Buying a Home in Iowa City: Step 4

Getting to Step 4 and Making an offer is a major milestone in the home buying process. With the help of your buyer’s agent you’ve done your due diligence. You’ve viewed and researched homes in Iowa City. If you’ve got any “special requests” you’ll take care of that before writing an offer. (I can’t tell you how often I’ve called City Building Departments to ask questions about houses before writing offers with clients). At any rate by now you feel comfortable enough to move forward and write an offer on the house you think will be the perfect fit for you and your family. If you’re relocating to Iowa City you’re probably a little nervous about this step. Change is not always easy and you have A LOT of that in your life when you’re relocating. Being prepared. That’s what it’s all about. If you know you’ve covered all you bases you’ll be fine when you get to the point of making an offer on a home.

Major Components of an Offer ~ Price, Terms & Conditions

Price is not the only factor you need to think about when it comes time to make an offer on a home.There are three major components to an offer – Price, Terms and Conditions. The plan is of course to get the best price and the most favorable terms and conditions for you. At the same time it needs to be appealing to the sellers. There’s a balancing act to getting this part of the process right. This is where the expertise of a (good) Realtor will come in handy. There’s much more to writing an offer than haphazardly filling in the blanks and hoping for the best.

Once you’ve talked with your Realtor and decided on a strategy you move on to filling out and signing the necessary forms. I use the words filling out, because it truly is a “filling in the blanks” scenario. The forms are standard and approved by the Iowa City Area Association of Realtors.

Signing an Agency Disclosure

To start with, if you haven’t done so already, you’ll need to sign an Agency Disclosure acknowledging that you’ve been educated on the Rules of Agency in Iowa and how they apply to you in the purchase of a home. I’m pretty vocal on my blog about my support of Single Agency. (This is when buyers and sellers have their own agents. Dual agency is where the listing agent represents both parties). There are many reasons to work with a buyer’s agent. Having someone in your corner who has no obligations to the seller when it comes to this part of the process is one of them.

Residential Property Disclosure & Lead Paint Disclosure

Before writing an offer you’ll need to sign off on the Residential Property Disclosure form. This is a form filled out by the sellers giving information on any problems they might have had during the time they lived in the property. Or it may contain information that there were no problems. Either way it’s required for buyers to acknowledge receipt of these documents. If the home was built before 1978 lead paint disclosures will also need to be acknowledged and signed.

Information on the Purchase Agreement Provided by the Iowa City Area Association of Realtors

Address of property
Price offered
Terms of financing
Amount of Earnest Money to be deposited into the listing broker’s trust account (This is generally between $500 – $1000 for lower priced homes and a gesture of good faith that the offer is genuine. If the offer is not accepted earnest money is returned to buyer immediately).
Date of Closing
Information on how real estate taxes will be pro-rated
Items will be included in the sale, (i.e. washer, dryer, dishwasher, water softener etc.)
Time line for inspections: that will include home inspections, radon and pest inspection
Other financing details such as asking the seller to pay closing costs. (I wrote a post about “Seller Paid” Closing Costs that’s worth reading before you decide about that one).
Time for acceptance of offer

This is a partial list of major items in the standard Iowa City purchase agreement. It’s 4 pages long. (Not that long really, but full of legalize so it does need your undivided attention).

Presenting the Offer to the Listing Agent

Once you have signed the offer, it’s your agent’s job to present it to the listing agent as quickly as possible. The listing agent will in turn present the offer to the seller who has three options to respond:

Accept it with no changes
Respond with a counteroffer
Ignore or reject the offer

It’s usually one of the first two options that occurs. It’s very rare that a seller will ignore or reject an offer. (A REALLY low offer that offends the seller is an example of when it could happen that a seller chooses not to respond).

This negotiating phase can go back and forth a couple of times until everyone is on the same page. ***It’s not a legally binding contract until buyers and sellers have both signed and are in agreement with ALL the terms of the contract. Additionally, buyers and sellers both need to have a copy of the signed documents for the contract to be enforceable. (The agent doesn’t need to hand deliver or anything like that, email is fine).

That about wraps up this post: Buying a Home in Iowa City: Step 4 – Writing an offer. As you can probably tell just by my approach to this post, I am a stickler for detail. Maybe you are too – that would make us a great match! When you’re ready to make your move I’d love to hear from you. You can call me anytime at 319-400-0268 or of course email works too.