Offer Subject to Inspection – What Does That Mean?

As a Realtor I have a whole dictionary for just real estate jargon.  One of the most confusing terms, and often buyers will get the wrong idea about their agent, is “offer subject to inspection.”  So allow me a moment to explain what on earth this means.

“Offer subject to inspection” is a typical hurdle for buyers to overcome when shopping for homes that are tenant occupied.  The term means – the buyer can physically go in and SEE the home AFTER an offer is accepted.  Sounds a little backwards right?

And no – your agent is NOT trying to strong arm you and force you to buy a home without evening seeing it!

Generally this clause is for homes which are tenant occupied.  In order to preserve the rights of the tenant to have the quite enjoyment of their home – the tenant has the right to refuse prospective buyers to come in and see the home.  That is – until an offer is accepted by the seller, then the buyers has the right to inspect the home.

How does this work you ask?  The buyer must write a REAL offer since the terms are binding once accepted.  When the seller accepts the offer, the buyer will have a certain amount of days which is written into the contract to actually go in and see the home for the first time.  If the home is to their liking and the buyer wants to proceed with the contract – they do.  If the home is NOT to the buyers liking – for just about any reason – during the agreed upon days – the buyer will have the right to cancel the deal and walk away without any harm to both buyer and seller.

So you found a home you like – how do you write an offer?  If there are inspections available before hand – it makes our job of writing the offer a bit easier since we have a good idea of what the condition is.  If there are no inspections, and we haven’t seen the home, we drive by and gather as much info as we can with our eyes from the safety of the car.  We write the offer as best we can with the information provided and once the buyer has seen the home and had inspections we proceed with the new information – either by moving forward or discussing the new information with all parties and find a common and suitable outcome for all parties.

As strange as it seems – it happens more than you know.  For some buyers, they cannot imagine writing an offer for a home without ever seeing the home.  For investment buyers, this very typical and generally have no issues writing up a fair offer to get in.  Of course, what happens after a buyer gets to see the home is a far different story.  I have experienced both follow throughs on the contract and recessions – so truly we cross that bridge together when we get to it.

Which is truly at the root of what us Realtors do.  We are the buyers and sellers guides through Real Estate – what can The Caton Team do for you?

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Please enjoy my personal journey through homeownership at:

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3 ways Homebuyers kill their OWN real estate deals…

Hello  again!  Below is a great article I read in Inman News that I thought I would share.  I truly see this often….

Got questions – the Caton Team is here to help.  We are a click away – email us at Info@TheCatonTeam.com

 

3 ways homebuyers kill their own real estate deals

Mood of the MarketBy Tara-Nicholle Nelson

I recently bought a couple of spa treatment packages for a friend’s birthday (as much as a gift to myself as to her, to be sure). The package included a pedicure and a massage for the price of the massage, but had a bizarro restriction that required I pick the gift cards up at least one day prior to spa day.

The problem: The spa was across a bridge from my town. Despite my very best calculations, I hit unexpected traffic and it took me an hour’s drive just to pick them up.

It’s a good thing for the spa that I was literally stuck on that bridge, unable to turn around; otherwise, that would have been an undone deal. I was very clear that the value of my hour far exceeded the value of those two “pedis.”

In the end, the conditions I had to surmount to take advantage of the bargain negated the value of the deal — and then some.

And that happens much more frequently than you’d think in the world of real estate. Today’s ridiculously low prices and interest rates, combined, seem like the perfect storm for finding a great deal.

But some buyers run into — or even unwittingly create — circumstances in an effort to cash in on the bargain that deactivate or diminish the full value they otherwise stand to gain from buying at the bottom of the market, for both home prices and interest rates.

Here are three ways homebuyers are defeating their own deals in today’s market:

1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers.

Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues.

As a result, it is not at all bizarre to hear homebuyers today say they’ve been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion.

Alternatively, it can cause you to settle for whatever house you can get, even if it doesn’t actually meet your needs — then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted.

Both of these outcomes negate and deactivate the bargain you stood to score.

To avoid house hunting too long, it’s uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust.

Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you’re likely to both find homes that will work for your life and be successful in your efforts to obtain one.

2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers — offers sellers couldn’t afford to take if they wanted to — can have the very same result.

Buyers who think they can operate strictly on the basis of buyer’s market dynamics — without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home — are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal.

Note to “lowballers”: If you don’t actually secure the home, the superlow price you offered is no deal at all.

3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer.

Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges.

Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market.

This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time).

The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike.

Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making.

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

Loan Limits Have Changed… check out this site…

For more information on the change in loan limits – visit the Fannie Mae webiste at:  https://www.efanniemae.com/sf/refmaterials/loanlimits/

-Sabrina

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

How Much Insurance Do I Really Need?

