What to do before bidding on a house — RISMedia
Are you considering whether to buy a house? If so, you may be wondering what steps you should take before making an offer on the home.
Let’s look at some of the key things to consider before placing an offer on a property you like. Being well prepared will put you in a better position to succeed and enjoy your choice of accommodation.
Take the time to understand the current real estate market
There’s no guarantee that the property you love will be available when you’re ready to make an offer. You will want to make sure you understand the current market and what homes are available. Look at recent sale prices, as well as neighborhood trends.
All real estate is local, after all. Is it a buyer’s market or a seller’s market? The current real estate environment will play a large role in what to expect.
For example, right now, current real estate markets are heavily favoring sellers. Multiple bids and home bidding wars are the norm, not the exception. If your local market is like any other, you could probably find yourself in the same situation.
Be willing to do things that make you uncomfortable
When the market is white-hot, buyers are competing with many other people. To win the home they love, buyers often think outside the box and do unusual things. Here are some examples of what you might encounter:
- The offers far exceed the asking price of the house.
- Buyers waive a home inspection.
- Buyers waive the appraisal of their home or offer a valuation difference guarantee.
- Get rid of the mortgage financing clause in their offer
- Allow the seller to re-let for a fixed term.
You can see some or all of these things before bidding. Talk to your real estate agent about what to expect. This will help you adapt your offer when the time comes.
It may be a good idea to offer an alternate bid when you are not the winning bidder. Many buyers will make offers on homes that are contingent on their dream home coming back on the market.
Get pre-approved for a mortgage loan
Before making an offer on a property, it is important to have pre-approval for a mortgage loan. This will help eliminate unpleasant surprises during the home buying process. There are very few sellers who would consider accepting an offer without having one.
You can expect the seller’s listing agent to require it as well. This one is a biggie. Unless you have your financing in hand, you won’t be able to make an offer on the house. Your agent can help you get pre-approved for a mortgage in today’s market.
If you haven’t chosen a lender, your buyer’s agent will have someone they feel comfortable referring you to.
Check your credit report
Credit scores have a significant impact on the rates and terms you will get from a lender. Over the life of the loan, this could translate into thousands of dollars.
Talk to neighbors
Now that you’re in a position to make an offer on the home, be sure to do your due diligence. Talking to neighbors to find out if there are any issues you are unaware of is essential. Check the title deed and deeds for any unusual stories.
If you can’t find anything to worry about, continue to the next step.
Once you have a good idea if something is wrong with the property and you’ve talked to the neighbors, it’s time to prepare your offer.
There are a few important things to keep in mind when making an offer on a home:
- The offer price
- The amount of the deposit
- Loan conditions
- All the eventualities you want
- The requested closing date
Making an offer on a home is an important financial step. Make sure you’re comfortable doing this before you go full steam ahead. Lean on the professionals you work with to help ensure the process goes smoothly.
Bill Gasset is a nationally recognized real estate leader helping people buy and sell real estate in the Massachusetts metro area for 35 years. Bill is the owner and founder of Maximum real estate exposure. For the past decade he has been one of the top RE/MAX REALTORS® in New England.