Buying Process: Negotiation and Signing the Contract
You have found the home you love and have already secured a pre-approval for financing. Your buyer’s agent should help you determine the fair market value of the home, based on comparable sales information. Your agent should also review the current tax records on the property and the tax plat for any possible issues, concerns or irregularities. Once that has been completed, you are ready to begin the buying process.
Determine Your Offer
- Work with your agent to formulate a strategy to purchase the home at or below the price you are willing to pay. Your buyer’s agent should tell you how long the home has been on the market and, if possible, should offer information on the seller’s motivation, whether or not there are other current interested buyers and other facts to help you leverage for the best possible price and terms.
Make an Offer
- Your agent will fill out the Purchase and Sale Agreement and any other necessary documents including exhibits and disclosures. As the buyer, you will sign this agreement when you make your first offer.
Provide Earnest Money
- This is money (usually in the form of a personal check) provided by you as a show of “good faith” of your intentions to purchase a property and follow the terms of the contract. This money is returned if the seller refuses your offer and is deposited as defined in the contract if your offer is accepted. As the buyer, you can only lose your earnest money if you break the terms of your own agreement. If the seller breaks the terms of the agreement, these funds are returned to you. Your buyer’s agent should write the contract with financing and inspection contingencies to protect your earnest money.
- The process by which two parties (the buyer and the seller) decide on price and specific terms related to the sale of a property. The negotiation may involve the seller’s immediate acceptance of your offer or they may return a counter-offer which includes a different price or additional terms. If the seller counters, your buyer’s agent will help you to discern possible meanings, including an approximation on the price the seller may be willing to accept. From that, you may decide to accept their counter, make a counter offer of your own, or walk away.
Knowing When to Walk Away
- There is a danger in becoming emotionally involved with a particular house or with “winning” the process. Sometimes the best way to win is to walk away. You should walk away when accepting an offer will put you in a financial bind, or you are accepting risks (such as a defect in the house that you plan to “deal with” later) in order to get that particular house. Your perfect house — the right house for you — will not place you under additional stress, it will help alleviate it.
Accepting and Signing the Contract
- Once you have negotiated for a piece of property and both parties agree on the price and terms for a house, the contract is accepted. The contract becomes binding when one party signs an offer without making any alterations.
Jeff’s Note: When you find the home you want, following due diligence, you should make an offer as quickly as possible. The only thing that happens when you wait, is the chance that you lose the property. This is one time when waiting gains you nothing. If you are sure, make an offer.