Category — For Buyers

In real estate contracts the contingency is a common element.

Contingencies are clauses in a contract that give either the buyer or seller a way to get out of the contract if certain conditions or time lines aren’t met.

A commonly used example is that of a buyer making an offer on a new home before selling his existing home. The buyer needs to sell his present home before being able to get financing on the new one. So he makes his offer contingent upon the sale of his existing home. There will always be a time period associated with such a contingency. If the buyer is able to get his present home sold within that time period, the deal can go forward. But if he fails to sell within the specified time period, the seller has the option of getting out of the deal. In most cases, sellers won’t accept this kind of contingency, because they will most likely feel that they can find another buyer capable of closing the deal without needing to sell another home first. But new home builders are often willing to accept an offer contingent upon the sale of an existing home.

Every contract is unique. The possibilities for contingencies are virtually endless.

Some of the more commonly used contingencies would include:

• Financing. Contingencies that depend on the buyer being able to obtain financing are very common.
• Home Inspections. Probably the most common type of contingency is the “contingent upon satisfactory completion of inspection”. There are any number of specific types of inspection for which a contingency might be included in a contract. Some of the more common would include inspection by a qualified home inspector for hidden defects, pest inspections, water and sewage system inspections, inspections dealing with the presence of radon or mold, etc.
• Appraisal. It’s not unusual for a buyer to have a contingency that allows for a formal appraised value at or above purchase price. Since lenders will nearly always want an appraisal performed too, sellers usually don’t have a problem with this.

Remember, just like everything else in real estate contracts, contingencies are negotiable. Always take care before signing that you are comfortable with all contingencies included in your contract. Likewise, take time to think about what contingencies you might like to have added.

Your decision to buy a home is both a sound financial decision and a commendable achievement.

As your real estate agent we will do the following to guide you through the home buying process.

• We will help you define your “wish list” of features you want in your home, your neighborhood and your school district.
• Commit our time and energy to finding you the right home.
• We will monitor all new listings and alert you to new houses as soon as they are put on the market.
• Provide detailed listing information not available to the general public.
• Negotiate the deal to save you money.
• Guide you through the avalanche of paperwork.
• We will walk you through the mind-boggling financial details associated with buying a home, including understanding the various mortgages and home buying programs available to you.
• We will eliminate the stress involved with buying a home by putting our years of real estate experience to work for you.
• Best of all, we work at no cost to you!

Finding the perfect home is our business. Contact us today!

Step 1 – Make the Decision to Buy

It seems obvious, but it’s good to note that the first step to buying a house is making the decision to buy. Consider the reasons you want a new house and write them down. Determine how long you want to live in the new house – does buying still make good financial sense? Can you afford a house that will meet your list of requirements? A good rule of thumb is your mortgage payment should not exceed 1/3 of your net monthly income.

Step 2 – Seek Professional Guidance

The next step is to schedule a time to meet with you to hear the reasons you want to buy a house and your plans for the future. We’ll talk about neighborhoods, schools, economic factors liable to affect the market today and tomorrow, as well as how you would like your house and neighborhood to grow with you. We refer to this step as the buyer consultation.

At this time, we will also help you get pre-qualified for a mortgage loan. Pre-qualification is a written statement from a loan officer indicating his or her opinion that you will be approved for a mortgage loan up to a certain amount. The fact that you are pre-qualified will help us when we are negotiating the deal.

Step 3 – Begin the Hunt

After our initial meeting, we’ll search all our resources for houses on the market that fit your criteria. Then, we’ll schedule appointments to tour the houses at times convenient to you.

As we tour houses, we will ask you to tell us what you like and what you don’t like. You’ll probably amend your “wish list” as we tour houses, some things will become more important and others less important. With this new information, we’ll refine our search criteria to narrow in on the house of your dreams. Don’t be surprised if you find the home is 6-8 properties.

Step 4 – Know the Market

Our knowledge of the local Clearwater area real estate market is an essential factor in the house search. We’ll let you know when the market in a particular neighborhood is “hot” and requires immediate action or when the market is “cool” and allows for thoughtful consideration.

As we tour houses, we’ll let you know when the asking price has negotiating room and when the house is “priced to sell”. Our unique market knowledge will keep you a step ahead of the “house hunting competition”.

In a “seller’s market”. It is not unusual to see multiple offers on a property, full-price offers and even above-price offers. On the flip side, during a “buyer’s market” there are more houses for sale than buyers. This gives us more negotiating room as houses are taking longer to sell.

Step 5 – Find Your Dream House

We are confident we will find your dream house. When we do, we’ll do a comparative market analysis to help determine value and put together the purchase offer tailored for your needs including appropriate contingencies (such as obtaining financing, favorable home inspection, clear title, etc.).

The offer is normally presented with “earnest money”. This is a cash deposit made to a home seller to secure an offer to buy the property. The amount is applied to closing costs. If the seller accepts the offer, generally closing is held 30 to 60 days from the offer date (generally dependent on the turn around time of your mortgage financing).

Step 6 – Negotiate the Deal

It is not uncommon to receive a counter offer when the initial purchase offer is submitted. Don’t let this discourage you. We will discuss the counter offer and decide whether or not to accept the counter offer, submit our own counter offer, or reject the counter offer and move on.

Market conditions will play a role in how aggressively we negotiate the deal. We will also work within your limits. Emotions can lead to buyer’s remorse. It is better to set limits prior to negotiating an offer and stick to these limits.

Step 7 – Get a Loan

During the closing period, you will be working with your mortgage lender to close the loan. Since you pre-qualified for the loan before starting your home search, you will be that much closer to the end. Our closing team will gather the necessary property information your lender will need to close the loan.

Step 8 – Close the Deal

You will receive a “Good Faith Estimate” of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer’s past experience and may not include all the closing costs. We will be glad to review the “Good Faith Estimate,” answering any questions you may have.

Step 9 – Move In

Congratulations! It’s time to move into your new house and make it your home. Enjoy this exciting time. The Malott Group will help you prepare to make your moving day a pleasure.