Making an Offer & Getting a Contract on a House

Now that you’ve found a house you are interested in it is time to make an offer.  Verbal contracts are not enforceable in the state of Florida so you must put your contract in writing.  The first step is to make a written offer.  Making an offer on a house isn’t a roll of the dice.  There are some basic steps you and your REALTOR® can take to arrive at a price range and other terms that can be beneficial and save you money.

Comparative Market Analysis
A Comparative Market Analysis (CMA) is something your REALTOR should prepare for you before you submit an offer.  The CMA compares the property you are interested in with others that are currently on the market and recently sold.  It should only compare homes that have similar bedrooms, bathrooms, square footage, lot sizes, and characteristics.  This report will also give you the average price of each of these comparisons.  This is a valuable tool to help guide you in making your initial offer to the seller and also being able to negotiate from an informed and educated standpoint of the market's value of the house you are trying to purchase.

What the Offer Contains
If your offer is accepted, it becomes a legally binding contract or a Purchase and Sale Agreement so it is important that your offer contain everything necessary for an easy and successful close.  Taking shortcuts here can cost your money and/or time later.  You and your agent want to make sure the following is included.
•         Address & Legal Description of the Property
•         Sales Price
•         Terms (cash or subject to your obtaining a mortgage for a given amount)
•         Seller’s promise to provide clear title (ownership)
•         Target Date for Closing
•         Amount of earnest money deposit accompanying the offer, and whether it's a check, cash or promissory note, and how it's to be returned to you if the offer is rejected -- or kept as damages if you later back out for no good reason
•         Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
•         Provisions about who will pay for title insurance, survey, termite inspections and the like
•         Type of deed to be given
•         Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses
•         A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
•         A time limit (preferably short) after which the offer will expire
•         Contingencies, which are an extremely important matter and discussed in detail below

Contingencies

If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. The following are three common contingencies contained in a purchase offer:

• The buyer obtaining specific financing from a lending institution. If the loan can't be found, the buyer won't be bound by the contract. 
• A satisfactory report by a home inspector "within 10 days (for example) after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies you , the buyer . If not, the contract would become void  or renegotiated . Again, make sure that all the details are nailed down in the written contract. 
• The buyer sells their current house and uses the funds from that sale to purchase this house

Negotiating tips
You're in a strong bargaining position -- meaning, you look particularly welcome to a seller -- if:
• You're an all-cash buyer; or 
• You're already pre-approved for a mortgage; and 
• You don't have a present house that has to be sold before you can afford to buy.

In those circumstances, you may be able to negotiate some discount from the listed price. On the other hand, in a "hot" seller's market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.
It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep these considerations in mind:
• Every month a vacant house remains unsold represents considerable extra expense for the seller; 
• If the sellers are divorcing, they may just want out quickly; and 
• Estate sales often yield a bargain in return for a prompt deal.

Earnest money
This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A REALTOR®  through their brokerage, an attorney , or a title company  usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.

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  in writing of acceptance. If the offer is rejected, that's  the end of negotiations , 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 patio furniture 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 accept or 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.


When it comes to making an offer many people are often anxious.  Buyers do not want to over pay but they also do not want to get their offer rejected.  It is important to have an agent that can successfully guide you  through  this process.  TEAM JOHNSON is that team.  You do not only have one experienced agent helping you.  You have an entire team all working together to get you that home you want.  Give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com

     Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
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Choosing a Home

A house is shelter, but a home is far more. It's where you live, relax, entertain friends, raise families, and work. A home is where you spend much of your life, and so choosing a house is an enormous decision.  How do you know if a house is THE one?  Here are 6 tips to consider before choosing a home.

1.  Grab Your Calculator. Your lender says you can afford to buy the home you adore, but are you comfortable with the monthly payments you'll be obligated to make? Is the down payment within your means? Will you have enough cash to pay transaction costs and moving expenses? If the house needs major repairs, remodeling or redecorating can you save the necessary funds within a reasonable time period?  What about ongoing maintenance.  A dream home becomes a nightmare the moment you can’t afford it. Remember, look beyond the listing price.  For example, a house with vaulted ceilings costs more to heat and a house with a pool means paying to maintain it. All these extra factors can add up.

2.  Condition.  Along with price, the condition of the home should be a top consideration. Does the home need a new roof? Extensive upgrading of the electrical wiring? New plumbing? Is the home disaster-ready.  A fixer-upper home with lots of potential can be a great find or a money pit. Will you be able to meet the financial challenges and live with the mess and inconvenience while the home is being brought up to your expectations?


3.  Trust Your Intuition.  Most buyers form opinions in the first few seconds after walking into a house.  Can you picture yourself and your family in this house?  Where will you put your furniture?  For example, if you’re viewing a house and find yourself imagining your sofa near the window and your green chair near the fireplace, pay attention. Chances are the house is a nice match for you.




