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Step 3

Well, we've found just the right House or Land and we are ready to make

The Offer

The first thing we do is to check the comparable home sales in that subdivision or area to see if this home is priced fairly, and how it relates to others similar to it that have sold. This CMA (comparable market analysis) tells us the price range of sold properties are in the area, what the average time on the market for them has been, and what the average sales price per square foot of the recent solds are. Although an appraiser will only use the last six months of comparable sales when figuring appraisal value, it is helpful to have a more overall trend for the neighborhood to determine that prices are rising and that your investment will be protected in the long run. To arrive at a reasonable market price you and I will be comparing the condition, location and amenities of similar homes that have already sold plus the current market competition of other homes for sale in the area.

In some cases there will not be enough that have sold. I find out how long the property has been on the market or if there have been any price reductions during the listing period, if there have been any other offers on the property, and what the motivation of the seller is.

Then you must figure out what YOU are willing to pay for this home. If you are willing to pay market value or more for this home because you donít want to risk losing it, please let me know up front! Most good agents will try and negotiate a below market sales price for you because they want to please you and retain you as a future client. But only you can determine how you might feel if you lost this home to another buyer for a few thousand dollars!!! If you want a deal be sure to tell your agent that, but if you want only this home, tell me! My negotiating tactics will depend heavily on this information.

Also we go over Restrictive Covenants. Restrictive covenants are deed restrictions that apply to a group of homes or lots, property that's part of a specific development, or 'subdivision.' They are normally put in place by the original developer, and are different for every area of homes. Buyers should be given a copy of a development's restrictive covenants before they make an offer on property.

Restrictions give a development a more standard appearance, and control some of the activities that take place within its boundaries. When enforced, covenants protect property values. They nearly always stipulate the minimum size residence allowed, how many homes may be built on one lot, and what type of construction the homes must (or must not) be.

Other common clauses deal with set backs (how far homes must be from streets and interior lot lines), easements (if any exist), assessments for road maintenance or other fees, and rules regarding changing or voiding the covenants. Some clauses attempt to reduce 'clutter' on lots, such as those prohibiting owners from storing a vehicle that doesn't run within view of others, or rules against parking recreational vehicles on the property. You might see statements regulating animals (no breeding for profit, no livestock, no unchained pets), and others that regulate in-home businesses and home rentals. Developments in wooded areas sometimes prohibit tree cutting, or forbid owners from erecting any type of fencing.

So You Don't Like Deed Restrictions? This photo does a pretty good job of pointing out the role deed restrictions play in protecting your property value.

If you find a house that you want to make an offer on, but I don't have a copy of the covenants to give you, I make approval of the covenants a contingency to the contract.

Where Are The Property Boundaries? You love the building lot, but can't quite determine where the property boundaries lie. Is the neighbor's fence in the correct place? And what about the location of his shed? Please review this article by Julie Garton-Good that covers this area well.

What Comes with the House? Just because you regard an item, as a permanent fixture does not mean the seller does. Never assume that sellers plan to leave any item behind. A written agreement is the best way to make sure there are no misunderstandings at closing. Please read this article that covers this issue.

We also review your closing costs. At times we hide your closing costs in the sales price if you need help with the loan costs. Though this does not necessarily work every time, sometimes a seller who feels he has received his "selling price" may agree to pay some of the buyers closing costs as part of the transaction. Instead of thinking of his bottom line - what he nets from the transaction - he is consumed by getting a specific amount for.

When weíre comfortable with what we will be offering, we begin to fill in the blanks of the NWMLS Residential Real Estate Purchase Contract.

Contract Signing

Once you've found the home you want to buy, together we'll complete a purchase and sale agreement. This is the contract in which you and the seller outline the details of your property transfer. The purchase and sale agreement usually consists of the following pages:

  • Earnest money receipt
  • Financing addendum
  • Inspection addendum
  • Conditions/disclosure addendum
  • Contingency addendum-when appropriate
  • Addendum outlining special conditions
  • Lead-based paint notification-when appropriate

We go over this contract very carefully, so that each paragraph is understood. The first part deals with the property description and outlining what stays with the house. The majority of homes in the Kitsap County are sold without the refrigerator, washer or dryer, but any other appliance that is attached stays, such as the stove, dishwasher and if built-in, the microwave. Window coverings, fountains, lighting, screens, etc. are also examples of what stays.

Next is the earnest money , which is held by the title company or selling broker until closing and becomes part of the down payment. Offer the seller more earnest deposit than the norm for this area. This is guaranteed to get the sellerís attention when you are negotiating. By giving him a larger earnest deposit he is assured of your seriousness and is confident of a timely closing.

Next are the terms of the offering price, including which method of financing. Then we fill in the closing date desired, and acknowledge that the closing date is actually the recordation date at which time keys are passed to the buyer. Be flexible about moving dates. Whether the seller wants more or less time on a closing, if you can give him what he needs here, you can almost always assure yourself of some price concession. You may even offer to close and allow the seller to "Rent back" the property from you for a short time. This gives him access to the funds he may need for closing on his next home or moving. Just be sure the rent back period is not longer than 30 days or your lender will consider you an investor and may charge you a higher interest rate. And make sure you retain a security deposit from the sellerís proceeds.

