Understanding the Back-Up Offer
“When can I consider my home sold? This is one of the most common questions real estate agents are asked. While the laws vary in different states, generally the contract is binding once both parties sign the offer. At that time the closing process begins. This is also the time when sellers must stop considering other offers, but they can accept back-up offers.
What is a back-up offer? This is when the seller accepts an offer contingent upon the first one falling through. There are many reasons why the home purchase might not close—the buyer may fail to secure the loan, the home inspection may find issues the two parties can’t resolve, it could even be that the Homeowner’s Association has rules that the buyer is unprepared to accept. Whatever the reason, real estate agents know that the deal isn’t done until it closes.
A back-up offer should be carefully executed. Both buyer and seller must be able to pursue other options. Unless the buyer is willing to wait without seeking an alternative property, the back-up offer should be written to allow for the possibility that they find an alternative home in the meantime. The seller, on the other hand, must make clear they are currently obligated to another buyer and will consider the back-up offer only if the current one cancels.
Back-up offers can be a great tool in a fast-moving real estate market. Writing the offer virtually guarantees the listing agent will notify you if the home becomes available again. This gives the buyer an advantage in a seller’s market, increasing the opportunity to capitalize on a home that fell out of contract.
Be Prepared for Closing Costs
Saving for a down payment in preparation for buying a new home is pretty common knowledge. With the mortgage meltdown, most mortgages that allowed zero down payments disappeared. While FHA and VA loans still offer little to no money down, most potential homebuyers will need to save at least 5-20% of the home value.
Unfortunately, many first-time homebuyers are dismayed to learn that in addition to the large down payment, they also owe thousands of dollars in closing costs that they might not have expected. The national average for closing costs ranges from 2-4% of the purchase price, which adds considerably to the amount of savings needed to buy a home. In addition, while not a closing cost, most lenders also require a savings reserve equal to at least two months of the mortgage payment. Needless to say, it adds up.
Let’s break these costs down.
Closing costs include fees charged by the escrow or closing attorney, as well as costs associated with obtaining a home loan, including:
- Escrow fees
- Title search and filing fees
- Appraisal fees
- Home inspection fees
- Wire transfer fees
- Loan costs – These include what are termed “points”; each point is 1% of the purchase price and is used as both commission for the lending officer and as an upfront fee to reduce the loan interest rate.
These are just a few of the extra costs associate with buying and closing on a new home. It’s important to know these costs ahead of time, so potential homebuyers can save the appropriate amount of money needed to buy a home. Nobody wants to be surprised by unexpected costs and and end up missing out on the perfect property.
Seven Easy Spruce Ups
Everyone is spending more time at home right now. With so much time on our hands, it’s natural to want to spruce up our homes. While furniture stores and other retailers are closed, the good news is there are home improvement stores and online delivery to help us make the best use of this time and make some easy changes to freshen up our homes.
7 Easy Ways to Spruce Up Your Home
- Outdoors–Big box home improvement stores are open and full of spring blooms; this is a great time to add color to your yard.
- Update Your Kitchen – Kitchen trends have changed. Add some color to your space with modern paint or even a colorful appliance.
- Reimagine Your Living Room– With a little time to kill, try moving your living room furniture around for a fresh look. Visit a local big box store for decorative pillows, area rugs, frames, vases, and other decor details.
- Change Your Walls–An accent wall is an easy way to liven up your space. Invest in a couple of hours to paint one of your walls a fresh color. Build a gallery wall with family or vacation pictures – anything that draws attention to the wall and interest to the room.
- Improve the Lighting–Simple things like installing new light bulbs or fixtures can really change the mood of a room.
- Plant a Garden–Whether inside or out, there’s no better time to try your hand at an herb or fresh vegetable garden.
- Clean and Organize–Take the time to finally tackle that cleaning project.
We’re all spending more time at home; as we appreciate our homes more, we can also take this opportunity to tackle some of the changes we’ve been wanting to make.
Quick Tips to Make Your Home Show Ready
Everyone dreams of living in a model home – a beautiful modern room with the perfect vase of flowers sitting decoratively on a glass side table. Unfortunately, life doesn’t always work this way. Our homes tend to look more “lived in” with a pile of shoes by the front door, school books on the kitchen table, and cat hair on the sofa.
If you have your home listed for sale, then you also know the stress of looking around your home after a phone call requesting a showing with a few minutes’ notice. You want your home to show well so the buyers can see the beauty of the home you love, but with such short notice, how can you convert the lived-in look to a show-ready property? Fortunately, there are a few tricks for helping you keep your home show-ready at any time.
- Plan in Advance – Before you even list your house, consider the adjustment you’ll need to make in your lifestyle. Move non-essential items to a storage unit, to not only create visual appeal but make it easier to clean quickly.
