Buying a property is a big step involving a substantial long-term financial commitment, so it requires a thorough assessment of what you can afford.
Making an Offer
Making an offer to purchase a home has its own set of factors. Rely on a CENTURY 21® Agent’s experience and knowledge to make a successful home buying offer.
Making a Home Buying Offer
Once you’ve found your ideal house, it’s time to get started with the financial and contractual side of the purchase. Let your CENTURY 21® professional guide you through this process. Purchase contracts vary in length and terms from state to state, and sometimes within a state.
Multiple offers on the same home are not uncommon, so you may only get one chance to make an offer that the seller will consider. That's why it's important to think carefully about your strategy. In most cases it is better to have your real estate professional present the offer. If you have any personal interaction with the homeowner, avoid sharing any information about your move, your current housing status, financial status or your feelings about their property - positive or negative. This could work against you in future negotiations.
TIP: You and the seller have different goals, so it’s important to consult with your CENTURY 21® Agent. He or she can bring order to the process, and will know what questions to ask to help you reach a desirable outcome.
How Much Do You Offer?
How much should you pay for the home? This section will help you to determine an appropriate amount to offer to secure a winning bid.
Your CENTURY 21® real estate professional can help you find out what other homes have sold for in the area, and how much money you might have to put into repairs or renovations. These considerations should be a factor along with the amount you're comfortable spending.
In addition to sale prices of other comparable homes, there are several ways you can come up with a winning bid. For example:
- The condition of the house. Is the home in move-in condition, in need of paint and other cosmetic improvements, or a fixer-upper that needs real work?
- The market. If you are in a buyer's market — where there are more homes for sale than there are people to buy them — prices are probably stable or falling. If you are in a seller's market — where there are more buyers looking for homes than there are homes for sale — prices are probably moving upward.
- Your ceiling. If you have a credit pre-approval, you know how much you can borrow for your home purchase. Of course, you may not be comfortable paying as much as you've been approved to borrow, so think carefully about your financial situation before making an offer.
Next, decide how much you are willing to pay for a home. Remember, the advertised price of a house is just a starting point – it may take quite a bit of negotiating to arrive at a final cost.
TIP: The value or disadvantage of certain features can help or hurt resale. In some areas, a swimming pool actually detracts from a home's value, and makes it harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may affect the home sale and future value.
Applying for a Mortgage
Once you’ve made the decision to become a homeowner and picked the house, you may need to apply for a loan. This process might seem daunting, but your lender will guide you through it. The process will be even easier if you know what to expect and prepare for it.
Here are the high-level loan application steps:
- Prepare required documents:
- Two years of employment history, current employment status and salary are needed. Employment letters can be used to explain gaps in employment.
- Two years of W-2s (this does not apply if self-employed) and tax returns allow the lender to be sure that your salary is high enough to make the mortgage payments every month.
- Most recent pay stubs for the last 30 days tell the lender that you’re still earning money similar to the amount on your tax returns. (This does not apply if self-employed, but the lender will likely require a profit and loss statement.)
- List of assets, including bank statements, let the lender know that you have the money to cover the down payment, closing costs and a reasonable emergency.
- Submit the application. Once you’ve prepared the required documents, the first step with the lender is to apply for the home loan. Of course, you will need to provide personal information, as well as information about the property you’ll be purchasing, such as the address and estimated purchase price.
- Provide your documents. Submit your documents, such as pay stubs, W-2s, bank statements and employment history.
- Get pre-approved in as little as 24 hours. Once your loan application is submitted, you should receive your pre-qualification in as little as 24 hours.
Looking to buy home through a lease option? Learn about lease options here, or contact a CENTURY 21® Agent for complete support.
A lease option is an arrangement between the buyer and the seller to purchase a house after renting it for a specific period of time. A portion of the rent would be applied toward the purchase if the option is exercised. This is referred to as rent credit. Most institutional lenders will accept rent credit as part of the down payment, if rental payments exceed the market rent and if a valid lease-purchase agreement is in effect. A copy of the valid lease-purchase agreement must be attached to the loan application. Read any lease option arrangement carefully for details about transferring the option and other important concerns.
TIP: For information on lease options, contact your CENTURY 21® Agent.
If you are planning to buy a home with cash, this section provides some useful information to make your transaction a success.
Buying a Home With Cash
Though most buyers don't buy a home with all cash, anyone considering such a move may be wondering how it’s done. Because all cash buyers sidestep the time-consuming loan qualification process, the deal can close very quickly. The primary advantage of buying a home with cash is completely avoiding mortgage interest. Buyers also save money that would be spent on loan origination fees, required appraisal, some closing costs and various other charges imposed by the lender.
TIP: Take a look at other investments that are doing well, and determine if spending cash on a home is your best investment option.