In part one we discussed getting your loan in place, determining the type of home and location that excites you and looking at properties… the fun part.
In part 2 we will discuss making an offer on a property. This is the technical part of the job. Below is a brief overview of the several considerations. Naturally, we are not covering every detail and nuance. We will refer to the Arizona Residential Purchase Contract during this discussion. We have a page on this site where you can download a copy of the contract and an overview of that document.
Below are the high points of Part 2 of our step-by-step guide.
- Determining the current value of the home.
- Establishing the offer you would like to make.
- Settling on a close of escrow date and earnest money deposit.
- Reviewing and choosing options you have when making an offer
- Personal property you would like included
- Title and Escrow Company
- Term of Inspection Period
- Home warranty options
- Date for Seller to respond to your offer
- Signing the Residential Purchase Contract.
Step 1: Doing the Comps. We study a variety of sales data to determine the current market value of the property. In addition, we gather facts from the Maricopa County Tax records and other information sites. Together we will use this knowledge to make your home purchase offer.
Step 2: Determining a Closing Date. Your agent can offer advise about an appropriate closing date. If you are living in a rental property, the term of your lease can be important to consider. In addition, your lender may have time requirements that would effect the close of escrow date. In general, most contracts have a close of escrow date 35-45 days after the offer is accepted. NOTE: If you are making an offer on a short sale, an accurate close of escrow date is generally not possible. Please visit our web site dedicated to short sales for more information.
Step 3: Contract Details. The Residential Purchase Contract has several fill-in the blanks sections we’ve outlined below.
- Often home sellers offer the refrigerator, washer or dryer as part of the purchase. If so, this has to be noted in the contract.
- You will need to choose the title and escrow company you would like to oversee your home purchase. Your agent can offer suggestions if you do not have a firm in mind. However, short sale and lender owned homes often require you to use a specific title and escrow company. You agent will help determine this variable.
- A deposit, also known as earnest money, is required when purchasing a home. The amount of the earnest money deposit is not set in stone, however, 1% of sales prices is often used. Make sure and bring a check with you to the signing for your deposit. Note: The check will be deposited by the Title & Escrow Company a day or two after your offer has been accepted.
- Home inspections are a very important part of a home purchase. The default time period for inspections is 10 days from contract acceptance. If you would like more or less time, it needs to be noted in the contract.
- You may want to have a home warranty policy included with the purchase of the home. See our page on home warranties for more information. A dollar value will need to be put into the contract as well as who is going to pay for the policy. Choice of vendors can be determined later in the process.
- A date for the home seller to respond to your offer is chosen and put in the contract as well. Your agent can advise you about different strategies here.
Step 4: Addendum. In addition to what we have covered here there will probably be a number of additional documents called “addendum” that will be included with your offer. We’ve provided an overview of the common addendum on our site. Simply click on the “Purchase Contract” tab at the top of the page and a drop down menu will display tutorials on common addendum.
Step 5: Keep Breathing. At this point you may feel a bit overwhelmed. Luckily, we’ve written hundreds of offers and will help you every step of the way. That’s part of what we do. If you have legal or tax questions, please do not hesitate to contact qualified counsel. It is important you feel safe and comfortable.