Buying a Home in Iowa City: Step 4 – Writing an Offer

February 1, 2012 By Leave a Comment
Buying a home in Iowa City - Writing an offer

Getting to Step 4 and Writing 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 writing 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 Writing 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.

Buying a Home in Iowa City: Step by Step Guide to the Home Buying Process

Step One: Buying a Home in Iowa City – Getting Pre-approved by a Lender

Step 2: Buying a Home in Iowa City – Your Wants Needs & Wishes List

Step 3: Buying a Home in Iowa City – Finding the Right Home

Step 4: Buying a Home in Iowa City – Writing An Offer 

Step 5: Buying a Home in Iowa City – Home Inspections and Repairs

Step 6: Buying a Home in Iowa City – Preparing to Close on Your New Home

Step 7: Buying a Home in Iowa City – Closing on Your New Home

 

 

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Why You Should Visit with a Buyer’s Agent Before Getting Pre-Approved

October 13, 2010 By Leave a Comment
Finding the perfect home starts with a plan

Getting pre-approved for a home loan is the first order of business when you’re looking to buy a home in Iowa City. If you’re relocating to the Iowa City area this is a challenge since you don’t know anyone yet. That’s also true for first time home buyers who are not always familiar enough with the process to know the questions to ask when they do meet up with a lender. Finding the perfect home starts with a planRight there are reasons enough for you not to rush off and talk to a lender before you visit with me. Nope. I want you to talk to me first. I can save you from making costly mistakes. That’s what Buyers Agents do. They help you to make smart decisions. They won’t refer you to any lender. They’ll talk to you about your specific needs and help you figure out what kind of mortgage professional you need. In my case, once I have a little background info I’ll have a couple of more loan oriented questions for you.

Are you looking for a loan with a low or no down payment option? Or… Do you intend making a large down payment of 10% – 20% or more?

For those looking for no or low down payment options there are several available here in the Iowa City area.

FHA loans offer a low down payment option, at present 3.5% and although there are several lenders in town that offer them, I prefer to send my clients to someone who specializes in them.

100% Financing Options are still available as in-house loans with some of the local banks here in Iowa City. They are usually 5 or 10 year adjustable rate mortgages (ARM’s) and are very popular with people relocating to the area who know they may only be here for 3 to 4 years. Fellows or Residents to the UI Hospitals or Faculty and Students to the University of Iowa spring to mind. There is a high demand for these loans – As Iowa City is a relocation destination this makes perfect sense.

I should mention that I also serve clients in the North Liberty area and there is another 100% financing option for rural areas in the form of the USDA – Rural Development Loan. North Liberty is growing fast, but still classes as a rural area where it’s possible to qualify for a rural development loan.

These are just a few examples and as you can tell from just this relatively small amount of information, depending on your circumstances there are many different loan programs, so it’s really important for you to hook up with the right lender. It’s my goal as your buyer agent to make sure we start out the buying process on the right foot. Getting you Pre-approved for the right home loan by a lender who will get you to closing with the minimum amount of fuss is right at the top of my list. Just email me or give me a call at 319-400-0268 when you’re ready to get started…


In the meantime, here are a couple of things you can be putting together ready for that meeting with a lender.

*Documents Required by Lenders to secure financing:

Full Loan Application (If applying by phone this would be sent out by the bank the same day).
2 years of tax returns or W2 forms
Paycheck stubs for most current 30-day period
Monthly debt (who with, how much, loan number)
2 months recent bank statements to verify cash to close
Address of mortgage company or landlord for past 2 years
Drivers license (Legal aliens will also be required to provide visa or alien registration card)

*Depending on the loan, other documents may be required.

Comparing Lenders: It’s always a good idea to compare lenders. Particularly closing costs vary greatly from lender to lender and you want to be sure you get the best deal. Making sure you get a GFE (Good Faith Estimate) is the only way to easily compare quotes, so make sure you get one from every lender you speak with.

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Forget the Negative Headlines – It’s a Great Time to Buy A Home!

September 9, 2010 By Leave a Comment

Houses in Iowa City are priced to sell and interest rates are at an amazing 4.25% for a 30 year fixed loan. How come the market isn’t humming? That’s what I’m wondering. Could it be that the negative headlines we get fed on a daily basis through the Media is having an effect on the average consumer? Could it be that they’re so confused that they have no idea what to think anymore? I know if I wasn’t in the real estate business I would be pretty confused right now!

I see that the buyers who are able to see the benefits of buying a home now rubbing their hands with glee at the deals they’re making. I closed on an almost $300,000 house just a couple of weeks ago and the buyer shook his head in amazement when he realized how low the monthly payment was for so much house. It doesn’t get any better than this folks!

So the $8000 tax credit is gone. So what! This is better. That was a one time gift. Most buyers had spent it in their heads before ever getting to the closing table. What we have now is the gift that keeps on giving. The super low interest rate means you save money each and every month – On a home you will pay less for than you would have just a couple of years ago too. Looking at the bigger picture Iowa City is a pretty stable economic environment anyway. There’s no reason to buy into the idea that buying a home is a bad financial decision.

Since I’m a freak about data and don’t want you to just take my word for it I want to share with you a really compelling article I came across yesterday showing the financial benefits of buying a home. Financial Planning: 5 reasons to buy a house today. It’s so well written that I really have nothing to add. Except maybe this: If you want to learn about the real estate market talk to a professional. Find someone who knows your market. I know the Iowa City and Coralville real estate market and can talk about it all day long. Find someone who knows your market. Talk to them. In many parts of the country it is a GREAT time to buy a home.

Filed Under: Buyers Info, Mortgage & Finance Tagged With: ,

Buying a Home: Working with a Solution Finder vs Problem Solver

July 21, 2010 By Leave a Comment

Are you a solution finder or a problem solver? That was the question I read in a post recently. It got me thinking. Aren’t they same thing? That’s probably what you’re thinking right now too. So let’s think about it some more…. It’s all about where you focus your energy. If you concentrate on a problem that needs solving, then that’s negative energy you’re wasting right there. You’re focusing on the wrong thing. If you concentrate solely on the solution, then it’s the reverse and it’s positive energy your spending to get a job done. So I ask you again, are they the same thing? No they’re not. And the difference is like night and day!

Personally, my philosophy has always been that there are no problems, just solutions. In fact it’s one of my standard comments that I roll out when clients are frustrated with something that’s going on in the transaction. My attitude is “don’t tell me it can’t be done.” I just don’t believe that and will turn over every stone to figure out how it can be done! Of course if the issue at hand is that you absolutely want to know where the property line is on a 70 year old property where the only records are lacking in detail and aerial photos inconclusive. Then the solution might be to pay $2,000.00 for a surveyor to come out and survey the property for you. It might not be the solution you want to hear, but it’s a solution nonetheless and the ball’s back in your court. Real case scenario of course and the buyer did end up continuing with the transaction and the deal closed – He knew I’d moved mountains to get the information that was important to him. He wasn’t happy with the solution, but he lived with it. (And no he did not pay $2,000.00 to have the property surveyed).

That was a hard one. An easier one was when the buyers after looking at about a dozen homes decided there really wasn’t anything out there for them. Well, there was that really nice home with the radon mitigation system as main focal point in the family room… Deal breaker? Yes. Solution – Get the sellers to move it. Easy, right? We just had to ask.

Who do you want to be around? Do you want to work with an agent who solves problems or one who finds solutions? If you’re looking for a home in the Iowa City area and you want to work with someone who gets the job done, call, text or email me – I’m here to help!

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3 Good Reasons to get Pre-Approved Before Looking at Homes in Iowa City

June 1, 2010 By Leave a Comment

Looking at homes is much more fun than going to a lender to get pre-approved. I don’t think anyone will disagree with me there! Perhaps that’s why so many buyers need to have a house in mind before they go see a lender. We all put off things we don’t like doing and since going to a lender seems to be right up there with a visit to the dentist it makes sense getting pre-approved would be one of those things you’d put off. So why is that such a bad idea you ask? Well, here I am with 3 good reasons why turning things around and getting pre-approved FIRST, before you go looking at homes in Iowa City is a much better plan.

1. It’s frustrating and totally depressing for you to spend time looking at homes in a certain price range to later find out that you can only get pre-approved for a lesser amount. It takes all the fun out of the buying experience to have to adjust your expectations when you’ve already set your heart on something. Think about it. When you’re making other purchases, whether it’s groceries, luxury items or a holiday in the Caribbean you don’t go looking to buy without having a plan on how you’re going to pay for it, do you? So why would you do that when you’re buying a house? Generally speaking you won’t know how much a bank will loan you for a home until you visit with them. This is not something that is easily “guesstimated.”

2. Going back to the idea of “guesstimating.” Even if you have the best credit and know for sure you will get pre-approved easily, it’s still not a good idea to wait until you have a purchase agreement in hand before you see a lender. The purchase agreement has a financing contingency that requires that you have a loan commitment within 30 days of an accepted offer. That doesn’t give you a lot of time to be shopping for a lender. More than likely you will take the road of least resistance and will go to a bank that is most convenient to you at that moment in time. Will this mean you may not get the best deal? Possibly. Rates may not vary too much from lender to lender, but closing costs certainly do. Just this week I had one client pay $150 for closing costs “you can shop for.” I had another pay nearer $900. I’d say that’s reason enough right there to do your “loan shopping” ahead of time and not wait until you have a time crunch!

3. Last reason for the pre-approval is the one that usually gets top spot. This is where it shows your strength as a buyer. Particularly in the current market sellers are very nervous about accepting offers without having something in writing that shows that the buyer can pay the purchase price. I don’t think this needs too much explanation. Put yourself in the sellers shoes. The media tells us day in and day out it’s harder to get a loan these days. Would you want to accept an offer from someone who’s never spoken to a lender and has no idea how much house they can afford? My guess is probably not. That’s how sellers feel too. They don’t know you. It’s not personal. They just want to be sure you’re the “real deal” before they accept an offer.

Buying a home in the Iowa City area? Call, text or email me, whatever suits you best. I’m here to help!

Buying your first home?  I’m happy to provide all the information you need with a (free, no pressure) homebuyer consultation where we sit down and talk about the process.

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