a Mortgage
Although you may submit the best offer for a home, there is no guarantee that a home seller will accept your proposal if you lack the necessary financing. On the other hand, a homebuyer who receives pre-approval for a mortgage may be able to stand out to home sellers, and for good reason.
With pre-approval for a mortgage, you may be able to move through the homebuying process faster than other potential homebuyers. Thus, a home seller may choose your offer over others, as he or she will be able to minimize the risk that a deal could fall through due to a homebuyer's lack of financing.
3. Work with a Real Estate Agent
A real estate agent understands the ins and outs of both seller's and buyer's markets. Therefore, this real estate professional will offer tips and insights to ensure you can submit a fair offer on a residence.
Remember, your real estate agent is happy to help you in any way possible. And with this professional at your side, you can gain insights into the home seller's perspective. Plus, your real estate agent will be able to negotiate on your behalf to help reduce the risk of overspending for a house.
Find a real estate agent who boasts years of industry experience, and you can reap the benefits of unparalleled support throughout the homebuying journey.
In a competitive housing market--like the one we have today--sellers are fielding numerous offers, especially in desirable urban and suburban hubs.
If you’re hoping to buy your first or second home, it can be tough to make offer after offer with no success.
However, there are some things you can do to help ensure your time house hunting is well-spent and to increase your chances of getting your offer accepted.
In today’s post, I’m going to give you a few tips on how to win a bidding war on your dream home.
The most effective way to ensure that your offer is accepted is to make it in all cash. Cash offers drastically simplify the real estate transaction process, making things easier on the seller.
Most buyers, especially first-time buyers, won’t be able to make an all-cash offer on a home. However, people who are downsizing after their children moved out or are buying a retirement home may find themselves in the ideal financial situation to be able to leverage a cash offer.
If that sounds like you, consider a cash offer as part of your bidding strategy.
Waive the financing contingency
If you’re new to real estate contracts, you might be wondering what a contingency is. Essentially, a contingency is an action that needs to be completed before the contract becomes valid and the sale becomes final.
There are a number of different contingencies that can be found in a real estate contract. However, the most popular are for inspections, appraisals, and financing.
If you’re planning on taking out a mortgage to purchase the home, a financing contingency protects you in case you aren’t able to secure the mortgage in time. In other words, you’re not on the hook for a home you can’t pay for.
In some special situations, buyers might decide to waive the financing contingency, signaling to the sellers that there won’t be any hang-ups or delays from the buyer regarding financing the home.
Waiving this contingency comes with risks (namely, being responsible for coming up with the money to pay for the home). However, there are ways to safely waive a contingency.
The most common approach is to get a fully pre-approved letter from a lender. The important distinction here is that your mortgage needs to be pre-approved and underwritten (not just pre-qualified), otherwise you again risk getting denied the mortgage in the last moments before buying your home.
Crafting a personal letter
Sometimes all it takes to win a bidding war is to be the seller’s favorite candidate. Take the time to write them a personalized letter. Explain what you love about their home and why it’s perfect for your family.
Avoid talking about big changes you’ll make. Remember that they probably put a lot of time and money into the home, making it exactly the way they want it, and won’t appreciate you making huge plans to undo their work as soon as they’re out the door.
Using one, or a combination of, these three techniques, you’ll be able to give yourself an edge over the competition and increase your chances of getting your offer accepted.