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Health & Fitness

Making an Offer on a Home? A Few Things to Consider

No matter if you are a veteran home buyer or new to the game, there are always new things to consider when buying a home - Read my blog, it may save you some headaches down the road.

Whether you’re a first-time or a seasoned home buyer, there are a few things you should consider when you make an offer on a house. By anticipating potential problem areas and including these “contingencies” in your offer, you may save yourself some headaches down the road.

A contingency is a requirement that must be fulfilled in order for a home sale to go through. By adding a contingency or two into your purchase offer, you give yourself an “out” – the opportunity to cancel the contract with no penalty if certain issues or scenarios come into play. If you cancel the contract because your contingencies have not been met, you will not have to forfeit your earnest money deposit to the seller.

Probably the most common contingency for buyers who are simultaneously selling a home of their own is that their current home must sell prior to the purchase of the new home. By writing this contingency into an offer, you will ensure that you won’t be stuck with two properties and therefore two mortgages – potentially a huge financial burden.

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A very common contingency that you might include in an offer is that you must secure financing for the new home. Other common contingencies require that the property must appraise for the amount you are offering to pay, and that the house pass the mandatory home inspection. You may also wish to consider additional contingencies such as a title contingency – which ensures that the seller is indeed the true owner of the property – and an insurance contingency guaranteeing that that you will be able to secure home insurance for the property.

Some homebuyers may wish to include other contingencies based on the features of the property on which they’re making an offer, such as pest or other additional inspections, requests for repairs on known problems with the property, and even a “neighborhood contingency,” to allow you to research the area where the house is located to determine its suitability. These types of contingencies are less common.

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It is important to remember that in a “hot” real estate market, a seller may receive multiple offers at the same time. The seller will evaluate all offers on the table and choose the offer that is most attractive. If an offer contains too many demands or contingencies compared to another offer, that buyer is likely to lose out. It’s a balancing act for the buyer to protect himself without appearing too demanding or greedy.

Beyond including contingencies in an offer, buyers should also include an expected closing date in an offer. This date can be somewhat flexible, but having a date in mind will allow both you and the seller to plan your moves, avoid storing belongings between homes, and make all the preparations necessary for a change of possession, such as changing over utilities and making change of address arrangements.

Your real estate agent can help guide you in crafting your home offer contract. Most agents have standard forms they use for such transactions. Your agent has the experience necessary to guide you through the offer process and will be able to help with any questions you have. By crafting a solid offer, you will increase the likelihood that you will soon be living in the home of your dreams.

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