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Buyers & Sellers • March 2, 2023

Home Warranties

by Kristi Gibbs

What are Home Warranties?

Home warranties are a type of service contract that provide repair or replacement coverage for major systems and appliances in a home. They can be purchased by either the seller or the buyer, and typically last for one year. The question that often arises is whether it is worth buying a home warranty or not.

One benefit of having a home warranty is the peace of mind it can offer. If a covered item breaks down, the warranty company will send a qualified technician to diagnose the problem and either repair or replace the item. This can save homeowners hundreds or even thousands of dollars in repair costs.

The items covered by a home warranty can vary, but typically include central air conditioning systems, central heating systems, kitchen appliances, clothes washer and dryer, plumbing system, electrical system, and roof leaks. Many of these items are included in the standard plan of the warranty.

If you are selling your home, offering a home warranty can be a selling point for potential buyers. If your home is older, offering a home warranty can offer peace of mind to buyers and help mitigate issues that may come up in the inspection with concerns about mechanicals or appliances being near the end of their life, for example. You will also be covered by the warranty during the time your home is listed, which can be a benefit for the seller.

Buyers also have the option of purchasing a home warranty. This can be especially useful for those who are purchasing an older home, as it can provide coverage for major systems and appliances that may be near the end of their life. Buyers typically have 90 days after closing to add a warranty.

It is important to note that not all home warranties are created equal, and it is important to research the options available and read the fine print before purchasing. Some home warranties may have limits on the amount of coverage provided, as well as exclusions for certain items or types of damage.

In conclusion, whether or not to buy a home warranty depends on individual circumstances and preferences. While a home warranty can provide peace of mind and potentially save homeowners money on repairs, it is important to carefully consider the options available and weigh the costs and benefits before making a decision.

Buyers • February 27, 2023

What does “as-is” mean?

by Kristi Gibbs

As-Is Properties: What Does That Mean?

While looking for homes, buyers will sometimes come across a property listed “as-is” or have to make an “as-is” offer to get a home they love under contract. So what does as-is mean exactly?  An as-is offer means you can have an inspection, but you are not supposed to ask for any concessions, repairs, credits, or price reductions based on the inspection results – what you see is what you get. There are some safeguards to protect you when purchasing an as-is property.

Should I have an inspection?  

As a buyer, you have the opportunity to have an inspection during the inspection period and you should.  After all, you did not waive inspections.  In Indiana, we use an as-is addendum that is provided with an offer spelling out the timeline and terms of an as-is purchase. A defect in Indiana is, in short, defined as a condition affecting the health or safety of inhabitants or significantly shortening or adversely affecting the life of the home.  If a defect is revealed during the inspection that was not previously disclosed, you have the opportunity to walk away from the sale and request a refund of earnest money.  Typically, when a buyer goes into an as-is situation they know what they are getting into minus what isn’t easily determined in a walk-through of the home unless the seller has provided an inspection.  In some cases, there are more defects revealed than the buyer is comfortable addressing or can address due to budgetary constraints.  

Should I provide an inspection response?  

If you find that the number or magnitude of defects is too great to address and that has changed your desire or ability to purchase the home, then I suggest providing a response.  If the situation is too extreme and you don’t want the home, then walk away as the as-is addendum provides for that.  However, if you still want it, but are not willing to move forward at the agreed upon terms then I recommend providing a response.  If the seller is not willing to consider the response, then they can terminate the contract on their own accord and must return the earnest money to you per the language in our as-is addendum.  The reality is that whatever is causing you to want to walk is likely going to be something that will now have to be disclosed to future buyers and it may be worth it to the seller to preserve the deal in hand.  Sellers still need to disclose any and every issue with the house, regardless of the as-is sale.

Is an as-is sale for me?

As-Is properties can sometimes be a good deal, but if you don’t have a good handle on what the costs are to make repairs or updates that you think need done plus some extra cash for unforeseen items that come up on an inspection, this may not be for you.  You need to ask yourself how comfortable you are with an as-is offer knowing a seller is not planning to address or share the cost of inspection items.  The idea is that the price is such that it is accounting for the work that needs done.  Not every buyer has the stomach for this, emotions can get in the way of whether you should move forward.  Buyers ultimately have the power to pull the plug on as-is deals with little to no consequences.  Like I tell my sellers, it’s not always the best path if you want to get to closing.  I have tips for sellers that I share to minimize the risk of an as-is deal.  