4.  There’s No Such Thing as a Crystal Ball.  Wondering whether the house will be too small if you get a dog—or too big when the kids leave for college—is inevitable.  It is important to envision a home’s role over time but making a decision with too many variables in mind can work against you.  You should buy the house for the way you are living today, then adapt as you go.


5.  Buy How You Live Not Where You’ll Live.  A house that offers a beautiful water view with enormous windows can seem like a wonderful place to call home, but if you’re rarely home during the day, the views aren’t going to be visible most of the time. Focus on features that will please you indoors. This advice is particularly applicable to high-traffic parts of the house, such as the kitchen. A sleek, minimalist European stainless steel breakfast bar may set your heart on fire, but if you’ve got busy toddlers, a practical kitchen with lots of room and sturdy smudge-resistant cabinetry may be a better match.



6.  Don’t Delay.  When you finally do make a decision, make an offer right away.  Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then “thought it over.”  Many times the story has a sad ending -- someone else came in that evening with an offer that was accepted.  Resolve at this point that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or under-priced.

There are many things to consider when choosing a home.  We all want to walk into a home and instantly fall in love with it.  We hope to be able to picture ourselves in that home with our families.  But buyers should not rely on feelings and emotions solely.  There are other factors to consider.  This article will give you some perspective so that your “perfect” home will remain perfect for many years to come.  TEAM JOHNSON would welcome the opportunity to help you buy your new home.  Give us a call at 904-495-0146 or email us atteamjohnson@watsonrealtycorp.com

Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
Click Here to Search the MLS Like an Agent
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Looking at Homes For Sale in Saint Augustine Florida

Now that you’ve gotten yourself ready to buy a house, it is now time to find one.  Searching for a home can be a very time consuming task.  At the time of this article ' s publication there were 1,409 active listings in the St. Johns County Multiple Listing Service.  Many buyers jump onto real estate search sites like “Realtor.com,” “Zillow” or “Trulia” for hours a day trying to find their home.  Others rely on their real estate agent to search.  Before anyone can search you have to narrow down your criteria.  This article gives helpful advice about the process of looking for a home to buy.

Choose the Type of Home

The first thing to consider is what type of home you would like to buy.  In addition to single family homes (one home per lot), there are other forms of home ownership:

• Single Family Homes:  A single family home is what most people think of when they are looking for a home.  It is a single home located on one lot.
• Multifamily homes: Some buyers, particularly first-timers, start with multiple family dwellings, so they'll have rental income to help with their costs. Many mortgage plans, including VA and FHA loans, can be used for buildings with up to four units, if the buyer intends to occupy one of them.
• Condominiums: With a condo, you own "from the plaster in"  unlike what you would  with a single  family house , where you own from the ground up . You also own a certain percentage of the "common elements" -- staircases, sidewalks, roofs and the like. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowners association administers the development.
• Townhomes:  Townhomes are similar to a condo but a townhome you own the property underneath your dwelling.  Instead of a condominium association you would have a homeowner’s association.  The term “townhome” is sometimes used to describe a style of condominium that is 2 stories.  You will want to do some research and be sure you know which one you are buying.

Choose a Neighborhood

When evaluating a neighborhood you should investigate local conditions. Depending on your own particular needs and tastes, some of the following factors may be more important considerations than others:

• quality of schools 
• property values 
• traffic 
• crime rate 
• future construction 
• proximity to schools, employment, hospitals, shops, public transportation, prisons, freeways, airports, beaches, parks, stadiums and cultural activities such as museums, concerts and theaters.

This is an area you will want to research for yourself.  It is a violation of ethics and federal law for a real estate agent to steer you towards or a way from a particular neighborhood or area of the city.  If you are wanting to research these items the local police department and the local school board are great places to start.

Put Together Your Wants vs. Needs

Every potential home buyer has a list of items they are looking for that every house must absolutely have.  For example, number of bedrooms, bathrooms, fenced yard, etc.  There are also items that would be nice but are not absolutely necessary.

Team Johnson has compiled a Prioritize Your Wants and Needs checklist.  Click Here to Download.  This list will also help your agent so that they do not take you to see houses you are not interested in.


Now that you have a good idea of what you’re looking for, talk with you agent and start viewing houses.  TEAM JOHNSON has many tools that will help make this process fun.  Any of our team members would be more than happy to help you find your new home.  Give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com

Team Johnson
Watson Realty Corp
3505 U.S. 1 South 
St. Augustine, Florida 32086
904-495-0146
Click Here to Search the MLS Like An Agent
View My Website
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Get Loan Pre-Approval

Prospective homebuyers may be chomping at the bit as the housing market shows signs of recovery, but the path to getting a mortgage can be strenuous. Many housing markets have shifted to favor home sellers recently, meaning homebuyers face stiff competition and need to make themselves the most attractive candidate in order to get their dream home, and experts say step one should be getting preapproved for a mortgage. 

