I wrote a couple of weeks ago about what you have control over when Selling your home and what you do not. I promised to address some “control issues” around Buying as well, and so here are a few thoughts:
Lenders: Do you have control over whether you are approved to purchase a home that you fall in love with? Yes. When you begin your search for a new home, the first stop ought to be a good lender. A decent percentage of home Buyers do not begin this way, and it is the source of much disappointment and frustration. I often will take Sellers out looking for properties when I list their home on the market so that they can begin to get an idea of what they like & don’t like in a new home, (and it gives them the opportunity to see how other homes are presented… giving them *hopefully* an incentive to tidy theirs up and create a good showing : ) Very often these clients of mine poo poo talking to a lender before we venture out… they think they know about what they are approved for, and/or will tell me they talked w/someone awhile back who approved them for such & such. I’ll admit to giving in at times to Buyers who have not yet been to a lender or who have not handed me an approval letter as yet, and I will tell you I have seen tears when people think they’ve found “the one” & then decide that’s a good time to talk to a lender. Here are some pointers:
- Get the facts up front before you begin looking for properties. That way you are only looking at homes you would be actually able to purchase. In any undertaking, you want to begin with facts so that you can make good decisions about how to proceed.
- Don’t worry about taking a lender’s time before you have a property in mind. This is what they do. They are used to it.
- Listen to your Realtor and any other qualified advisors when you are looking for a good lender. Get a good referral. You should have at least three from which to choose. ***The lender is the entity holding the most amount of control in the end stages of any mortgage transaction. A lender who knows and works well with your Realtor will be inclined to nurture the process… especially in the end stages. And one who is experienced and skilled will be able to field any last-minute issues that may arise so that you actually get to the completion of your transaction.
Negotiating – Do you have control of the negotiation process? Yes.
So, you’ve fallen in love with a property, and you are “countering” with the Sellers over various items. Your job is to keep a cool head, and remember what is important to you. Your Realtor will give you good advice on pros & cons of different options, and in the end, it is your decision how to proceed. Remember your budget and look at the bottom line. That said, also give some thought to how important a few dollars a month may or may not be to you if you are achieving other goals. Remember… You’re in the driver’s seat. You get to decide what’s right or wrong for you.
Earnest Money or Promissory Note? – You make this decision too, and the one about how much it will be. I advise my clients that the earnest money is their statement to the Seller reflecting their sincerity (earnestness : ) in wanting to purchase their home. The Seller will be taking their home off of the market if they accept your offer, and so you are showing good faith, and in the event you do NOT abide by the contract you are, in essence, compensating them for taking their home off the market for you for a time.
An earnest money check always gives a better impression with an offer (and you are trying to get them to agree to accept your offer right?) than a promissory note. The exception to this would be if you are out of state and making an offer without the ability to hand your Realtor an earnest money check. People tend to understand this circumstance.
Your earnest money goes toward the bottom line of your transaction, and is held by the escrow office as a neutral third party while your transaction is in process. If, for instance, you find something during your inspection period that causes you to want to retract your offer, escrow will return your earnest money, and you can begin looking for another suitable property. The contract also states that you must be able to get funding… so if you are not able to obtain funding through no fault of your own, you should receive your earnest money back as well. If the home does not appraise for at least the sale price, and either you, the Seller, or both of you are unwilling to negotiate price or come to some other arrangement, you should receive your earnest money back. The only way to lose your earnest money, really, is to violate some term of the contract. As long as you meet the time lines in the contract, and perform as you have agreed, your earnest money is safe.
Well, I hope that these tidbits were helpful. That’s enough discussion of “control issues” for now… I’ve got to run and assist some fantastic Buyers in making some decisions of their own!