Please let me know if I can answer any questions about “as-is” sales!

Buyers • October 24, 2022

HOMEBUYING FEES

by Kristi Gibbs

When buying a home, many buyers think they only need to have a down payment ready for closing, however, there are many other fees that have to be paid throughout the process.  So what are these other costs, when are they due, and how can you prepare for them?  Look for a separate post touching on inspections for vacant land.

Appraisal: Typically the appraisal is around $450 to $550+ and is paid to the lender at closing, but some lenders do collect that payment upfront.  A few questions you might have: What happens if the home doesn’t close?  You will most likely still have to pay for the appraisal if it was completed.  Do I have to pay for the appraisal if it comes in less than the purchase price?  Yes.  No matter what the value is, if the work has been done the appraiser will be due their fee. 

Home Inspection:  I always recommend buyers do a home inspection on a property. These may range from $350 to upwards of $750 based on the size of the property.  If you tell the inspector the size of the home, they should be able to give you a quote over the phone. The inspector will collect the fee for the inspection at the time of inspection.

Additional Inspections:  I often recommend clients do additional inspections on top of the general inspection.  It depends on the property you are purchasing if and which of these I would recommend. Typically these inspections are done on the same day as the general inspection and are paid for that day:

        Radon – Radon is a naturally occurring gas which could pose a health hazard if the levels are at or above 4 pCi/L according to the EPA.  This is a very common test in our area.  Your inspector will run this test for 48+ hours and then will check the machine’s readings to determine if the levels are safe. The cost for this is $100- $250.

        Wood Destroying Insects/Termites –  Checking for signs of insects that could cause major damage to your home is very common.  This includes: termites, carpenter bees, carpenter ants and powder post beetles. Prices range from $75-$150 depending on the size of the home.

        Septic –  If you are buying a home with a septic system you can have the local health department perform a visual inspection for $100 (plan ahead as this will take several weeks) or you can hire a septic company to pump then inspect.  I will ask for info from the current owners on the septic maintenance.  Start with your home inspector and see if they will conduct a dye test that might cost @$75.  Then go from there depending on the findings, etc…

        Sewer scope – Usually done on inspection day if there is access to the sewer.  The costs could be $150 – $500 (may depend on where, how much length, amt of time it takes and/or if there is a clog that needs cleared first). This will help determine if the lines are clear or not.  Especially good to do if there are large trees on a small property – think Elm Heights area, smaller lots and huge trees with major root systems.

        Pool, Water, Indoor Air Quality, & Mold – These are some additional add-on tests.  These are not as common.  If you have well water though, you will want to have the water tested. 

Closing Costs:  When you close on your home or land you will then pay closing costs and prepaids on top of your down payment. Closing costs are typically 2% to 3% of the purchase price and likely include the appraisal as well as title co fees, lender fees and more. You’ll also likely need to pre-pay 6-12 months of your homeowners insurance or HOA fees. Your lender is going to be your best resource for those fees and will explain what you will need to bring to closing in terms of cash that you wire. If you are paying cash, the cost to close at a title company is going to be around $550 and then you may need to pay pre-paids.  You won’t have loan closing fees or an appraisal fee due at closing.  Remember, your earnest money is credited back to you at closing and most buyers get a credit from the sellers for future taxes, so those often offset a chunk of these costs.

If you have any questions about how much money you need to have to buy a property, please let us or your lender know!

Sellers • August 29, 2022

BROOM CLEAN CONDITION FOR SELLERS

by Kristi Gibbs

Have you ever heard of ‘broom clean’ condition? It’s the condition in which a property legally needs to be left when a seller moves out. Here are guidelines to help you know what the requirements are in terms of how the property should be left:

Fixtures:  Anything attached to the walls other than artwork should stay which includes all light fixtures, bathroom mirrors, towel bars, curtain rods, TV wall mounts, shelves attached to the walls like floating shelves, and blinds. In addition, it is not uncommon for buyers to ask for draperies and so make sure you know what items they asked to have stay, above and beyond, what is written in as a default in the contract.  

Paint:  If you are a seller, you aren’t required to repaint, however, it’s nice to patch any holes left from items such as artwork, etc., and it’s generally considered common courtesy to touch up the paint to cover any patches, scuffs, or knicks in the paint. Consider touching up tiny spots and marks with products such as the Mr. Clean Magic Eraser. While you aren’t required to do this by law, it makes for a smoother final walk-through and helps avoid potential problems.  

