You finally found your dream home! It’s perfect: it has exactly the amount of bedrooms you want, the perfect garden behind it, nice neighbors. There are no neighbors – it’s just rolling green hills around it, a forest and a lake. Your dream house, it is on a quiet street or right downtown, it has a garage, it doesn’t but it does have a swimming pool like you always wanted. Your significant other loves the house, you don’t have a significant other but the mudroom has been converted to a play area – you can let the dogs sleep there, when it’s warm outside. It is time you’ve let your real estate agent know that you’re interested; that this is the only house you want, forget driving to XYZ town or XYZ street: we are home!

Well. Make an offer then.

Scary, isn’t it. And what does it mean exactly? The biggest misunderstanding about making an offer is that many first-time home buyers think that even though they have adjusted their offer to the sellers, that their options are still open, they can still look around and commit to something else in case another dream home shows up on the horizon. To some extent, this belief is correct if the seller rejects the offer, counteroffers it (outbids you) or if they ignore your offer; if any of these happens than certainly, your options are still open. You can accept the bid, make a different offer or just forget it and move on.

Once, however, your seller accepts the offer that you’ve made – you will be notified of the offer acceptance – than you have a legally binding contract to follow through with the sale. Naturally, all the conditions specified in the listing have to be met as well as house inspection requirements have to be fulfilled before the offer process is completed. In most cases there’s no additional paper work besides making an offer and the offer acceptance – the signed offer is the contract.

When the offer is accepted there’s no turning back – this is why you need to make sure that everything you want in a house or whatever compromises you need to make have been considered when you make your offer and your intentions are clear. This is a binding contract. The following things have to be listed in your offer:

· Any house repair / financial contingencies such as your ability to get a mortgage with specific interest rates and terms have to be listed. Also, certain house conditions – accurate plumbing, working sewage disposal, new paint job – should be outlined here. There are no compromises – if you feel bad about requesting something you’ll have to understand that once the sale goes through you’re the only person responsible for any repairs / conditions of being a new home owner.

· The proposed selling price and any concessions you want the seller to make.

Your real estate broker can definitely help you with making an offer. There are a number of things that you should consider before you finalize your offer:

Other things that you need to ask yourself is: ow much of a mortgage will you have to get out? A mortgage is basically a long-term loan that you have to obtain from a bank, thrift, independent mortgage broker, online lender or perhaps even the property seller. Your house and the land it is on, are what is known ast the collateral for the loan that you take out. You will need to sign documents at closing time giving the lender a lien against the property that you’ll purchase. If you don’t make payments as agreed in the contract, the lender can take possession of your home through foreclosure. Mortgages are big loans and borrowers pay them off over long periods of time, between 15 to 30 years. The monthly payments gradually decrease and your principal balance decreases as well, slowly at first then rapidly toward the end of the loan.

Finally, do ask yourself how much do you really want the house? The closer your offer price to the asking price is, the better chance that your offer will be accepted right away. Sometimes you may even want to offer slightly more than the asking price, if you know that there are others competing for the house.

What happens when you finally make an offer and it turns out that there are lots of people competing for the same house and there’s fierce bidding happening? First of all, don’t let that stop you. Negotiate! Your real estate agent or broker will help you with the negotiations. Again, you may have to make the offer bigger than what it’s being asked for but you can request that the seller covers some or most of your closing costs as well as make all the repairs that you need to be made. The negotiations on a price may go back and forth for awhile before the deal is complete but just remember not to get caught up in negotiations too much so that you will forget what you’re really after and what you can realistically afford.

Your closing fees are between 3% to 5% of the actual price of the house. The best idea is to wait until you have your Good Faith Estimate before you make your final decision and sign any loan papers. Good Faith Estimate basically helps you get the idea about all the – “hidden” and actual – costs of your property as well as all the proceedings that are connected to finalizing the sale.

The Good Faith Estimate can be obtained from a couple of lenders so that you can compare your costs prior to asking the chosen lender to beat the competition’s most attractive offer.

The Good Faith Estimate is an estimate of charges and does not necessarily correspond with the actual costs. It often happens that your lender won’t be aware of certain fees for an escrow holder – a person who takes care of all the finances during the processing and offers unbiased advice and help – or things like the actual amount that will be transferred into your escrow account for taxes and insurance purposes. When you ask for a Good Faith Estimate costs there are few fees that should be included and described in the document:

· The title search fee -- to make sure your property doesn’t actually belong to somebody else such as a divorced spouse or a family member of a deceased estate owner.

· Title insurance fees – to ensure that you have a rightful claim to the property if there’s ever a legal dispute.

· The amount of lender’s attorney’s fees as well as your attorney’s fees.

· The fees that will go toward your mortgage loan application process and processing as well as credit check fees.

· All the fees for the appraisal of the property fees as well as land survey fees and any other inspection fees such as termite and pest inspection fees.

· House inspection fees – the plumbing, structural details, the condition of appliances.

· Escrow transfer taxes estimation.

· Legal document recording as well as documentary stamps on new notes and any other legal fees.

· With your mortgage, all the points and origination fees.

· You’re also responsible for the escrow account balances as well as pre-paid fees if there were any.

Sometimes even though you do everything when it comes to buying your house and the seller of your house has been quite co-operative you may find that in the end he / she has not followed through with certain promises such as leaving the appliances or making sure that the carpets are cleaned before moving out. You may want to request that the final inspection is included before making a final offer. This pre-closing inspection will give you the final chance to make sure that you are paying exactly what you asked for.

To discuss this topic Click Here to go to our Online Forum