Buying Your Home - Making an Offer

Can you buy homes below market?
While a typical buyer may look at five to 10 homes before making an offer, an investor who makes bargain buys usually goes through many more. Most experts agree it takes a lot of determination to find a real "bargain." There are a number of ways to buy a bargain property:
*Buy a fixer-upper in a transitional neighborhood, improve it and keep it or resell at a higher price.
* Buy a foreclosure property (after doing your research carefully).
* Buy a leftover house in a new-home development.

Are low-ball offers advisable?
A low-ball offer is a term used to describe an offer on a house that is substantially less than the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be rejected. You should always do your homework about comparable prices in the neighborhood before making a low offer.

Is a low offer a good idea?
While your low offer in a normal market might be rejected immediately, in a buyer's market a motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be accepted by the seller. But there are other considerations involved:
* Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition.
* Is the offer made on the house as is, or does the buyer want the seller to make some repairs or lower the price instead?
* Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.

What contingencies should be put in an offer?
Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase contract must include the sellers responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.

What stays in the home when it is sold?
It depends. Fixtures, any kind of personal property that is permanently attached to a house (such as drapery rods, built-in bookcases, tacked-down carpeting or a furnace) automatically stay with the house unless specified otherwise in the sales contract. But anything that is not nailed down or a-fixed is negotiable. This most often involves appliances that are not built in (washer, dryer, refrigerator, for example), although some sellers will be interested in negotiating for other items, such as a piano. We highly suggest putting these items on an Addendum to the Purchase Agreement, we want an appraiser to give value to the home, not a hot tub or piano.

Whose obligation is it to disclose pertinent information about a property?
It is the seller(s), but obligations to disclose information about a property vary. Here in Indiana a bank, estate (probate), or government owned home is under no obligation to disclose any defects in the home expect Lead Based Paint, if they know. Under normal circumstances the seller will fill out the state required Seller's Residential Real Estate Sales Disclosure (State Form 46234). Which will give the sellers knowledge of the properties condition to the best of their knowledge. It is wise to review this before making an offer. 

How do you determine the value of a troubled property?
When considering a foreclosure property you must understand the bank(s) will not make any repairs unless required by a mortgage. in most cases a bank owned home will sell for less than a normal home, generally speaking 10%-15% less. If a home seems too good to be true, it normally is. As the market 'recovers', banks are in a stronger negotiating position.

What are some tips on negotiation?
The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, seller who must move quickly due to a job transfer may be amenable to a lower price with a quicker closing. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home or must sell the home due to court orders.
Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller's asking price stacks up. We discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all, not only during the initial phase but also during the inspections as well.

Do I need an attorney when I buy a house?
In Indiana, you do not need an attorney to complete a real estate transaction. You do have every right to have the agreement reviewed by any council you choose. Most buyers are capable of understanding purchase agreements as long as they make certain they read the fine print and understand all the terms of the contract. In particular, you should be clear on the terms of any contingency clauses that will allow them to back out of the contract. If you have any questions at all, it may be advisable to consult an attorney to avoid future legal hassles. In looking for an attorney, ask friends for recommendations or ask us to recommend several. We will always recommend attorneys that specialize in real estate law.

What are the standard contingencies?
Most purchase agreements include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. As a buyer, you could forfeit your earnest money under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase agreement must include the sellers responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.