Nails – Remove nails from the walls. If you put up frames, art, mirrors, or anything that requires nails, make sure to remove them. If you have time, go the extra step and spackle the area to remove the small holes that remain.  Again, you aren’t required to patch the holes by law, but it’s a common courtesy many sellers undertake. 

Odds and Ends – Unless there is an agreement to the contrary, empty ALL your possessions from the home including any storage areas, as well as food from the fridge/freezer and empty the trash before leaving for the last time.  Double-check all cabinets before you leave for the last time as we often find items left behind in drawers, cabinets, washers/dryers, dishwashers and even attics & crawlspaces.  If you want to leave anything extra behind like paint, extra materials, etc…run that by me first and I will check with the buyers agent because those items should not stay unless they want them.  Leaving behind what was there when you bought the property is not okay without making sure the new owners want those items. 

Appliances – the buyer will most likely do a thorough check of all the appliances that were included with the property so make sure everything is in working condition. If something is broken and needs to be fixed, let me know asap

Buyers thoroughly check the property at the final walk through, which usually occurs the day before closing or the day of closing to make sure nothing was damaged when you moved out or has stopped working. Think of the walkthrough as a mini inspection. If damage did occur while moving out or between the inspection and closing, the buyers can delay closing until you fix the damage, require you to put money into escrow for the repairs to be done after closing or cancel the contract and walk away. That’s why it’s important to leave the property clean and in good condition. 

If the buyers are not getting possession at closing they still may do a walkthrough to check on any inspection repairs or just make sure the home is being kept in the same or better condition as when they first saw it.  It can be nerve wracking to close on a home you don’t get to move into right away. 

The last items to leave for buyers are garage door opener(s) and keys as well as any alarm or garage keypad codes.  Those can be collected at closing or left securely in the home. 

If you remember one thing, it’s to leave the home in the same condition you would be happy to receive it in. Happy Selling!

Buyers • Buyers & Sellers • Sellers • August 12, 2022

WHAT IS EARNEST MONEY?

by Kristi Gibbs

What is earnest money?

Earnest money is a good faith payment which shows the seller that you are serious about buying their home.  It’s also part of your down payment.  So for instance, if you pay 1% in earnest money (abbreviated as EM) and your total down payment is 20% then that means you’ve already paid 1% of your down payment up front. So at closing, you’d just pay the remaining 19% of your down payment plus your closing costs. 

How much is earnest money?

Typically it is 1% of the offer price in our area.  The first EM payment is usually due within a few business days after an offer is accepted.  Earnest money is typically deposited the day it is received so be sure that money is in your account when you drop off the check or wire the funds.

Who holds the earnest money?

Usually, the earnest money is held by the real estate brokerage representing the seller.  However, not all real estate brokerages are set up to hold earnest money. If the seller’s real estate brokerage doesn’t hold earnest money then often times either the buyer’s real estate brokerage or the title company will hold the earnest money instead.  EM will be credited back to the buyer on the closing statement.

Why do we pay earnest money?

Sellers take their home off the market for buyers and the earnest money is the way the buyers show sellers they are serious. Without some skin in the game, a seller is unlikely to accept the offer. 

Can I get my earnest money back if I cancel the contract?

If you have a change of heart, you will forfeit your earnest money.  If the inspection reveals major defects, as defined in IN, that the seller is unwilling or unable to address then a buyer could submit a mutual release and would likely receive their earnest money.  If a buyer doesn’t give the seller an option to remedy defects, the buyer could lose their earnest money.  If the buyer has waived inspections or is buying as-is, then just ask me about that because those are different circumstances for how EM is handled.  Regardless, if you submit a mutual release because your loan was denied, the property burned down, the property didn’t appraise or because of another reason where your earnest money was protected in the contract then you’ll usually get the full amount of your earnest money back.

If you have additional questions about earnest money, just let me know!

 

Uncategorized • May 22, 2020

BUYING DURING COVID-19

by Kristi Gibbs

 

Buyers are navigating showings during COVID-19 with the help of protective gear, patience, and flexibility.  The process is generally the same once you have identified the home you want unless you are from out of town.  Those buyers are not likely making multiple visits here.  Finding the home you want is a more thorough process as we carefully select which homes to view.  Once you have an accepted offer the process moves forward in a typical fashion other than limiting contact with others.  We are following guidelines and those may change here and there along the way.  Below is how things have changed thus far.

