You have finally found a home that you want to make an offer on. It is now time to strategize with your agent and figure out what terms to offer.
The following are key terms that you should discuss with your agent:
To decide what to offer, you first need to have an understanding whether the asking price is at, below or above fair market value. Ask your agent for a comparative market analysis to help you make an informed decision.
In addition to the market value analysis, the following factors will affect your pricing strategy:
You should also consider your own personal factors:
The escrow period is the number of days after the seller accepts your offer that you have to close escrow meaning that all funds (including the loan funds) required to purchase the property and pay for your share of the closing costs will have been deposited with the escrow holder. Sellers would like the escrow period to be as short as possible. The shorter the period, the sooner you are required to close and the more attractive your offer will be. However, if you will be getting financing to purchase the home as most buyers will, how much time you will need to close will in large part be dictated by your lender. In today's market, lenders are scrutinizing loan applications very closely and you should expect that it may take 2 to 3 weeks or more, if unexpected problems arise, for your lender to be in a position to fund the loan after the appraisal is in. Because loan processing is taking longer than it used to, we do not recommend an escrow period shorter than 30 days or longer depending on the lender that you will be using.
There are three basic contingencies in the standard California Association of Realtors Residential Purchase Agreement form commonly utilized in residential transactions.
The default period for these contingencies in the C.A.R. Residential Purchase Agreement is 17 days, but your offer can provide for longer or shorter contingency periods. The shorter the contingency periods, the more attractive your offer will be. You should, however, be careful not to shorten the contingency periods to an unrealistic timeframe.
What is customary will vary from location to location. In Los Angeles County, it is customary for a seller to pay for the following:
It is customary in Los Angeles County for a buyer to pay for the following:
Cost allocations, however, are deal driven and there are situations when a buyer may need to pick up certain costs that sellers usually agree to pay for.