Check out the next course for a closer look at what happens once you’re under contract, from the VA appraisal to your loan’s underwriting and more.
Talk with a Veterans United loan specialist to see if you’re eligible for a $0 down VA loan.
Real Estate Expert
When you find the home that’s right for you, it’s time to put together an offer to purchase the property.
Real estate agents craft offers and negotiate contracts every month. Your opinion and gut are important here, but carefully consider their input and suggestions. It’s ultimately up to you to determine where that first offer begins.
Here are a few broad considerations to bear in mind:
Make sure you’ve done your homework. Verify the school information, property boundary lines and more. Visit the home and the neighborhood at different times of day. Scour local news sources and talk with your real estate agent or local officials regarding any pending changes to or near the property. You don’t want to find out after closing that a factory or a four-lane highway is going up nearby.
See what your agent can learn about the seller’s motivations. Are they looking to sell because of that incoming factory or four-lane highway? Or maybe they’re taking a new job and are desperate to unload the property. Other homeowners may be in no hurry and focused on getting the best possible offer. Getting insight into the seller’s mindset and motivation can help strengthen your negotiating position.
Before making an offer, you’ll want to compare the sales prices of similar homes. Your real estate agent will handle the number crunching and prepare a “Comparative Market Analysis” (CMA). The CMA compares and contrasts the characteristics and sales prices of similar homes. It’s an educated estimate of the fair market value of your future home and a great tool for picking a starting point for negotiations. Also look at how long the property has been on the market and what the sellers paid for it originally.
You’ve already determined how much you want to spend on a home. Protect your financial future by sticking to this figure. Keep in mind that a first offer is seldom accepted, so you’ll want to leave some wiggle room between your initial offer and your total housing budget. Rely on your agent’s guidance and make a first offer that makes sense. You don’t want to overpay for the home, but you also don’t want to start with a lowball offer that poisons the negotiating environment.
To show that you’re a serious buyer, it’s a good idea (and a legal requirement in some places) to include a deposit with your offer. This deposit is known as “earnest money” and can be refunded to you if you walk away from the sale (within the terms of your contract). Ask your real estate agent for advice on how much earnest money you should put down. Some agents suggest depositing a small percentage of the sales price, while others recommend a flat amount ranging from $500 to $2,000.
VA buyers are required to have an appraisal. But that doesn’t give you the same insight and protection as a home inspection. Make your purchase contingent on the results of a home inspection. These can reveal all sorts of costly problems, and you can use the results of the inspection to renegotiate with the seller or even walk away from the deal. Veterans and military members who currently own a home may want to add a home sale contingency that makes the new purchase contingent upon their ability to sell their old home.
Some buyers include a photo and a handwritten letter that talks about why they love the home and their plans for it. This is more common in hotter markets and multiple-offer situations. Telling your story and sharing your dreams for the home can help personalize your offer and ensure it stands out. That personal touch can help clients in a bidding war, especially if their offer isn’t the most competitive.
A purchase offer will feature your stipulations and contingencies. This is your way of saying, “I want to buy this house, but only if X, Y and Z happen.” Your agent will have a good handle on what contingencies and specific requests you should include.
Some of the most common stipulations and contingencies include:
Next, we’ll take a closer look at closing costs.