In this edition of our Home Buying series, we’re going to examine what happens after you find a home on the market. There are specific steps to making an offer, negotiating a deal, and capitalizing on some costs when it comes to purchasing a home in Ann Arbor, MI. If you want to make sure you get the home you’ve fallen in love with, consider these points:
Step Four: Identify A Property
Today, the internet can greatly help your search for an Ann Arbor property, especially if you don’t have a very specific idea of where you wish to live. A good online search can prove invaluable as you look at crime statistics by ZIP Code, check out the quality of the schools in the area, and check out what a particular neighborhood looks like. In many instances online information might also include 1) whether there is a homeowners association fee, 2) what the property taxes might be, and 3) information about the area’s schools.
It is important in the home buying process to not go to an Ann Arbor open house or to even see a new home builder without your real estate agent. Without your agent, whoever shows you property may end up as your agent for that piece of real estate. Again, if you’re not careful, you could end up with an agent that is actually representing the best interests of the seller and not yours.
It’s recommended that you narrow your search down to five or six properties before you attend the first showing. One reason for this is that many buyers quickly discover that they need to adjust their needs and/or wants after viewing a few homes.
Home buyers relocating from some distance away should understand that a good real estate agent is oftentimes a busy one. Always set up appointments in advance so you don’t drive a great distance only to find that your agent is booked up for the week.
Step Five: Writing & Negotiating An Offer
Here is where the skills of a good real estate agent are very valuable. Always remember that in negotiating a purchase almost everything is negotiable. A purchase contract establishes the terms and conditions of the sale of residential real estate. Although there is a lot of what is called “boilerplate” language in such agreements, many of the contract terms can be modified by either the buyer or the seller. There are addendums that may be required. For instance, if a property is being sold “as is”, or if it is a short sale, or if there is a homeowners association.
If you’re not paying cash for the property then a loan status report (LSR) should be submitted along with the offer to purchase. It is imperative that you show the seller that you not only want to buy their property, but that you are in fact able to do so. An LSR is essentially a pre-qualification statement from your lender. It does not fully guarantee that the loan can be obtained, but it does demonstrate that you are a legitimate buyer. The LSR will typically note 1) the terms of the loan, 2) the amount of down payment, and 3) the qualification amount.
Step Six: Deciding on the Price
A common question arises, “How long does this whole process take?” If you are getting a loan for a standard purchase (not a short sale), you should typically figure on 30 to 45 days. If you’re paying cash, it can be done in about 21 days. Remember, a short sale purchase will usually take a fair bit longer.
When it comes to determining the price to offer for a property, it’s vital that the buyer establish that amount, and not the agent. Now, the realtor can be very helpful in providing comparable market analysis (CMA) for that neighborhood to help you with a decision. Properties in the neighborhood that have been sold in recent months often provide a good indicator of the current market value of the property.
Upgrades don’t always add to the value, but both the condition of the property and upgrades can affect the current market value. Once you know the current market value of the property, you can determine whether the seller’s asking price is realistic. Ultimately, realistic expectations from both the buyer and the seller are usually key to concluding a sale.