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Thursday, January 6, 2011

Becoming Home Owners: Win!

So now that you've seen a tour of our dream home, what do you think happened next?  Well I'm not great with the details of negotiation.  Here's the short version -- we got it!!  I'll admit that most of it is now a blur now, and I cannot exactly pin point how much we went in with our first offer.  When you put in an offer you sign a bunch of papers to make the offer official.  You also write a check to go along with the offer, showing that you mean business.  If you have a mortgage pre-approval letter from your early preparation, then make sure to include it.  It will let the seller know that you can follow through.  Negotiation should go back and forth until an agreement is reached by both parties.  If an offer is accepted, the check goes to the owner, and it is part of the down payment.  Our realtor advised us to write a heftier amount on the check to really show our interest, and we followed her advice.  Before the week was over, the owner accepted the offer!!  We tried our best to be reasonable without being offensive. We paid asking price with the owner providing $5k assistance.  The house also came with home warranty for a year.  All showings of the house scheduled for that weekend were canceled, and the house was ours!  Yay!  I think we were the only people to ever see the house while it was on the market.  We're special.  :)

I wish I could give more details about the process leading up to the move in, but I wasn't very involved.  Here is my short list version of what goes on...
  • talk with mortgage broker back and forth to get approved for a mortgage and locked in on an interest rate
  • get yourself a lawyer to conduct the real estate settlement -- required for the state of Delaware to protect the buyer 
  • find money for down payment -- we put down 20%
  • don't forget about settlement costs -- ours was $7k 
  • get the house inspected & don't skimp!!  go for the radon test (YHL explains the details)!
  • pack, pack, pack!!
Since I actually know a thing or two in this area, please get an inspection done by a qualified professional.  This will be the only time when you can be assured that the house is in good working order.  If something does not follow to code, the owner is required to fix it at his/her own expense.  Smaller issues will be brought to your attention that may require to be fixed or replaced in the near future.  It is all good information that you can use.  Please spend the extra money to get a radon test performed as well.  This is not a required test to perform during inspections, but your health will thank you for it.  It also doesn't matter if your house is only 2 years old or 42 years old.  Radon comes from the soil, and it doesn't care if your house is new or old.  Read more about it from the EPA website.  If the test results are high (above 4), then you must look into a mitigation system, which the owner will most likely help pay for.
    In an economy where houses stay on the market for months, it is really odd to see a house go on and off the market in less than a week.  That makes it sound like we were crazy to jump on our chance for the perfect house, but I just think it was meant to be.  The experience went without any hurdles, and before we knew it, we were moving into the house the following month.  H and I met the owner during settlement, and our hearts melted a little.  This was his home for the last 42 years, and we were given the privilege to start our own lives here.  We will be forever grateful and hope to continue to give this house lots of love.

    After looking for houses for months, you start to get used to pricing and know what is considered a good or bad deal.  You have to use your best judgment when putting in an offer because money is always a touchy area.  H and I knew that our house was priced to sell, which is a very common strategy in today's not so great market.  If a home owner really wants to sell quickly, it is wise for them to list the house priced to sell.  Go into negotiations knowing that you don't have much room to budge or bargain.  If you're stubborn and ask too low, then the house can be easily sold to someone else, especially in a desirable location/neighborhood.  You may not be the only one interesting in the house, and it could result in a bidding war.  Eeks!  I have also seen houses that are priced $40k+ more than they are worth, and those are the ones that stay on the market for 6+ months or never sell.  The price continues to drop, and you know that the owner is coming to terms that their house will not sell for more than it is worth in today's market.

    Pretty much you can't go into negotiations the same with every house.  Your realtor can assist you with their expertise of the market and value of homes in the area.  Always remember to trust your instinct though.  Even though the realtor is on your side, he/she is still trying to make a sale.  The higher the house sells for, the more he/she make off of commission.

    I'm going to wing it and say that it's going to be tough to get the seller to cover settlement costs.  In the old market during the housing boom, it was pretty easy for that to happen.  The market isn't the same, and the bubble has burst.  When the seller benefits from a great market, then it is easy to share the wealth.  In a not so great market, the seller needs to save every penny to make the deal fair for him/her.  You will often find that eager sellers will specifically state in their listing if they are willing to offer settlement help.  Our costs came to around $7k.  Don't forget about this detail when budgeting for a house.  Also don't bank on the seller being able to assist you.  Always be prepared for the extra out of pocket expense.



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