Part 4 of Buying Your First Home: The One!
Step 5: The Offer
You have found the one and are ready to make an offer. Your Realtor® will offer you a Competitive Market Analysis (CMA), which is essentially a list of comparable homes in the same area that have recently been sold. This information will help you with buying your first home by determining if the home is priced appropriately, and give you a good idea of what to offer for the property. Additionally, you may want to consider the level of interest in the property and how long it has been on the market.
When putting together an offer, keep in mind that it may include more than just the sale price. You may also consider including concessions, such as asking for closing costs, a home warranty, or requesting that personal property be removed from the property. If the home is in high demand, you may want to include an escalation clause, a high earnest check, or a rent back option for the sellers.
Once you have determined your offer, your agent will create a purchase and sale agreement for your approval, which will then be submitted to the other agent. Typically, the offer will have a time limit for the sellers to review and respond. The KW-Jay Hudson Homes Team aims to keep this time limit to 24 hours, especially in a hot market where multiple offers are expected. However, sometimes the time limit is set by the sellers.
After submitting your offer, you will wait for the sellers to respond. If they accept your offer, CONGRATULATIONS, you are one step closer to buying your first home. You have successfully secured your dream home!
Step 6: Your Offer is Accepted!
Once you successfully win a sale, the process of closing on buying your first home begins. This involves a series of timelines and due dates that need to be managed carefully. Fortunately, the KW-Jay Hudson Home Team has a Director of Client Services, Brandie Driskell, who is a licensed agent with extensive experience in managing this process. She will reach out to you to introduce herself and provide you with a timeline of events, including overlapping items guiding you through buying your first home.
One of the initial steps in the process is to secure funding within three days by making an official loan application or providing proof of funds. During this time, you should also schedule any inspections that you deem necessary, such as a Home Inspection, Pest, or Mold inspection. Although these inspections are not mandatory, it is highly recommended that you have them done. You will be responsible for scheduling the inspections, and the cost will depend on the type of inspection, the company, and the size of the home.
It is important to ensure that the home inspector is certified, and it usually takes a couple of days for them to get to the property and another 24 hours for you to receive the report. Once you receive the report, you should review it with your agent and discuss the items listed. You can choose to address these items, negotiate them, or consider them deal breakers. For example, if the roof needs replacing, you may ask the sellers to replace the roof or reduce the price to cover the cost.
Within 14 days, you will need to schedule an appraisal through the lender and secure homeowners’ insurance. The appraiser will review the home and perform a CMA to compare it to similar homes that have recently sold. He/she will then send back the price they set for the home. Depending on the loan, the appraiser may also include conditions, such as repairs that need to be made before closing. If the appraisal comes in lower than the agreed-upon purchase price, negotiations with the sellers may need to be restarted. If you and the sellers can come to an agreement, then it’s almost time for closing day on buying your first home!
Before closing, you will receive the Closing Disclosure, which is a list of the fees you will be paying. This must be signed three days prior to closing. Cash buyers do not receive a Closing Disclosure. Next, you will receive a settlement statement from the title company to review and ensure everything is correct and matches the Closing Disclosure. This usually happens the day before closing or even the day of closing.
On the day of closing, you will have a set appointment with the title company. You will have scheduled your funds to be wired through the title company with the help of your lender. Once the title company confirms that the purchase has been funded, you will sign all the necessary paperwork for buying your first home. CONGRATULATIONS, you are now a homeowner!