How Much Insurance Do I Really Need?  It’s a great question that I get often.  Found this great article and thought I would pass it along:

http://www.washingtonpost.com/realestate/if-you-arent-sure-what-your-homeowners-insurance-covers-ask

 

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

Steps To Buying a Home

The Caton Team believes that buying a home is a journey.  We are happy to meet with buyers at any leg of their trek, whether it be a few years out, or we’re ready to buy now – Susan & Sabrina are happy to create a home buying plan with you and your family.  We believe communication is essential and understanding your goals as a home-buyer is they key to success.

Steps to Buying a Home

1.     Our Initial Interview

  • Determine needs, wants & desires for your new home
  • Discuss parameters
  • Discuss financial qualifications

2. Get Pre-Approved for your Home Loan

  • Contact your Financial Institution (Bank, Credit Union, etc) for a pre-approval of a Home Loan
  • Obtain a Pre-Approval letter once you have provided them with all necessary documentation (income verification, taxes, debt)
  • Once you know your purchase power we can help you shop your loan if necessary to find the best loan for your price range with the best interest rate & terms
  • Remember to make sure you have funds saved for your closing costs.*
  • REMEMBER – DO NOT OPEN ANY NEW LINES OF CREDIT OR MAKE LARGE PURCHASES – it will affect your credit score and purchase power!

3. Property Tours

  • We will preview many homes in your criteria
  • We will show you available properties that match your needs & wants
  • Listen carefully to fine-tune your ideal home
  • Provide information about the current market and reliable resources regarding cities, schools to help you with your decision

4. Write an Offer on the Home that fits your needs & wants

  • When possible – we get the Sellers Disclosure package beforehand so you can review the disclosures before we write an offer
  • Writing an offer will take between 1 to 3 hours
  • Complete the purchase agreement contract & review all the necessary disclosures with you
  • Buyer provides the earnest money deposit (this can be in the form of a personal check & will be held until an accepted contract is created – generally 1% – 3% of the purchase price)

5. The Caton Team Presents Your Offer

  • Prepare a presentation by highlighting the strengths of the offer & your strengths as the buyer
  • Present the offer to  the Sellers’ Real Estate Professional & when possible the Sellers
  • The Seller with either accept your offer, counter it, or reject it
Of course, our objective, if it is your objective – is to get your offer accepted on the first try.  If your offer is not accepted or rejected right off the bat – you begin the counter offer process.

6. Counter-Offer

  • Discuss the counter-offer with you and how it relates to your goals and prepare a response
  • Negotiate the counter-offer in your best interest while keeping the Seller happy as well

7.          Escrow

  • When the offer has been accepted & signed by all parties, escrow is opened
  • Earnest money (good faith deposit) will be deposited AND CASHED by the escrow company and held in escrow
  • The Escrow Officer will order the Preliminary Title Report & send copies to the Lender & us – your Realtors

8. Contingency Period

  • Buyers approval of Seller’s Real Estate Transfer Disclosure Statement
  • Buyers approval of the Preliminary Title Report
  • Buyers approval of any disclosures not provided prior to writing the offer
  • Conduct all desired Physical & Pest Inspections
  • Verify that the Property Appraisal & Loan have been approved & secured
  • Once the buyer is fully satisfied with the home, the buyer, in writing, will remove all their contingencies and is not locked into contract

9. Homeowners’ Insurance Coverage

  • Select an insurance company and discuss coverage (it is best to start with your car insurance company – they often offer umbrella discounts)
  • Give insurance agent escrow information.  They will need to order a copy of the policy for the new Lender prior to escrow closing

10. Signing Documents at the Title Company

  • Lender will send the loan documents directly to the title company several days before close of escrow
  • Buyer will receive copies of the title documents and the Lender documents (Take the time to review your loan documents prior to our signing appointment to make sure all the terms & conditions are what you agreed to – changes to the loan documents must be made before you sign so escrow will close on time)
  • Buyer will need current photo identification

11. Down Payment and Closing Cost Funds

  • You may bring a cashier’s check to the Title Company several days prior to closing or have funds wired directly from you bank
  • The Escrow Officer will provide a Buyer’s Estimated Closing Statement, which will itemize costs and credits, estimating the total money due at closing and also provide wiring instructions if you are doing a wire transfer of your down payment

12. Funding

  • Lenders will send funds directly to escrow the day before closing

13. Close of Escrow

  • The deed will be recorded at the County Recorder’s office by the Title Company (Buyer will receive the original back from the County Recorder in approximately 6 weeks)
  • Real Estate Professional will coordinate the transfer of the house keys after the transfer of sale is on record.

14. Move In!

  •  Get those boxes in the car, pop the bubbly – the house is yours!  Congrats
Got Questions – The Caton Team is here to answer them – email us at info@thecatonteam.com or visit our website at http://thecatonteam.com/
Visit my personal journey through homeownership at http://ajourneythroughhomeownership.wordpress.com/