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Signing a Contract


 five steps for home buyers 



You'll be able to make an offer as soon as you’ve found a place you love.

- Sellers prefer home buyers who have lender preapprovals.



- Working with an experienced agent will likely save you money in the long run

- REALTORS know the market and can offer advice about every aspect of buying a home. Have an ally on your side.

 1. Offer Price 

Once you find a home, the first thing you need to do, is decide on an offer price. You need to stay within your budget, but you don't just need to throw out a random number. This is where your REALTOR can help find that sweet spot with a data driven analysis, to get your the best deal without insulting the seller.

Three things to consider:

1. Condition - how does the home compare to comparable sales in the area? Are there any necessary repairs or renovations? 

2. The Market - Real estate agents are particularly useful in assessing the current market and housing costs. Ask your agent for a comparative market analysis.

3. Your Budget - You may be pre-approved for a large mortgage price, but don't outspend what you are going to be able to pay back. Make sure you can live comfortably with the monthly mortgage payment.

 2. Contingencies 

A contingency is basically an escape clause in a sales contract that allows buyers to walk away from a sale with their earnest money.


Common contingencies include:

- home inspection

- appraisal

- financing

- title.


If you’re buying a home and can pay cash for it, you will not need to include the financing contingency or the appraisal contingency, which is required by lenders to make sure that the property is worth at least the mortgage amount.

 3. Earnest Money 

A contract to buy a home in Alabama requires a good faith cash deposit, called earnest money. The amount of earnest money is negotiable and varies from market to market. In North Alabama, you will see earnest money range from $500 up to 3% of the purchase price. The more you put down, the better your offer looks to the seller.


This money will be held in an escrow account and later applied to your mortgage down payment. 

 4. Write an offer 

You have a price in mind. You have a plan for contingencies. It is time to convey that to the seller. Your agent will draw this up for you. (Your agent will always have an estimated closing statement for you, to give you an idea of how much money you will need to bring to closing.) If you don't have an agent, you will need to include this:

- The address of the home you want to buy
- Your name and the name of anyone else who will be on the title with you, such as a spouse
- The amount of money you want to offer for the home
- Any contingencies the home needs to meet before the sale goes through, such as a successful inspection
- Any concessions you’re asking from the seller, such as closing cost coverage or repairs
- Items you want included in the sale, such as window treatments, appliances or lighting fixtures
- The amount of your earnest money deposit
- Your mortgage preapproval letter so the seller knows you can fund the purchase
- The date you expect to close on your loan
- The date you want to move into the home
- The deadline to respond to your offer

 5. Negotiations 

You have submitted your offer. But, you aren't quite done yet. The seller must respond. Basically, they have three options:

1. Accept the offer - in this case, the seller signs your offer and you are under contract to purchase the home. You can proceed to produce your earnest money check, get the contract to your lender, and schedule your home inspection.

2. Counteroffer - the seller has the option to send an offer back to you. It isn't always a counter on price (although most of the time, it is). It can be a counter for things like closing date, repairs, or other terms.

3. Reject the offer - Sometimes the seller has a better offer, or just does not want to accept yours based on price, loan type, or other factors. Although a rejection can leave you disappointed, it may be a good learning opportunity to educate yourself on the market, or it may be leading your to a home you will fall in love with even more.

Done Deal

If you are ready to begin the home buying process, let's set up an appointment to go over your needs and how we can help you find your next home. Get in touch with the contact information below.

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