Initial Consultation

When a new buyer reaches out to me, the first thing I do is send my buyer survey to gather information about their search.  Next, I set up a time for us to meet in person or chat over the phone.  I’ll delve into more details of their search.  I work with a lot of out of town buyers so the fact that all my consultations are now over the phone is not much different for me.  Whether it’s COVID-19 or not, I ask buyers to provide a pre-approval letter from a lender before seeing homes.  Being pre-approved and targeting homes based on criteria we’ve discussed means our time will be used wisely.  We’ll only see the homes that are the best possibilities, which is exactly what we should be doing now anyway.  We are being selective when choosing to go into other peoples homes.

Showings

I am asking ALL of my buyers to wear masks, take shoes off or use shoe covers, and touch as little as possible with a wipe in hand.  Majority of sellers are requiring these measures.  Whether or not they state those requirements explicitly, I am telling my buyers to follow that protocol.  Prior to viewing homes, buyers are to review all online materials for a home which could include a home tour video or a Matterport 3D tour, floorplan drawings, photos, and any documents provided in the MLS.  By thoroughly reviewing all of this and driving by the home before a showing, if possible, we can avoid unnecessary showings.  Many sellers are asking that only the Realtor and parties who will be signing purchase agreement documents enter the home.  There also should not be overlapping showings.  I’ve found my buyers are being really thoughtful about whether or a not a showing is necessary.

Out Of Town Clients

Many of my buyers moving here from other areas of the country are limiting their travels.  They are waiting to travel here until it’s closer to their deadline for securing a home.  The timing can be tricky with limited visits and certainly can make the move more stressful when there is pressure to find a home.  I have taken a lot of videos of homes and neighborhoods for buyers over the years.  I’m no videographer, but it helps narrow down possibilities.  I’m also utilizing FaceTime as well as WhatsApp, a free app that allows me to video call buyers similar to FaceTime so they can tour the home along with me in real time.  I will not only help you with your home purchase, but I will also connect you with anyone else here to help meet your needs.  Whether it’s a list of my preferred service providers, healthcare providers, or a friend who has a kid in the preschool you are interested in, I’m on it!

Inspection and Appraisal

Inspectors and appraisers are taking all the same precautions we are asking buyers to take.  It is preferable that only the inspector and buyers attend the inspection.  The sellers will be away for this appointment per usual and it is not a good time to invite family and friends to see the home you are purchasing.  I know you might be excited to show it to them, but a video call would be best.  Buyers don’t attend the appraisal in any circumstance so that has not changed.  Lenders are allowing more drive-by appraisals during this time and sometimes they are even waived in certain circumstances.

Final Walk Through & Closing

The final walk through will likely be your third time in the home after the initial visit and inspection.  You are not required to attend a walk through or even have one.  I recommend doing one to make sure there are no last minute surprises like a burst pipe.  I will happily do the walk through while on a video call with you if you prefer.  As for closings, you can close inside the title company in a private room that has been disinfected.  You can also request to sign from your vehicle.  I will not be inside for a closing in order to limit the number of people in a room.  I will either be in the parking lot or available by phone should a question arise.  Knock on wood, by the time we get to the closing table most questions have been answered and any additional questions can likely be answered by your closing agent.  If there is someone in your party who does not want to come to closing, but needs to sign, someone could be given Power of Attorney or documents could be signed then mailed.

In summary, I will work with you in the way that you need me to be in order to feel safe and to minimize your outings.  This entire process can be done from home.  If that’s the choice that is best for you then by all means I will do what needs to be done to make that happen just short of picking up a home and bringing it to you.  Prepare for the process of finding a home to take longer, as there have been fewer listings than usual.  We all now know how quickly a country can shut down and if we return to a stay at home status then closings could be delayed.  We did see some of that in March and then things got back on track.  If there are two thing to be during the time of a pandemic, it’s patient and flexible.  I look forward to helping you find a home in a safe and productive way!

Sellers • May 22, 2020

SELLING DURING COVID-19

by Kristi Gibbs

 

Whether you are selling during COVID-19 pandemic or considering selling, read on to learn more about selling during this time.  Listing consultation, marketing, showing, pricing, and closing protocols have all changed since then.  It’s important to have an understand of selling in today’s world because some of this may remain as the new normal for listings.

