What is your dream home worth?? In simple terms, a home ultimately is worth what someone will pay for it. Everything else is an estimate of value. No one wants to overpay for something, but maybe you have the best family in the world, and they are simply “over the moon” for this house. You might make an offer very close to the asking price. Right?? However, another family who prides themselves in the thrifty business might make a substantially lower offer. Your real estate broker can offer suggestions based on factual information such as comparable sales, number of days the home has been on the market, and how many price reductions it has seen, which can speak to the motivation of a seller, but ultimately the decision of how much to offer is yours.
Unless you are a cash buyer, your Purchase Agreement will most likely have at least 4 contingencies. Contingencies are conditions that are included within the offer that must be fulfilled before the deal can close. If you or the seller is unable to satisfy a contingency, then the agreement may become void. Contingencies usually include time frames in which a buyer can get his earnest money back if the contingency isn't fulfilled before the deadline. For example, if a buyer schedules an inspection within the time specified on his contract and decides that there will need to be too many repairs made, he can rescind his offer and get his earnest money back. The most common contingencies are :
Financing Contingency: the buyer must get approved for a mortgage loan to be able to buy the home. He will have a set amount of time to receive a loan commitment letter from a lender to confirm the approval of his loan application.
Inspection Contingency: gives the buyers the rights to get the home inspected and negotiate further if there are repair issues.
Title Contingency: the offer depends on whether the title of the home that documents the history of ownership is clear of any liens, and that the seller will be able to convey “clear” title. This contingency grants the buyer the right to review a title report.
Appraisal Contingency: the success of the offer depends on an appraisal confirming a value for the home that is equal to or greater than the buyer's offer amount.
There can also be contingencies for the sale of your home and for NM septic systems along with any number of others, some of which maybe unique to your circumstances.
While nothing is set in stone, some costs allocated in your Purchase Offer are considered customary, such as who pays for the survey (seller) or how closing costs are shared. Your broker will advise you on these matters as well as the amount of earnest money that should be put down. Earnest Money is the money buyers submit along with their offer to show that they are serious about the offer. The money is deposited into an escrow account. When the sale is completed, the earnest money becomes part of the buyer's down payment. If the sale fails due to a contingency outlined in the initial Purchase Agreement, the buyer recovers the earnest money. If the buyer backs out for reasons not covered in any of the contingencies, he is considered in breach of contract, and the seller has the right to keep the earnest money.
Once your Purchase Agreement is completed, your real estate broker will become your best advocate while presenting the strongest case possible in order to achieve acceptance of your offer. Depending on how aggressive (low price and other conditions that benefit the buyer) the terms of your offer and the motivation to sell on the part of the seller, your offer will either be accepted (best scenario possible) or you will receive a counter-offer. Again, it is the responsibility of your broker to expertly guide you thru this process and the strategies of negotiation.
Now that the buyer and the seller have “meeting of the minds”, so to speak, you are “under-contract” and both parties must now attend to the terms and contingencies laid out in your Purchase Agreement.
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