Did you know?
Statistics show that 86% of buyers negotiate the contingencies of the offer through their own real estate agent, known as a buyer's agent, rather than negotiating with the seller's agent or the home seller directly.
Negotiating the final offer
The seller may respond to your offer in one of three ways: By accepting it, rejecting it, or making their own suggestion, known as a counter-offer. Always take your time in considering a counter-offer.
You may want to stipulate that the sellers are responsible for ensuring that the plumbing, heating, mechanical, and electrical systems are in working order at closing. Without this clause, you agree to accept the house "as is." You should require a walk-though inspection a day or two prior to the closing to determine if all conditions in the contract have been satisfied.
Don't rely on the seller's verbal agreement that specific fixtures, appliances, and personal property are included in the sale. To avoid any misunderstandings or surprises, list on the contract everything that the owner is supposed to leave behind.
Closing and occupancy date
You may want to include a provision that the sellers must pay you rent on a daily basis in the event that they have not moved out by the agreed-upon date (usually by the closing date).
Typically, the real estate professional will present your offer to the seller and will relay the seller's response back to you. Negotiating the final purchase price is usually accomplished in the same way. You may be expected to put a large deposit down (again, to be held in escrow) once the seller has signed your offer to buy. You need not, however, tie up the entire amount of your down payment at this point. Your real estate professional will counsel you as to the most appropriate amount to deposit.
One of the contingencies in your contract should be that you obtain a satisfactory home inspection. You will, of course, have examined the house to the best of your ability before making an offer on it. But before you go through with the purchase, you will want an expert to take a critical look at the property.
Although the buyer usually pays for this inspection, it is well worth the cost. In a "hot" housing market, the seller's real estate agent may suggest that you not include an inspection contingency in your contract for fear of "losing the house to other buyers." If you follow this advice, please be aware of the additional risk you are taking.
This may help
A professional third-party home inspection costs between $200 and $400, and you will usually receive a written report within 48 hours.
If any major problems are revealed, you have the right to void the offer, or renegotiate the terms of the purchase.
For newly constructed houses, the lender may still require a $75-100 inspection, in addition to the required appraisal.
What the inspection includes
The home inspection is not the same as an appraisal. The inspection is meant to evaluate the structural and mechanical condition (not the fair market value) of the home. The inspector's findings will be based on observable, unconcealed structural conditions. The inspector will not normally guarantee or warrant the condition of the house, nor determine whether a house is in compliance with local building codes, but it can help you find structural problems of which you may not be aware.
It is strongly recommended that you accompany the inspector on her/his rounds. You can expect the inspection to take about two hours. You will undoubtedly pick up valuable maintenance tips along the way, and you will have a chance to ask questions and learn more about the extent of possible problems with the house. You will also be in a better position to understand the written report.
Every inspection should include an evaluation of at least the following:
- Doors and windows
- Roof and siding
- Plumbing and electrical systems
- Heating and cooling systems
- Ceilings, walls, and floors
- Septic tanks, wells, and sewer lines
- Common areas, in the case of a condo or cooperative
Using the inspection report
The inspector's report will not include a recommendation as to whether or not you should buy the house, nor will it evaluate the purchase price. If major flaws are uncovered, the report should give you some idea of what it will cost to repair the problem and/or replace needed parts.
The inspection report may serve the following purposes:
- To identify problems before you purchase a home, preventing unpleasant surprises later
- To enable you to terminate a purchase agreement and get your deposit refunded if serious problems are identified
- To help you negotiate an adjustment in the purchase price if you want to buy the house despite the problems
- To get the seller to agree to pay for needed repairs, either before or after the sale, using escrowed funds
- To help you feel more confident about going ahead with the purchase
When you and the seller have agreed on all provisions of the contract, you are ready to finalize the offer, and finalize the loan you will need to make the purchase. The lender will want to see a copy of the signed contract when you apply for the mortgage.