Timing an Offer

Real estate is time-sensitive. Timing affects what options are on the market. Whether it’s a better time for buyers or sellers. How active (or slow) the market is. Who else is looking for a home. All of it is impacted by timing. For military families, timing is even more critical. When the new orders are cut. How quickly your former home sells. What date you need to report by. The clock is ticking. Plans need to be made to uproot your family from one place and settle them in another.

Timing is of the essence. This makes it tempting to rush into making or accepting an offer or to drag your feet out of concern that you won’t get it all just right. Neither is a good strategy for a successful real estate transaction. Keep in mind that an offer signed by both parties is a legally binding contract. So you want to do your homework and have your strategy mapped out in advance of making or accepting an offer.

Before you make an offer…

                Be a tourist in the neighborhood. You’d spend time researching a company before you started working there, right? Perform the same due diligence on the home address and neighborhood in general. Google the house. See if you can speak with any neighbors regarding their experiences living in the neighborhood. Check out the local amenities. Track the distance to post or school or work and make sure it works for your family’s needs. You may like the house, but can you see yourself living comfortably in the area?

Double-check the numbers. Remember that the number a lender preapproves you for is not necessarily a number that you can reasonably afford. Do the math. Factor in your potential new mortgage payment, property taxes, homeowner’s insurance, etc. Will those numbers still fit in your budget? Have you factored in some cushion for new home expenses? Have you asked for and reviewed utility estimates from the current owners to see if there are any surprises for you there?

                Review the seller’s disclosure. Laws about when sellers are required to disclose any known difficulties or deficiencies with their home vary from state to state. In some states, a potential buyer has access to them in advance of an offer. In other states, that information is provided within a set timeframe after an offer is made. If you have access to a seller’s disclosure before making an offer, avail yourself of that information. Is anything disclosed that could be prohibitively expensive to repair or replace? And if so, and you still love the home, do you have the financial wiggle room to account for that expense in the numbers you’ve just run?

                Discuss comps with your real estate agent. He or she should be able to provide you with comparable real estate listings. When you know what similar properties in the area are selling for, you can make sure that any offer you make is aligned with the local market. Your real estate agent will provide invaluable guidance regarding what a reasonable offer would be, informed both by the comps and by his or her own extensive experience on both sides of an offer.

                Consider the contingencies (both yours and the seller’s). Contingencies in a real estate offer or contract stipulate that a finalized sale is contingent upon meeting certain criteria.

A home inspection contingent offer gives a buyer the right to have the house professionally inspected. (DO NOT WAIVE THIS RIGHT.)

A mortgage contingency protects a seller from missing other opportunities to sell the home if a buyer’s financing is not assured.

An appraisal contingency allows a third party hired by the lender to evaluate the fair-market value of the home and back out of the deal if the house appraises for less than the sale price and you don’t intend to pay the difference. (If you’ve ever used your VA loan benefit, you already know how important to your loan that appraisal value is.)

A home sale contingency outlines that the transaction is dependent upon the sale of the buyer’s home. 

Whatever the contingencies are, make sure that your interests are protected and that you can live with the seller’s stipulations too.

Before you accept an offer…

Look at the numbers again. Maybe you’ve been offered your asking price and are now worried that you didn’t ask for enough. Perhaps you think you’ve been offered too little. Whatever the offer number is, remember that number is only one thing to consider. Is it less than your number, but in cash? Is the number on the low side, but the sale will be quick, and you must sell this home before you can purchase your next home? Is the buyer offering to cover closing expenses? Consider the entire picture—the dollar amount, the financing terms, the timing—all of it should be taken into account.

                Consult with the professionals. Your real estate agent can tell you if the offer is a “good” one and what you might expect in terms of other offers coming in. Your agent has his or her finger on the pulse of the local real estate market and can assist you with factoring in what else you need to know before accepting or rejecting any given offer. Your attorney will review the offer, with a close eye on any contingencies and how they can adversely impact you. He or she will make sure your own interests are protected and that you don’t put yourself in a position where you’re now bound to a contract that isn’t right for your family’s own unique situation.

As a buyer or seller, the timing isn’t right if you haven’t asked the right questions or put the right protections in place for yourself and your family. Once you have? Then it’s the perfect time to make or accept an offer.          

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