The title company chosen is stated, and what their role is, and lists the title insurance policy commitment, including the Conditions, Covenants and Restrictions (CC&Rs), and that they will make the perorations and what the title company provides.

Next addresses the disclosures. You will be pleased to know that Washington State has many provisions for disclosures! An important one is from the Seller, known as Form 17, Sellers Disclosure Statement, a 5-page disclosure provided to the buyer within 5 calendar days for approval. If the home was built before 1978, a lead-based paint disclosure is necessary.

There are provisions for a Home Inspection, Home Warranty and any other inspections the buyer may elect.

If the home is on well, or septic, there are certain seller obligations.

The day before closing, there is a final walkthrough to make sure all is as it was when inspected, or if any repairs that were requested have been completed.

There are warranties that survive the closing. Any information that was withheld which materially and adversely affect the sale will survive the closing.

Remedies for Breach are addressed, whether by buyer or seller, what recourse, there is such as mediation, arbitration or if judicial action is warranted.

There are additional terms, such as compensation of the Brokers (it is paid by the seller and the amount is agreed upon in the listing agreement).

This is a synopsis of the terms of the contract. The legalese contained brings this contract to 4 to 9 pages! Fortunately, it is plain language and easily understood.

Okay, now what? As buyerís agent, I present the contract to the seller and sellerís agent. If feasible I will be negotiating with the seller at their agent office. However, if the seller is out-of-area, negotiation is done from me to the sellerís agent, or in a conference call.

Buyers: the seller's response to your offer. You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that's that, and the sellers could not later change their minds and hold you to it.

If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer , with the changes the seller prefers. You are then free to accept or reject it or to even make your own counteroffer. For example, "We accept the counteroffer with the higher price, except that we still insist on having the pool table."

Each time either party makes any change in the terms, the other side is free to acceptor reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.

Withdrawing an offer. Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit, or find yourself being sued for damages the seller may have suffered by relying on your actions.

* This is the point that is probably the hardest part of buying a home. Why? Because this is where you'll start to feel BUYERS REMORSE . Although about 60% of my buyers are extremely excited, most will feel the first stages of buyerís remorse. This happens because it's time for a decision, commitment, and legal documents. So remember, the butterflies you feel are normal. You'll get through it. Don't worry... I haven't lost one yet!

Home Inspection

Now, we have an accepted offer. Whatís next? We have 10 days in which to do a Home Inspection.

Is a Home inspection necessary? You have the right to request inspections of any properly you are thinking of purchasing by a professional inspector of your choice. You should always exercise your option to have the physical condition of the property and its inclusions inspected. Many of the more severe and expensive problems such as mechanical, electrical, structural and plumbing, are not noticeable to the untrained eye. If repairs are needed Dianna can negotiate these in your contract offer. A professionally conducted home inspection followed by a written evaluation is becoming standard procedure in home buying because of increased buyer awareness and savvy

What does an inspection entail? A qualified inspector will follow ASHI's Standards of Practice in conducting their inspection. The inspection consists of a physical inspection of the home with the purchaser present, followed by a written report detailing their findings. They report on the general condition of the home's electrical, heating and air systems, interior plumbing, roof, visible insulation, walls, ceilings, floors, windows, doors, foundation, basement, and visible structure. The inspection is not designed to criticize every minor problem or defect in the home. No home is perfect. It is intended to report on major damage or serious problems that require repair for the well being of the home, and that might require significant expense. In Washington, a special concern is expansive soils. They can be destructive when water causes these high clay content soils to swell and exert upward pressure on foundation and driveway slabs. If improperly constructed, these structures can crown up in the middle.

Buyer education is necessary The primary purpose of the inspection is to educate the buyer to enable them to make an informed purchasing decision. The inspector should allow and even encourage the buyer to attend the home inspection. A good home inspector knows how the home's many systems and components work together and how to minimize the damaging effects of sun, water, and the passage of time. Attending the inspection provides an important opportunity for the buyer to learn, first hand, how their prospective new home works, and about possible repair costs and maintenance routines. This is valuable information that could increase the life span, and perhaps the future-selling price of the home.

The Home Inspection company I recommend is a part of ASHI and certified , and very thorough!

Again we both attend because you will learn much about the mechanisms of the home. Any repairs will be requested in writing immediately, and the seller has 5 days in which to respond.

After inspections are completed and approved, we enter our next phase, the closing!

Useful Links

Getting the Most From Your Home Inspection With thoughts of how you're going to arrange the furniture in your new home, whether you'll make the deadline for registering the kids for their new school and how you'll find a mover on short notice, the home inspection process sometimes takes a back seat. But it shouldn't.

Home Warranty Protection The Home Warranty Plan offered by AHS, the oldest and largest home warranty company in the nation with over 29 years of service experience, can provide solutions for systems and appliances you use everyday.

Understanding the Market in Your Are

And now on to the next "step!"

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Ron Kimball "A Internet Realtor"
Serving all of Kitsap Mason & Pierce County, WA
New Visions Reality LLC
1616 Ellis Court | Port Orchard, WA 98367
Direct Line (360) 876- 4741 | Fax (360) 876 4843
E-mail: ron@ronkimball.com

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