Listing Consultation

Sellers can request a virtual appointment which can easily be done over FaceTime, WhatsApp, Zoom, etc…  This way you can see me and give me a tour of your home both inside and out.  The video works well enough for me to provide recommendations about staging, landscaping, painting, and general repairs or maintenance.  A follow-up plan will be emailed outlining what should be done before listing your home.  I will also drop off my sellers brochure which walks you thought the process of selling as a handy reference.  Another option is for sellers to leave home so I can walk through on my own.  We could chat outside after I view the interior.  It’s really up to each seller what they are most comfortable with!  

Marketing

If your home is not occupied, then not much will change and we can proceed like usual while taking precautions for showings.  Whether a home is vacant or not, all my listings have a video walk through, floor plan drawings, and professional photos.  I found it was immensely helpful to provide those services pre-COVID-19.  I continue to do so now with a few adjustments.  For example, I am asking sellers to clean out closets so photos of those can be included with the listing if needed.  In addition, I am advertising with a service that follows buyers online with an ad about your listing.  I know buyers are on the internet house hunting more than ever so I want to be present there beyond home search sites. 

I am still sending out “just listed” postcards and posting to social media, in addition to online marketing.  As for printed materials, most times I am not leaving packets in homes for buyers to take.  If you want to list your home, but want to do it completely virtual, that is possible.  You would have to take all your own photos, which I could have enhanced.  I would also ask that you video the interior of your home and possibly ask that you FaceTime a prospective buyer and/or their agent.  I understand it is not possible for some people to have anyone in their home if they can avoid it.  A home could be listed on the condition that the buyer not be able to enter until an offer is made.  This could work depending on the home and price point.  Ultimately, you would have to allow the buyer with the inspector and appraiser to enter the home.  I will be do my best to meet you where you are.

Showings

For a long time now, a sellers first showing has been online.  Buyers start their search there and, now more than ever, they need access to the most information possible.  In an ideal world, the only showings you would have are with buyers who are ready, willing, and able.  While showings are down and you should expect fewer than you would have anticipated months ago, the buyers looking at homes during this time are serious.  That is good news!  The pool of potential buyers might be smaller, but there are buyers who are still looking to secure a home.  My listings have a COVID-19 reminder at the door listing protocols that are expected like not having multiple parties in the home at once.  I have shoe covers, wipes and masks available.  We are asking that everyone wear a mask and that only the agent, using a wipe, touch anything unless the buyers also have a wipe to use.  Ideally a seller will have the lights turned on and as many doors open as possible in the home so we can make the showing as touchless as possible.  

Pricing Your Home

Prices are changing during this time and everyone wants to know what will happen with prices going forward.  The answer is that I don’t know.  I’m keeping an eye on our monthly MLS reports and sales prices.  I’m optimistic that our niche market here will continue to chug along without the disruption that we might see on the coasts or in larger cities.  I will keep up with home pricing changes in our market so I can advise you accordingly.  I’ll provide information about your home views online and the number of showings in your area.

Closings

Title companies are continuing to process closings without issue.  They are either bringing documents to your car to sign or having you sign inside in a room all to yourself.  I am staying in my car in the parking lot or making myself available over the phone.  Sellers generally don’t have that much to sign since they won’t have lender documents and so you could also opt to sign remotely.  You can sign documents and return them in person or overnight documents if you are out of town.  

The overall goal of all these measures is to allow for social distancing and to keep everyone safe.  My mask protects you and your mask protects me.  Sellers who have to move are going to move and buyers who have to buy are going to buy.  Keeping the housing market going is impacting our economy in a positive way.  I anticipate Realtors will continue to be allowed to conduct business here so long as we are abiding by the rules.  My team and I are here for you from start to finish.  

Uncategorized • May 3, 2020

A FEW THINGS TO KNOW ABOUT APPRAISALS

by Kristi Gibbs

 

If the buyer is obtaining a mortgage to purchase your home then the lender will require that an appraisal be completed.  The appraisal is an estimate of a property’s value. This is based on factors such as age, location, square feet, number of bedrooms & bathrooms, amenities, structural condition, and recent sales of similar properties.

Who orders the appraisal?  

The buyer’s mortgage lender orders the appraisal and the buyer pays for it.  This appraisal will likely be scheduled a few weeks after an offer is accepted.

When does the appraisal occur and how is it scheduled? 

The appraiser will schedule the appraisal appointment just like a showing appointment.  He/she will be able to access your home as a member of our board and it is normally scheduled during typical weekday business hours.  

