5 Things You Should Know About Signing Your First Offer
Posted Wednesday, May 2, 2018
BY: A.Imbordino, The Sharon Falco Group
Buying a home for the first time can be an eye-opening experience. It is vital to educate yourself on some of the terms written within your offer. Here are 5 things you may want to know before writing your first offer on your potential home.
1. What is Earnest Money?
Earnest money is also known as a “Good Faith Deposit”. If you choose to include an earnest money deposit with your offer, this means you are demonstrating your willingness to act in good faith to complete the transaction through the form of a security deposit.
If you are financing the property, the money put forth for this deposit will be used toward your down payment on your loan. Remember to ask for a receipt when you deliver your earnest money. Your lender will likely request a copy to submit toward your loan approval.
Earnest money is also a great tool to use when you are in multiple offers. This allows you the ability to really show the sellers just how serious you are about the transaction.
It is important to acknowledge, if you default on the contract and are not protected by any written clauses or amendments within the agreement, the seller could petition for the receipt of your earnest money funds.
If you choose to not act in good faith, you must… put your money where your mouth is.
2. Understanding Attorney Review
In Illinois you have 5 business days from the acceptance of your offer to complete your review and inspections of the property. During this time your attorney will either approve or disapprove of the terms within your contract.
If you choose to preform a home inspection, radon testing or any other specialty testing it is important to be diligent in your timing. For example, Radon testing could take anywhere from 24-72 hours depending on the property. Also, a home inspection report could take up to 48 hours to receive.
If a change to the contract is proposed or you are asking for monetary credits for repairs to the property, you may be able to extend the attorney review period with written approval from the sellers.
Let’s put it this way, be diligent in working within the granted timeline.
3. Major Components
Just because a major functioning component is at the end of its useful life does not warrant the item to be defective.
For example, if the air conditioning unit is from 1975 and looks to be in rough shape, as long as it is still pumping out cold air you have no right within the contract to ask for its replacement.
4. Mortgage Contingency Deadlines
It is important to complete requests from your lender in a timely manner. Failure to do so could result in delays to your loan approval. There are three main dates you must always keep in mind when working toward receiving loan approval.
The first deadline will be your loan application and intent to proceed deadline. You will have 5 business days after the date of the accepted offer to file your mortgage application. Your lender will also need to send an “intent to proceed” letter stating you have began the application process, paid for the appraisal and are planning to move forward with the transaction.
The second deadline is your conditional approval. By this time, you should be through the application process and ready to clear the final conditions to continue to work toward receiving your mortgage approval.
The third deadline is your closing date. Keep in mind that you are not the only one involved in the transaction. Moving to a new home takes careful planning and diligent scheduling. Missing your closing date due to a financing delay could cause issues in the transaction.
To prevent any issue from arising we recommend being aware of your deadlines and provide what is needed when asked.
5. Multiple Offers
When there are multiple offers on the property you wish to purchase it is important to come up with a strategy with your agent.
The first questions we ask is “How bad do you want this home?”
This answer will affect the strategy you put into place with your agent. Make sure you are discussing what compromises and risks you are willing to make to make your offer more appealing.
Bottom line is this, if you want to win a multiple offer situation you need to present your best terms to the seller.
If you have any additional questions about placing an offer on a property or need guidance to start the process we are always here to help. Call The Sharon Falco Group Today 630.307.2760
*These items are based on Illinois Real Estate Laws and may not apply to every state. If you do not live in Illinois we recommend you speak with your agent to discuss the requirements for your state. *