What Is a Pre-Approval?
A pre-approval is a commitment in writing from a lender that a borrower would qualify for a particular loan amount based on income and credit information. Most pre-approval letters are good for 60 to 90 days.


Why a Pre-Approval vs. a Pre-Qualification?
A pre-qualification is done by supplying the bank with your overall financial picture.  You tell the loan officer your income, debt, and assets.  The lender then gives you an idea of the mortgage amount you qualify for.  This does not include an analysis of your credit report or an in-depth look.
A Pre-Approval is more in depth.  You will have to supply your lender with the necessary documents to perform an in-depth look at your financial background and current credit score.  The lender will be able to tell you the exact amount you are approved for.  Many sellers will not accept a pre-qualification.  It is best to get the ball rolling as early as possible so go for the pre-approval.


Why Do I Have to Get Pre-Approved If I Haven’t Even Found a House Yet?
A letter of preapproval can give buyers a competitive edge by showing realtors they’re serious when it’s time to make an offer.  It gives the seller a lot more peace of mind that this person is actually going to get approved for the loan.  If you make an offer on a house without a pre-approval, your offer will not be taken as seriously as another offer with a pre-approval.  This could cause you to lose out on purchasing the home of your dreams.  Many bank-owned homes will require a pre-approval letter upon offer submission.

The preapproval process also sets boundaries for buyers on exactly how much home they can afford, narrowing down the search by eliminating properties out of price range.  It’s always tempting to overbuy because people always want more home than they can afford and that’s where you get into trouble, where you start exceeding 30% of your total gross income


What Is Involved In Getting Pre-Approved?

Shop Lenders
Looking at a variety of lenders can help borrowers find the right mortgage program with a lender they trust. Warren suggests looking at a few banks and at least one broker, who will shop another five or six lenders.  Although it’s important to look at lender fees which can vary greatly, having a quality lender that is a little pricier can make all the difference.  It may cost a little more but if they’re there when you need them and they’re the ones that hold your hand through the process, then it’s more than worth it. If you have someone who stays on top of it, it’s going to increase your chances of closing at a reasonable time.  Remember it’s almost impossible to get the lowest rate, the best service, and the highest quality—there has to be give and take somewhere.          

Documents You Will Need to Provide  
   • Your W2 from the past two years  
   • Your paystubs for the past three months
• Your tax returns from the past two years
• Your checking or savings bank statements for the past three months
• Statements for all your other assets (stocks, bonds, retirement) for the last 2 months
• The name & number of your landlord (if you are renting)
• Current mortgage documents (if you currently own)
• Your divorcee decree, if applicable
• If you are self-employed:
*Your business tax returns for the past two years
*Your year-to-date profit and loss statement and year-to-date balance sheet


The lender will also pull your credit report and score for you and your co-borrower (if you have one.) Most lenders charge an upfront fee of around $30-50 to do this.  The lender will analyze your credit report for any red flags such as late or missed payments or charged off debt. Your credit score will affect your ability to qualify for a loan and determine how low of a rate you can get. Generally a score above 720 will get you the most favorable mortgage rates. Your overall debt (minimum credit card payments, student loan payments, car payments, etc.) will be analyzed to calculate your overall debt-to-income ratio. You will also need to provide any alimony or child support payments you are required to pay.

Calculate Total Costs
Remember there are more costs to consider.  You might have to come up with a down payment, closing costs, escrows for taxes and insurance, etc.  You’re lender or your REALTOR® should be able to help you with this.

What If I Can’t Get Pre-Approved?
If you can’t get pre-approved right now don’t give up.  Chances are there are three areas that you will need to work on:
• Correcting any errors on your credit report and raising your credit score
• Decreasing your overall debt and improving your debt-to-income ratio
• Increase your down payment amount in order to qualify for the price
Also, be sure to ask your lender for tips on how you can improve your chances for qualifying for a loan.  For more information consult our previous blog “I Want to Buy a House But I Have Bad Credit.”

Stay tuned for our next blog in this series “Looking at Homes For Sale in Saint Augustine.”  If you have any questions regarding the real estate process give TEAM JOHNSON of Watson Realty Corp a call.  TEAM JOHNSON has a team of REALTORS working to find you your perfect home.  With our 6 person team we have plenty of experience, knowledge, and back-up.  Rather than  having one agent negotiating on your behalf you will have the advantage of having 5 agents and 1 assistant all working together to find you the home of your dreams.  We are members of 3 local MLS boards and can show you any property as far south as Palm Coast, as far west as Palatka, as far north as Jacksonville and everywhere  in between.  Give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com

Team JohnsonWatson Realty Corp
3505 U.S. 1 South
St. Augustine, Florida 32086
904-495-0146
Click Here to Search the MLS Like An Agent
View My Website
Click Here to Email Me

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