Do I need to attend the appraisal? 

No, you do not need to attend the appraisal. However, you are welcome to be home when the appraiser is there.  Make sure any documents I have left at your home for showings are available for the appraiser.

How long does the appraisal take? 

Usually about 30 minutes and typically no more than an hour.

How long until we know if the property appraised for the purchase price? 

They usually have it completed in 7-10 business days.  The lender will forward the appraisal to the buyer which shows whether the property appraised at the purchase price, below the purchase price, or above the purchase price.  The seller does not get a copy of the appraisal.

If the property appraised at or above the purchase price, then great.  That means the buyer can get the loan amount they have requested.  If the property appraised for less than the purchase price, we have a problem. The bank will loan up to the appraised value.  In this case, the buyer is not able to finance as much of the purchase as planned and will likely ask the seller to renegotiate the purchase price down to the appraisal price.  If a seller says no, then the buyer has to come up with cash at closing for the difference between the appraisal price and the purchase price.  Generally, buyers can’t or won’t want to do that.  If the buyer walks away, his or her earnest money is usually refunded in the case of a low appraisal.  In my experience, it’s not been common to have a low appraisal so fingers, toes, and eyes crossed there are no issues!

Buyers • March 10, 2020

LET’S MAKE AN OFFER!

by Kristi Gibbs

 

The day has come when you have found your one and only.  Maybe not your true love of the human variety, but you did find a home you love.  Now what?!  Here is some information you need to know as you move forward with writing an offer.

Full legal name:  

You will sign purchase agreements for your home the way you typically sign your name legally unless you are buying the home in another name, such as an LLC.  If you are applying for a loan, you will sign purchase agreement documents the same way you sign your loan application documents.

Offer price: 

What price do you want to offer for the home?  Let’s have a discussion about the sale to list price in the neighborhood if we haven’t already.  We will discuss whether you should expect to pay below asking price, asking price, or above asking price based on today’s market.  I will email you comps to review and give you my opinion as to what the home is worth.  * Typically there is some negotiating back and forth.  You need to decide how much you’re willing to pay for the home and what your walk away price is.

Earnest money: 

Typically, we offer 1% of the purchase price.  There are some circumstances that warrant offering more earnest money and I will let you know if I recommend it for your purchase to make your offer more appealing.  The earnest check can be a personal check or cashier’s check made payable to the listing brokerage.  We specify the due date for this in the purchase agreement and it’s typically due in a few business days after offer acceptance.

Consider the earnest money as part of your down payment.  If you’re planning to pay $30,000 for a down payment and you’re paying $3,000 in total earnest money then at closing you would owe an additional $27,000 for the remainder of the down payment.

The earnest money is not something you get back if you walk away from a purchase due to a change of heart.  That money is your way of demonstrating to a seller you are serious about closing on the purchase of their property.  Things can come up during the inspection process that lead to a mutual release and, depending on how that process goes will depend on whether or not you are be entitled to a refund of earnest money.  I always tell buyers that money is gone once they write the check so that they are only making offers on homes they are serious about buying.

Method of payment:  

I will need to note your method of payment in the offer.  We will need to know what percent of the purchase price you are borrowing and the length of the loan.  If paying cash, I will need to provide proof of funds to the seller within 24 hrs of making an offer and if you are going to have an appraisal.

Closing cost credits: 

Do you want to ask the sellers to pay any of your closing costs?  Generally the sellers pay their closing costs and the buyers pay their own closings costs, however, we can ask the sellers to pay some of your closing costs on top of theirs, if needed.

Closing date: 

We often see closing timeframes of around 45 days if a buyer is getting a loan and 30 or less days for cash closings.  Closings take place during the weekday from 9 AM – 4 PM at a title company.  They take approximately one hour unless you are paying cash and then it will be closer to 30/45 min.

You can ask for a longer closing date if that is what works best for you.  Keep in mind you can typically lock your interest rate for only up to 60 days.   If you want to close in less than 30 days and you are getting a loan, you would need to let me know right away and I would help direct you to lenders who can make that happen.

If you’re not getting a loan and are paying 100% cash you can close as quickly as 14 days.  Especially if there will not be an inspection or appraisal.  The title company essentially needs enough time to get a title policy and have the closing scheduled.

