The DC housing market is competitive. A lot of the more desirable homes in our area have bidding wars where multiple offers are laid on the table, and the seller gets to pick the one that they think is best. As a buyer, you don’t want to lose out on your dream home because you were unprepared. That is why I always discuss these three things with my clients before we make an offer on a home.
There are a couple of questions that you should know the answer to before making an offer on a property. For example: Do I need to sell my house in order to buy a new one? Do I need to move money around in order to have enough money for the down payment? If I do that, will there be tax implications? What are the closing costs going to be?
A great lender can help you answer all of these questions and more. It is important to talk to one before even beginning your house search. This is probably the largest purchase you will ever make in your life, and most people take out a loan in order to do it. You want to be secure in knowing what level of home you can actually afford based on your monthly income. In fact, a pre-approval letter from a lender will almost always be required when making an offer on a property.
Your Realtor can connect you with a lender if you don’t know where to start looking. After all, a great Realtor has probably worked with many lenders, and some are better able to handle tight settlement deadlines and problems that occur during underwriting than others. Financing problems have caused many contracts to fall through. You don’t want that to happen to you!
Most people are familiar with getting a CMA, or Competitive Market Analysis, on their home before they list it, but you should also get a CMA before buying a home. A thorough market analysis is an insurance policy on your investment. You want to make sure the home is worth what you are about to pay for it! A CMA will look at what homes in the area have sold for in the past six months as well as neighborhood trends. It also answers questions like does the list price accurately reflect this home’s value? You want to have a competitive offer, but you don’t want to overpay on a house that is not going to appreciate.
Get Familiar with the Sales Contract
A residential sales contract is a legally binding document that has the potential of costing you money or “damages” if you are in breach of the contract. This is why understanding what your sales contract means before you sign it is vital. The Northern Virginia Association of Realtors has a standard contract form used by agents throughout the region. Realtors undergo educational training to understand what each section of the sales contract means so that they can better advise their clients. For any legal questions, however, it is always best to talk to a real estate attorney.
Walking through the sales contract with your Realtor ensures that you understand your responsibilities as the offeror of the contract. Settlement date, earnest money deposit, and contingencies all have time limits so it is important that you understand what that means so you can meet those deadlines. Your Realtor will also explain what the different contingencies mean in detail, and whether or not you want to include them in the offer. A general rule of thumb in a seller’s market is that the more contingencies, the less desirable your offer.
Finally, Virginia is a “Buyer Beware” state which means that a lot of the “due diligence” for finding out the condition of the property falls on you as the buyer. For example, If you have not put your desire for inspections in the sales contract, the seller is not obligated to allow you access to the property to perform them, so you could be looking at costly repairs shortly after buying your home. I would highly recommend reading the material on the DPOR website before signing the Residential Property Disclosure Form that is part of the sales contract. It will help you to understand your rights as the buyer in your real estate transaction.
If you follow these three steps, you will be confident in the offer that you present to the seller. With an experienced Realtor at your side, you will stand out amongst the crowd of buyers, increasing the likelihood of winning the contest for your dream home.
Contact me today so that we can get started!
Jean Beatty is a licensed real estate agent in VA, MD, and DC with McEnearney Associates, Inc in McLean, VA. If you would like more information on selling or buying in today's complex market, contact Jean at 301-641-4149 or visit her website JeanBeatty.com.
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: InsideNoVa@mcenearney.com or call 703.549.9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreMcEnearney