Buying a Home in Iowa City: Step 4: Making an Offer
This is part 4 in a 7 part series that gives a detailed look at how the home buying process works when you buy a home in the Iowa City area. I've included links to the other parts at the end of this post.
Okay, so you've found a house that you really like and want to make an offer. This will be done in writing, something that surprises some people who think a quick call to the seller will get the ball rolling. Homes are sold on a handshake in Mexico, so the idea is not out of this world - It's just not going to happen in Iowa though, we have lots of rules to follow when it comes to transferring property!
What I like to do is sit down with my clients and go through their options before writing an offer. Price, terms and conditions are the most important aspects of an offer and it's important to figure out what will work best for you. At the same time of course you want the offer to be accepted, so you want to make it as appealing as possible to the sellers.
Once we've decided on a strategy we 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.
To start with, if you haven't done so already, you'll need to sign an Agency Agreement acknowledging that you've been educated on the Rules of Agency and how they apply to you in the purchase of a home.
The seller will have filled in a Residential Property Disclosure form giving information on any problems that might have arisen in the time they have lived in the property, or just information that there were no problems. Either way you will need to acknowledge receipt of those documents.
Then we get to the actual Purchase Agreement. Ours in Iowa City is 4 pages long and includes the following topics:
- Financing Details
- Amount of earnest money to be deposited into the listing broker's trust account
- Which 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
- Closing Date
- 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 just a partial list of items in the standard Iowa City purchase agreement of course. There's more and quite a bit of legalize too.
Once you have signed the offer, it's my job to present it to the listing agent, highlighting the positive aspects of the offer. 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. (As an example of when it could come up, it happened to me with an investor who was "low balling" offers recently).
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.***
Congratulations! With an accepted offer, you're well on your way to owning a home in the Iowa City area.
We're on a roll now and onto the the next step: Step 5: Home Inspection and Repairs
Buying a Home in Iowa City: For your reference: links to all steps in my 7 part series:
Step 1: Getting pre-approved for a home loan
Step 2: Choosing the right area to live
Step 3: Finding the Right Home
Step 4: Making an Offer
Step 5: Home Inspections and Repairs
Step 6: Preparing to Close on Your New Home
Step 7: You're Closing on Your New Home
If you're new to the home buying process - a first time buyer or maybe relocating to the Iowa City area - all this information may throw up more questions than answers...There are a couple of solutions for that. You can either leave me a comment and I'll respond to that, or you can contact me directly either by phone or email, whatever suits you best.
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Although the information provided is deemed reliable, it's not guaranteed