Possession: 

It is not uncommon for sellers to ask for a few extra days of possession after closing to get moved out of the home.  So don’t be surprised if a seller counters with this request.  I’ve had sellers with months of extra possession and, often, we note in our listings when the earliest is that a buyer could get possession if the seller has a specific timeframe.  For example, it is not uncommon for sellers to want to stay in their home until the end of the school year and move over the summer.

Inspection: 

You can either completely waive all inspections, reserve the right to have an inspection, or buy the home “as-is.”  More often than not, buyers reserve the right to have an inspection.  We often ask for 15 days to both complete the inspection and provide a response to the seller.  We also ask for additional days, if needed, to further examine any issues that come up in the initial inspection.  I recommend reading the inspection portion of the contract more than once to make sure you thoroughly understand what a defect is according to IN law.

Home warranty: 

Do you want to ask the seller to provide a home warranty on the property?  They are $500 and here is a link to more information on an HSA home warranty:  https://www.onlinehsa.com/.  Home warranties are great for first time homebuyers, especially if the home is older.  This can provide some peace of mind that there will be some financial help with bigger replacements/repairs in that first year of homeownership.

Contingencies:  

Any other contingencies we need to be aware of?  Do you need to sell your current home before you can buy?

While negotiations sometimes go quickly, it can also take several days of going back and forth.  Every seller is different and some people can make decisions quickly whereas others need time to think things through. Patience is key once you submit an offer and start to work through negotiations. Cool, calm, and collected is my daily mantra.

Keep Calm & Real Estate On!

Uncategorized • February 26, 2020

MULTIPLE OFFERS – HIGHEST & BEST

by Kristi Gibbs

What is a highest and best offer?

When a seller receives multiple offers on their property, they typically ask all interested buyers to submit a final offer by a certain time and date. The idea is that this is the highest amount the buyer is willing to pay with the best terms possible. Usually there is no additional negotiation other than perhaps asking the buyer to change a closing date so interested buyers should offer the maximum amount of money they are willing to pay for the property.

How do you put together the highest and best offer?

While you might think the seller just wants the highest price for their property, there are other considerations that factor into which offer is the best for them. Here are some of those considerations and strategies that can help you secure the home you want:

  • Have your real estate team on the same page to ensure a smooth transaction. You don’t want to find out that you can’t qualify for the amount of money you’re offering if you go above the list price, so keep your lender in the loop as well as anyone else involved.
  • If you need a mortgage, make sure you have an up-to-date pre-approval which should be submitted with your offer.  Also, you need to be comfortable with the offer you’re putting in so ask your lender about the payment difference if you are increasing your offer.
  • A typical closing timeframe for a loan would be around 45 days and 30 or less for cash purchases.  Unless the sellers have a specific closing date in mind, try not to ask for anything out of the ordinary in terms of closing.  Make sure your Realtor knows if the seller wants post-closing possession and add that to your offer to make it more attractive.
  • Sellers want to work with a buyer who they think will be easy to work with. Talk with your Realtor and come up with reasonable requests. For instance, I don’t suggest asking for a home warranty if you’re in a multiple offer situation or closing costs if you don’t absolutely have to have those.  The cleaner the offer, the better.
  • Consider making an “As Is” offer.  An “As Is” offer means you do an inspection, but won’t ask the sellers to make any repairs. You are agreeing to buy the property as it is. After the inspection you can still choose to walk away if major defects were revealed that were not previously disclosed, but you won’t ask the sellers to fix anything if you choose to move forward with the purchase.  This gives the seller peace of mind that the deal will likely close because, often times, if a deal falls apart it’s over inspection items.  This isn’t the best choice for all buyers.
  • Have your lender call the seller’s Realtor and assure them that you are a strong buyer and won’t have any issues qualifying for the loan.
  • Write a seller love letter telling the seller about yourself and why this is the perfect home for you.
  • Consider an escalation clause.  This is something I go over with all my buyers who are in multiple offer situations and it is often used in our market.  I have specific strategies when using this clause.
  • Additionally, when I have a cash buyer in a multiple offer situation there are some strategies to help make their offer the most appealing beyond the fact that there will not be a financing contingency.

Why do sellers ask for highest and best offers?  

It gives all interested parties an equal opportunity to have their offers considered and it shows how committed a buyer really is.  Plus, sellers want the most they can get for their home with the best terms and this gives sellers that opportunity.  Some sellers list low with the hope they will get multiple offers so they secure a fairly clean offer that meets their criteria.

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