The A-Z of Buying a Home (Part 2)
The A-Z of Buying a Home (Part 2)
by Alan Donald, BuyHomesInCharleston.com
OK - so you've hired a REALTOR, discussed your needs and buying criteria and got preapproved by a lender. Now it's time to go see homes! Although it is a relatively small city, the Charleston Metro Area is very large, with hundreds of neighborhoods, areas and subdivisions each with a different style, construction, lot size and price point.
Step 4 - The Home Search
The home search is a collaborative effort between you and your REALTOR. If you are comfortable "sharing the news", make sure that you mention to everyone in your sphere of influence that you are looking to buy a home. It is impossible to know where your best option is going to come from - there are many sources of information at your disposal - including:
- The Internet (Your REALTOR's website, the MLS, REALTOR.com, Craigslist, Facebook, etc.)
- Your REALTOR
- Driving Around Neighborhoods (Yard Signs on Listings, For Sale By Owner)
- Friends/Colleagues/Family hearsay
- Newspaper/Real Estate Magazines
In a "Buyer's Market" such as the one we experienced in 2008, there are so many "suitable choices" out there that your home search may become overwhelming UNLESS you have a system in place. I recommend that my clients use the "helicopter approach", starting from up above in the sky to the landing zone (from general to specific).
You should first try to narrow down your search (using your "Needs" and "Wants" criteria) to 2-3 general areas (for example "within JB Edwards Elementary or Mount Pleasant Academy school catchment areas") , then down to 2-4 neighborhoods within those areas (i.e. Old Village, I'On, Molasses Creek Plantation) and then down to specific sub-sections and maybe even streets you prefer. If you are able to do this, the process to choosing a specific home will be fairly simple.
Step 5 - Negotiating a Contract
You found a home you love! Now your REALTOR will help you structure an offer, looking at the listing history, the sales comparables in the area, and general market conditions. You will have to write a check for the EARNEST MONEY (normally 1% of the purchase price), and determine the TERMS of the contract (including but not limited to purchase price, closing date, conditions, contingencies and concessions). Your REALTOR will send the offer to the LISTING AGENT (who represents the Seller) and you will have to wait for a reply from the Seller. The offer can result in:
- ACCEPTANCE: The Sellers accept your terms and conditions - once the contract is signed and delivered back to you, it becomes RATIFIED. Now it is ENFORCEABLE - both for the Seller's and for YOUR protection.
- REJECTION: The Sellers reject your offer and accepts someone else's (typical in multiple contract situations).
- COUNTER-OFFER: The Sellers acknowledge your offer but changes terms according to what they want. At this point you can either walk away (no expense, no responsibility), accept the Seller's counteroffer, or submit your own (second) counteroffer. This process can go on indefinitely until the "meeting of the minds" is attained. Sometimes it is just impossible and you may have to move on.
To negotiate a contract smartly, it is best to have the most information you can. Your REALTOR can many times get you:
- Market comparables ("comps") showing how much similar homes in the area have sold for
- How much did the Sellers pay for the home, when they purchased it, and what mortgages they have registered on it.
- Other choices in the area of similar size, age, characteristics.
- The Sellers' reason for selling, motivation and perceived urgency
Tomorrow: The Buyer's Due Diligence Process