When buying a home, you’ll notice a lot of different categories when perusing real estate listings. One status is “under contract.” This term means the purchase process has essentially begun between the seller and a buyer.
It doesn’t necessarily mean the house will be taken off the market. There’s still a chance the deal might fall through, which is why the listing isn’t removed.
When Does a Listing Go Under Contract?
When buyers want to make an offer, there are several steps they will have to take. They need to determine how much they want to offer and, typically, they’ll have to submit a pre-approvement letter. This shows they will have the funds necessary to support that offer. A buyer’s agent will submit an offer letter that includes all of this information.
Even if the seller accepts the offer, the house will still not be “under contract.” The buyer and seller will also have to agree to the contingencies. Once everything is agreed upon, the house goes under contract.
What Happens When a House Is Under Contract?
The house remains under contract until all contingencies are met. For instance, the sale may be contingent on the home inspection. If the inspector finds a problem and a solution can’t be found between the seller and buyer, the buyer might withdraw. The house will no longer be under contract. When this happens, other buyers will be able to make an offer to purchase.
While most houses that are under contract are sold, there are some that go back on the market because the deal fell through. Because of this, keep your eye open for desirable under-contract homes.
For more tips on buying a home, contact us at Randy Lindsay today.
At the moment, the home buying challenge is a difficult one. Why? Because it’s a seller’s market: the housing supply is low and the number of buyers on the prowl for a new home is high. One of the things many buyers are doing to make their bids stand out is to waive certain contingencies. While you might be willing to do so, the following are three contingencies you should be sure to keep despite what the competition may be doing.
- The home inspection contingency – Most home sales are contingent on a professional home inspection. This ensures that you don’t buy a house that’s riddled with expensive problems you didn’t know about (such as having to replace the roof). If you waive this contingency, you could end up buying a lemon without much legal recourse.
- The appraisal contingency – An appraisal gives you information about the property’s value vs. what the seller is asking for it. The appraisal is important because your lender wants to make sure it’s not lending you more than what it’s worth. If you waive the appraisal and sign on the dotted line, you may end up having to pay the difference between the appraisal and the cost since your lender won’t cover that. If you can’t cover those costs out of pocket, the deal could fall through.
- The financing contingency – The financing contingency states that your offer is dependent on your ability to secure a loan. If you waive this contingency and you end up being unable to get the loan you need, you could lose your deposit.
If you’re looking to buy a home soon, don’t waive any of these contingencies in an attempt to craft a more competitive offer. For more home buying advice, be sure to contact us at Randy Lindsay today.
There comes a time for many homeowners when they realize their house is too small for their needs. Your family has grown and you need extra space. Or maybe your first home was all you could afford, and it was a bit on the small side to begin with.
You may find yourself in a position where it’s necessary and financially feasible to upsize. If you plan on upsizing, be sure to avoid these three mistakes when buying a home:
1. Not being realistic about your needs – Bigger doesn’t always mean better. If you buy a house that’s massively larger than your current home, remember it will cost more time and money to maintain that extra space. Plus you’ll need more furniture. Assess what your needs actually are before you jump to upsize.
2. Not taking a long-term view – Your current needs may not be the same as your future needs. For example, you may have two teenage kids living at home and that’s why you want to upsize. Everyone needs more space. But what happens in a few years when they move out? You may get stuck with extra space you’ll never use.
3. Rushing to upsize – Don’t dive into buying a new home the moment you’ve decided you want to upsize. Because you already own a home, you have the luxury of waiting until the time is right for you. There’s a lot to consider:
- How your financial situation looks
- The state of the local real estate market
- What you want to do with your current home
When buying a home to upsize, be sure to avoid these mistakes. For more professional advice on buying a home in general, contact us at Randy Lindsay today.
There are a lot of different costs to evaluate when buying a home. For example, many properties are governed by an HOA (homeowner’s association).
If the house you’re buying belongs to an HOA, then you’ll pay monthly or annual fees. Those fees will vary based on your location and the services you receive from the HOA. HOA fees can be $200-$300 a month. But if you’re buying a condo in New York City, the fees can cost as much as $3,000 a month.
Here are 4 reasons why HOA fees are worth it:
- Access to community amenities – Some home communities have community buildings, play areas, swimming pools, and gyms. HOA fees can cover the costs of maintaining these areas so you can use them safely.
- Community engagement – HOAs often organize community gatherings to create a stronger sense of unity.
- Maintain property values – HOAs govern membership by implementing rules and guidelines regarding property development, renovations, remodeling, and landscaping. This ensures the community has a somewhat uniform look and that the actions of one homeowner won’t bring down the values of surrounding properties.
- The HOA pays some or all of your community expenses – Different HOAs cover different expenses. It’s not uncommon for an HOA to cover the costs of trash collecting, gatekeeping for gated communities, and landscaping.
HOA fees go toward maintenance, upkeep, and more. This makes them well worth the expense. However, it’s important that you pay attention to HOA fees when buying a house. Make sure the fees are worth it for you.
For more advice on buying a home, contact us at Randy Lindsay today.
A seller’s market is when the inventory of homes in an area is low but demand from buyers is high. A seller’s market puts home sellers at an advantage. They have more leverage when it comes to negotiations because there are more buyers competing against one another.
Buying a home in a seller’s market can be challenging, especially if you’re on a strict budget. Here are tips to successfully buying a home in a seller’s market:
- Add an escalation clause – Even if you make a strong initial bid, consider adding an escalation clause for 2-3% if it’s within your budget. Doing so will allow you to automatically bump your offer up if the seller has another bid higher than yours.
- Appeal directly to the seller – Send the seller a letter explaining who you are and why you want to buy the house. If the seller has an emotional connection with you, your bid may become a priority even if it’s not the highest.
- Provide flexible terms – If you can’t compete with your offer, consider non-price factors. For example, offer a flexible closing date that appeals to the seller’s needs. You can also waive certain contingencies.
- Submit a strong offer – You may be tempted to start low, but this strategy seldom works in a seller’s market. A low bid may be ignored. Odds are the seller will have another bid lined up anyway, which means you’ll lose out to a competing buyer almost immediately. You’ll rarely have the chance to counter since many sellers will have more than one offer to choose from in a seller’s market.
Keep these tips in mind if you’re buying a home in a seller’s market. For more professional real estate advice, be sure to speak with a local real estate agent at Randy Lindsay today.
When buying a home, it’s important that you do a professional home inspection prior to closing. This provides you a chance to find any problems that the seller has to take care of (whether via a credit or by doing the repairs) — although you can usually back out of a deal as well. However, even after all of the repairs have been made (or if no issues are found), you’ll still want to do a final walk-through right before the scheduled closing date. Doing so allows you to do one last check before you sign on the dotted line. The following are a few tips for doing a final walkthrough:
- Check previous issues – If you found any problems during your home inspection that the seller agreed to repair, then make sure that those problems have been fixed.
- Check garage opener – If the house comes with a garage, make sure that the door and the remote work properly.
- Inspect all the lights and outlets – Go through the home and check every light. Plug your phone into each outlet to make sure it works as well.
- Test all of the appliances and fixtures – Make sure all of the home’s appliances and fixtures (such as faucets) are still in working order.
- Make sure everything is cleared out – At this point, the seller (or whoever was living in the house) should have moved out completely. Make sure no personal belongings or garbage was left behind.
- Look for damage – Even if you didn’t uncover any damage during the home inspection, new damage may have occurred since then. Look for leaks, mold, water damage, and general damage to the home.
Always do a final walkthrough before you close on a home. For more tips on buying a home, be sure to contact us at Randy Lindsay today.