- Containers – A simple way to quickly eliminate toys, clothes, shoes, sports equipment, and other items is storage bins. Keep some handy to throw excess items into before a buyer shows up, and move them to the garage or basement, or even the back of a vehicle.
- Establish a Routine – Get everyone in the family involved in establishing a daily routine. The less clutter that accumulates, the easier it is to move out of sight quickly. All family members should have morning and evening duties to keep the home tidy. If things are kept up on a daily basis, it will make the clutter and mess less overwhelming.
Unfortunately, your life doesn’t stop just because you’ve listed your home for sale. Keep it show-ready by preparing in advance, so those last-minute buyers can see your home’s charm and not the day’s clutter.
Buying A Home Sight Unseen
It may come as a shock that many people purchase a home before ever setting foot inside. These buyers may be moving to a new country or city far away, or they may not have the time or resources to visit for a home search before the big move. Not everyone has the option (or the desire) to rent for a few months while they find a permanent home in their new location. Most homebuyers would prefer to purchase a house before they arrive, so they can move their belongings and quickly get settled into their home.
There are a few things you can do to make the process more manageable if you’ve considered buying a house unseen. The first step is to find a realtor in the area that you can trust. Let them know your circumstances and that you’ll need them to help vet potential properties for you. They’ll be able to provide you with a link to a virtual tour if it’s offered, or schedule a meeting where they can walk you through the house via FaceTime or another video-based app. This will help you feel like you’re there in person and give you the chance to ask your realtor about any potential issues that may pose a problem in the future. You’ll also be able to see any features that you love, which will help you make your final decision.
Another great option is to have a family member or friend who lives in the area stop by a few open houses or take a tour with your realtor of any homes that you’re interested in. It’s a great idea to involve someone that you know and trust, to help spot any red flags or deal-breakers you should be made aware of before signing on the dotted line.
When the time comes for you to move in, be prepared for the unexpected. There will always be a few things that you didn’t expect when you’ve purchased a home unseen. However, make the best out of the situation and stay positive. It really is possible to find your dream home, even if you can’t see it before closing.
How To Set Up Your First Home Office
Working from home is not a new concept, but recent events have created a mass shift in the American workforce and more people than ever before are working from home. While simply placing a laptop on the kitchen table is one way to work from home, having a designated home office offers a better environment for productivity and is easier to set up than you might think.
- The first step is to find the right location for your home office. Although it’s great if you have a spare room to use, not everyone has this luxury. A corner of a master bedroom or living room, a loft area, or even a section of a well-insulated garage can work just as well.
- Once you find the right space, create a list of the materials you’ll need to be productive. A formal desk is best, but if you don’t own one, then any table will work. Use bookshelves or storage cubes to keep paper, pens, and other useful items within easy reach.
- Pay attention to the lighting – both natural light and lighting fixtures. Cool light, such as sunlight, is best for productivity. Make sure you have a desk lamp or floor lamp if the room doesn’t have proper natural lighting.
- Once you have the essentials set up, it’s time to add some personal touches. Add a plant or decorate a wall with pictures you enjoy, to bring the space to life. Consider the storage elements as well, such as pen holders or file folders.
A home office doesn’t need to be fancy to be an effective and enjoyable space. The most important consideration is to ensure you can work in peace; it should also offer a pleasant place to be productive that is separate from your living space so you can unplug at the end of the workday.
Things to Upgrade Before You List
Most people have wandered through new home developments and wished their own home looked as modern and chic. Model homes showcase the latest upgrades and decorating trends; for home sellers these homes are their competition, and it can feel daunting to offer an older floorplan and design.
While it might seem like a smart idea to simply offer a buyer credit and list, there are downsides to this plan, and taking the time to update a bit on your own first could mean thousands of dollars in your pocket.
Here are a few reasons why offering a credit might not be the best strategy:
- Buyer Impression – A dated home looks old and not all buyers can see the potential.
- Lower Offers – Offering a credit could be viewed as high seller motivation, resulting in lower offers.
- Value Differences – You and your buyer might disagree on the value of needed upgrades. For example, you might feel $7,500 is a fair cost for a new countertop whereas your buyers might expect considerably more; this can lead to more negotiations and lower sales price.
- Home Condition – A property that shows its age can prompt the buyer to worry about the overall condition.
- Loan Approval – Lenders are wary of buyer credits; in fact, upgrade credits are no longer possible. You might have a buyer unable to take advantage of the credit at all and you could lose the buyer.
Home design trends change quickly. If you’re ready to sell, it could be tempting just to list your home in its current condition. Before you just add a credit to the listing, consider some simple updating so your buyers can see the value of your home.