In this step we’ll take a look at the parts to the residential real estate contract used by REALTORS in NWA, ways to make your offer as strong as possible, and outline the process for how offers are submitted and negotiated.
If you’re unfamiliar with the real estate contract used by REALTORS in NWA, take a moment to walk through the NWA Residential Real Estate Contract now.
This is a legally binding document with a lot of moving parts. For new homebuyers there are likely unfamiliar terms and topics as well. Ask your agent for a printed copy to review. You do not want to see this contract for the first time when you are frantically writing an offer on the hood of your agent’s car under a time constraint!
Even more common today is for buyers to discuss the offer they wish to make over the phone with their agent and then e-sign the document. In this case you may not even have a copy of the contract in front of you!
Therefore, it’s imperative to read through the contract now and have a very good working knowledge of it’s parts. You want to know what questions your agent will be asking you and fully understand what you are signing.
All contracts used by REALTORS in NWA are written by attorneys and legally binding. Your agent is only authorized to fill in the blanks of these forms. They are not able to make any changes to the contract, as that would be practicing law, nor can they interpret the contract for you. So, if you have any questions about the terms of the contract you need to seek legal advise. Again, something you want to do now and not when you are in the midst of a multiple offer situation.
TERMS & TOPICS TO KNOW
FEDERAL SUGGESTED PROTECTIONS
Your agent will do some research and provide you will comps (comparative sold homes) for the home you wish to buy. These will help you determine if the house is priced correctly, eliminate appraisal concerns, and give you assurance that the purchase is a sound investment. He/she can also provide you with the seller’s property disclosure, the property’s listing history, POA information, knowledge of other offers on the home, and any additional information that may affect your timing and/or the amount you plan to offer.
NEXT, LOOK AT YOUR OFFER FROM THE SELLER’S POINT OF VIEW.
The seller will evaluate your offer by looking at their net. You may be offering the seller list price but if you are asking for closing costs and a home warranty the seller will deduct these numbers from the purchase price to see how much you are really offering.
Obviously – the strongest offer will be what the seller has the home listed for (or possibly higher in a multiple-offer situation).
However, how strong a seller perceives an offer to be really depends on the their desires and situation.
If you happen to know some information about the seller’s desires you can use this to make your offer stronger. For example, if you know the seller wants to close quickly, then offering to close on the earliest date allowed by your lender may make your offer more attractive.
BE SURE TO INCLUDE YOUR PRE-APPROVAL LETTER.
Your pre-approval shows the seller that you are able to obtain financing for the amount you offered. This letter makes your offer stronger as it gives the seller a sense of added security. You can get a pre-approval for the exact amount of your offer from your lender.
Remember, especially in a hot market, that many sellers won’t even consider buyers who don’t have a pre-approval letter in hand.
KEEP YOUR EMOTIONS IN CHECK.
Buying a home is very personal. This can be an emotional time. Try to rely upon your agent to help you muster as much mental focus as possible to keep your attention on your priorities and goals. Make sure fear of losing the home or excitement doesn’t sway you to make a decision you may regret later.
UTILIZE YOUR AGENT’S EXPERTISE.
When making an offer, remember that it’s likely you will never meet the seller. This can make the negotiating process challenging, because it means you know very little about the person on the other side of the table.
Remember that everyone comes to the negotiating process with different negotiating styles and (often opposing) interests. This is where your agent comes in. Your agent is an expert in dissecting contracts for seller clues and negotiation strategies, so rely heavily on him or her to lead the way.
After the seller has evaluated your offer, there are three ways they can respond:
Were they happy with your offer, or at least happy enough? If so, the seller will sign the offer as you wrote it and you are now under contract.
If the terms of the offer are deemed unacceptable to the seller, or they feel you are too far apart to negotiate and come to agreement, they will reject the offer and move on to the next buyer.
If the seller isn’t thrilled with the offer but is interested in working with you to see if you can come to agreement, they will send your agent a counter-offer. You can either accept their counter or, if you are not in agreement with the terms of the counter, submit a new offer to the seller or move on to a different property.