Buying a house is probably one of the most exciting experiences for anyone-especially if you've been a long-time renter. However, it can also be incredibly stressful if you don't know what to expect. If you're like most first-time homebuyers, there is no better time than now to get educated about everything that will happen (and possibly could happen) during your search for the perfect new place to call home.
Today our Atlanta real estate experts give renters a list of everything home buyers need to know about making an offer on a house.
1. Get Preapproved for Financing (Before You Look at Houses)
When searching for the perfect house, it's always best to limit the number of possibilities. Therefore, when shopping around before settling on potential homes, it is essential that you get preapproved for financing so that you know your borrowing limit. Then, when you do find the house of your dreams, you won't have to worry about not being able to afford it.
In addition, sometimes sellers limit the offers they consider to buyers who are preapproved for financing. That usually means that they only want serious inquiries from those who have been approved. This can be a considerable advantage in making an offer quickly and efficiently, so don't pass up the opportunity to get preapproved before shopping for a new house!
2. Limit Contingencies in Your Offer
When trying to buy a house as a first-time homebuyer, there are many reasons why going with traditional financing might not be possible or ideal. For instance, if you have bad credit or no proof of income, then getting approved for a mortgage could be tough. In other cases, a home inspection could come back with significant issues that might make you consider backing out of the deal before closing.
However, when putting together your first offer on a home, it's important to limit the contingencies in your offer to show sellers that you're serious. With too many contingency clauses in your initial offer, sellers might fear that you'll back out of the purchase if any small thing goes wrong. If you're not sure about contingencies or what to include in your offer, work with a real estate agent or Atlanta real estate expert to create your offer letter.
3. Add More Earnest Money
Earnest money is a deposit made on a home to show the seller that you're serious about your offer and buying the property. It's a good-faith incentive that can help a seller consider your offer and intent over others who provide a lower earnest money amount (or none at all).
Increasing the amount you deliver for earnest money can help your bid make a bigger impact in a competitive market. In many cases, this deposit should be between 1-2% of the home's sale price. However, your real estate agent can guide you to the appropriate amount for a house you have your eye on. At closing, this deposit can go toward closing costs or the down payment.
4. Include an Escalation Clause
One of the most frustrating things home buyers experience is coming up on a house they love and getting outbid by another buyer. To prevent this from happening, our property managers recommend including an escalation clause in your offer (if one is not already included). This will help ensure that you stay competitive with other offers and give you peace of mind knowing that doing everything you can to win your future home is in your control.
An escalation clause simply tells the seller that you will pay a specific amount more (within your budget) if they receive a higher offer. These clauses give sellers an extra bit of confidence that you're serious about buying the home. However, it's essential to not 'escalate' your bid beyond your preapproved financing limit or purchasing budget.
5. Write a Letter to the Seller (As An Additional Touch)
Last but certainly not least on our list of everything first-time homebuyers need to know about making an offer, writing a letter to the seller can help convey your interest in their property. Whether they're viewing multiple offers on their home or just considering one offer, providing them with more information about yourself and your situation couldn't hurt.
Though this might not influence which offer gets accepted or rejected, it's crucial that you make every effort possible throughout the process. Work with your real estate agent to compile your offer with a personal note to go along with it.
Your Atlanta Property Management Company Can Help!
When you're ready to become a homeowner after renting, your property manager is an excellent resource to help you make this transition. From understanding the buying process to helping you budget and find the Metro Atlanta home of your dreams, Revolution Rental Management advises renters who are ready to leave tenancy behind! If you're considering buying a home after your lease ends (or you're not sure how to navigate your lease to become a homeowner), reach out to our team for guidance!
Ready to learn more about the costs of homeownership? Download our free resource, the 'Home Buying Cost Worksheet: Prepare for Closing on Your New Home.'