ContractNow that you have completed Step 1 – Hire a Realtor®, Step 2 – Get approved for a loan and Step 3 – Begin your home search, it’s time to move on to Step 4 – Negotiating the contract.

This is step 4 in a series of 6 steps to buying a house in Bryan / College Station, TX. Although these steps are generally accepted throughout the country, you should check with your local Realtor® for relevancy to your particular state.

4. Negotiating the Contract

So you’ve found that perfect home and it is an absolute must have, now what? Many buyers make the mistake particularly after viewing a lot of homes, of comparing the sales price of the home they want with the homes they have looked at. That is a mistake.

Remember sellers can ask whatever amount of money they want for a home but it doesn’t always mean that that is what the home is worth. So it is always advisable to have your Realtor® compare the price of the home you want with the price of homes that have recently sold or are under contract. This will give you a better idea of the true market value of the home and you can make your offer accordingly.

Making an offer is just the beginning. Few contracts are written where the full asking price is offered with all the terms in the sellers favor, so be prepared to negotiate.

contractsSometimes the sales price negotiated is not the true cost to purchase the home. For instance, if the asking price of the home is $260,000 but you negotiate a sales price of $250,000, then it may appear that you saved $10,000 but if it is going to cost you $18,000 in closing costs and $5,000 to replace worn carpets then the actual cost to purchase the home is $273,000.

However, your Realtor® may be able to negotiate for you a contract where provided you pay the full asking price, the sellers will pay half your closing costs and the cost of replacing the carpets. Using the above example, that would equate to a purchase price of $260,000 plus only $9,000 in closing costs and no expense for replacing the carpet. That’s a net purchase to you in the amount of $269,000, a saving of $4,000.

Keeping a level head and exploring all options is a valuable tool to learn when negotiating a contract as there are several ways to provide a favorable outcome and not all of them involve changing the asking price.

Very often, the offer and the counter-offer and the counter-offer on the counter-offer and on and on has the most emotional impact on both the buyer and seller. It can be a tense and frustrating experience but if you work with a competent Realtor® and you already have your financing in order then you will have a better chance for a favorable outcome. So rather than it being a nail biting and anxious time it can be an exciting and joyous time.

All homes for sale buttonOnce the dollar amounts and terms have been agreed upon then it’s important to pay attention to the time lines provided for in the contract when conducting inspections, surveys and appraisals. These all matter in deciding whether the home is a good buy or not. Surveys and appraisals are generally accepted or declined by your lender regardless of how you feel, however inspections can often result in you not wanting to purchase the home at all.

Remember, once you have a signed contract, you are legally bound to the terms of that contract. A great Realtor® will help you navigate these terms and make sure that you are not left with, no new home and a large legal bill.

Next Step covers – Step 5: Home Inspections

Previous Articles:

6 Steps to Homeownership – Step 1: Hire a Realtor®

6 Steps to Homeownership – Step 2: Get approved for a loan

6 Steps to Homeownership – Step 3: Begin your home search