You Found Your Dream Home - Now What?
You’ve been pre-approved and have been working with a local realtor to search for your dream home.
After a few open house tours, you find THE ONE. 🎉
It checks *most* of your boxes and you’re ready to submit an offer!
YAY! This is such an exciting part of the home buying process, but it can also be a stressful one to navigate if you don’t have the right tools or team on your side.
That’s why here at The Real Estate Collective, I’m here to make sure you have all the information you need so you can feel confident throughout the entire home buying process.
If you’re in the beginning stages of buying a home, make sure you read this blog post first to learn the first steps to take BEFORE house hunting and then read this one so you know what to do after you’re pre-approved!
In this stage of the home buying process, we’re talking all things offer submission, inspection, and appraisal.
So, let’s get into each one!
How To Submit The Right Offer
Once you’ve found the ONE, it’s time to submit an offer that a seller simply can’t say no to… and yes, there’s a strategic way to do this!
First things first, it’s important to conduct market research (which is something your realtor can help you do) to get an idea of what similar properties in the area have recently sold for.
This type of market analysis will typically be referred to as “comps” in the real estate world and takes into consideration the property's location, condition, features, and how it compares to similar homes in the market.
In addition to understanding the comps in the market, you then want to consider the seller’s situation and their motivations.
Are they moving and looking for a quick sale?
Are they more interested in a competitive price?
While a seller may not flat out tell you these things, your realtor can typically help you determine the main motive of the seller and can guide you on your offer based on that.
Finally, based on your market research and the seller’s situation, you can accurately determine an offer price that reflects its value while aligning with your budget.
Depending on the market, you can absolutely offer slightly under the asking price to open up room for negotiation, but it’s important not to lowball significantly.
This is why working with a realtor is so important, so that you can have a set of expert eyes and receive thoughtful guidance on your offer before you submit it for consideration!
When you submit your offer, it’s important to include contingencies, which can protect you in case something unexpected is found during inspections or if certain conditions aren't met.
Common contingencies include a home inspection, appraisal, financing, or the sale of your current home.
Pro Tips For Stand Out Offer Submission:
Personalize Your Offer – typically sellers LOVE to see a personalized letter that you’ve written expressing your interest in the property and why it's the right fit for you. This is where you can share details about your personal situation, your family, etc. to add a personal touch that can make your offer stand out.
Present the Offer Professionally – this should really go without saying, but when submitting your offer, you want to work with your agent to draft it professionally and include all necessary paperwork and documentation required by the seller or their agent, so they don’t even have to ask for it.
Be Flexible and Ready to Negotiate – when it comes to real estate, I always tell people to expect the best, but prepare for the worst. Meaning, ANYTHING can happen and I want you to be flexible and prepared to negotiate when necessary. If the seller counters your offer, have a predetermined idea of your highest offer and terms you're comfortable with.
Timeliness – if I know one thing about sellers, it’s that they want serious buyers, so submitting an offer in a timely manner is very important! This will show them that you’re serious about the deal and it can encourage them to make their decision quickly as well.
Follow-Up – during the offer submission process, it’s also important to stay in touch with your agent for updates and to respond promptly to any counter offers or requests for more information.
What To Expect After Your Offer Is Accepted
Submitting an offer is the first step, but getting your offer ACCEPTED is another.
When that happens, it can feel insanely exciting, but again a little stressful because you never really know what the next few days or weeks will bring.
It can feel like a true whirlwind, which is why I want to break it down for you so that you know exactly what to expect.
First up, you’ll deliver your earnest money AKA your good faith money! 💸
This is a sum of money that you as a buyer put down as a sign of your commitment and seriousness about purchasing a property in a real estate transaction. It's typically a percentage of the home's purchase price and is held in escrow until the sale is finalized.
If the sale goes through, the earnest money is usually applied toward your down payment or closing costs.
However, if you back out of the deal without a valid reason outlined in the purchase agreement, you quite possibly forfeit the earnest money to the seller.
On the other hand, If the seller backs out or fails to meet certain conditions outlined in the agreement, the earnest money would typically be returned to you.
(For a closer look at other types of money you can expect to spend in a real estate transaction, click here!)
When it’s time for you to submit your earnest money, your realtor will typically direct you on what exactly needs to be done with those funds.
In Montana, we use title companies for closings, so your earnest money will be held in escrow until it’s applied at closing. The seller will choose the title company and that is who you will make your funds out to!
After your earnest money is submitted, it’s time to schedule your home inspection!
Home inspections aren’t required for your transaction, but they are HIGHLY recommended.
It’s kind of like how your mom used to tell you that you had a “choice” but there was definitely a right or wrong choice to make. 🤣
Depending on the inspectors schedule, your home inspection might be days or weeks away, which is why it’s important to get it scheduled right away, so the process isn’t prolonged any longer than necessary.
PRO TIP: make sure you schedule your home inspection for a time that you can devote some energy to it. It’s usually a lot of information and some process time afterwards is highly recommended.
I’ll talk more about the purpose of your home inspection below!
Lastly, you or your realtor will need to get in touch with your lender.
During this time, your lender will need a copy of your purchase contract so they can get started on their file and let you know if they need anything else from you.
If you’re into a new month, they will need new bank statements and pay stubs, so make sure you have those handy just in case!
The Purpose of a Home Inspection
Since home inspections aren’t necessarily required, you might be wondering… why exactly do we recommend them then?
It’s a great question, so let’s talk about the purpose and the importance of a home inspection!
The primary purpose of an inspection is to provide the buyer with an in-depth understanding of the property's overall condition.
During the inspection process, the inspector will work to identify any existing or potential issues that might affect the home's value, safety, or livability.
This includes examining the structural components of the house, including the foundation, walls, roof, and other critical systems like electrical, plumbing, HVAC, and more.
They look for any issues that could pose safety hazards or might require immediate attention.
Additionally, the inspection provides an overview of the general condition of the property, which helps you as a buyer make informed decisions about the purchase, understanding the repairs or maintenance required after closing.
The reason we recommend opting for a home inspection is because findings from the inspection can be used as a negotiation tool.
If significant issues are discovered, as a buyer, you may negotiate repairs or a reduction in the sale price to cover the costs of addressing those issues.
Not only can you negotiate price based on a home inspection, but understanding the condition of the property allows you to properly plan for future repairs or maintenance if needed and overall provides peace of mind of your purchase!
Your realtor will typically have an inspector that they prefer to work with so that you don’t have to hunt someone down yourself, making the process as easy as possible.
What Happens If Your Desired Home Has Defects
During a home inspection, there’s always a chance that they will find a few things that need some work before the sale can go through…
And as a buyer, trust me when I say, I KNOW there’s nothing more stressful. You simply want to get to that closing table and walk away with keys in hand.
I get it – but these processes are in place for a reason.
IF the home you’re hoping to purchase comes back with defects, first of all: DON’T FREAK OUT.
Here’s why: most home inspection reports are very extensive, listing dozens of defects, especially if the home is older.
This means that some of the mentioned notes in the inspectors report won't even be things that you need to address.
The KEY goal here is to focus on the severity of the problem and ask yourself what are the deal breakers?
In instances like this, it’s not uncommon for a home inspector to call on a licensed professional to check something out.
For example, let’s say they find a double tapped breaker in the main electrical panel. They will then call on a professional – in this instance, an electrician – to come give further insight.
You will have the opportunity to bring whatever professional you like into the home to conduct whatever inspection you deem necessary.
The GOAL is for you to have as much information as possible when negotiating your home inspection!
PRO TIP: this is where your realtor's connections with local contractors in the community is going to come in haaaannndy.
(And psst: if you’re local to Billings, I’ve got a list of go to vendors here!)
And because I’m always honest with you, I will say: some homes might not be worth the work.
If that’s the case, you can cancel your contract and move on to the next.
But if you’re like most of the home buyers in this market, you’ll negotiate with the seller and you two can come to an agreement of what will be fixed or compensated for. This is what we call your “inspection negotiation period.”
If you can’t come to an agreement, the contract will be terminated and you’ll get your earnest money back.
However, more often than not, the seller & buyer WILL come to a mutual agreement and the contract will then enter into its next phase… the appraisal. ⬇️
The Purpose of a Home Appraisal
After the home that you’re hoping to buy has been inspected and approved for purchase, it’s time for the next piece of the puzzle.
Similar to a home inspection, a home appraisal serves multiple purposes, primarily to determine the fair market value of a property.
It's an important step in the home buying process and is often required by lenders before approving a mortgage.
During this step, an appraiser will evaluate the property's characteristics, condition, and comparable sales in the area to determine its current market value.
They’ll look at:
General Condition
Location
Age
Exterior - Siding, Roof, Windows
Size - Square footage
Design - remodeled, new, dated
Interior - Bedrooms, bathrooms, basement space etc.
Improvements
Safety Features
This value determination helps BOTH, the buyer and the lender, understand what the property is worth.
Once the market value is clearly understood, your lender will use the appraisal to ensure that the property's value justifies the loan amount.
This part of the process helps them mitigate the risk of lending more money than the property is worth, which could occur if the borrower defaults on the loan.
Just like a home inspection can be used as a negotiation tool, an appraisal can too!
If the appraised value comes in lower than the agreed-upon purchase price, it may prompt renegotiation of the price or require the buyer to bring more cash to cover the difference.
Overall, an appraisal provides legal and financial clarity by offering an unbiased opinion of a property's value to ensure that you as a buyer and your lender have a realistic understanding of the property's worth.
And again, your realtor will typically already have a trusted appraiser that they love to work with so that you can follow their lead and trust that you’re being taken care of every step of the way!
Ready To Start The Home Buying Process?
By now I know what you might be thinking… this feels like a LOT! And when you’re reading all of this at once, it definitely can, so I get it.
But what I want you to know is that your real estate agent is the person that works with you from start to finish to make this process feel way less overwhelming and will help you get connected with all of the crucial people needed who have been vetted and trusted.
That’s the #1 reason that you want to work with a local agent who is established in your area and KNOWS 👏🏼 THEIR 👏🏼 STUFF 👏🏼
So, whaddya say? Are you ready to begin the home buying process?
If you’re local to Billings, CLICK HERE to get started and I’ll help you get started on the right foot.
And if you aren’t local to Billings, good news for you – I know people. 😏
Connect here and I’ll get you in touch with a trusted agent in your area to start the home buying process with ease!
