The real estate closing process begins with any and all negotiations. It’s a good idea to know what your negotiating points are before you even begin dealing with the seller. What are your negotiating points? Consider the following:
Are you pre-approved for a loan?
This may come up before or after the initial offer. The fact is, the seller feels better about negotiating with you if they know you can find funding for the home purchase. If you are pre-approved, then you can use this as a point in your offer(s). The seller then knows that they are not wasting their time with someone who cannot afford the property.
How long has the home been on the market?
The longer a house remains unsold, the more money in mortgage payments and/or upkeep the seller must put into it while waiting for the home to finally sell. Basically, the seller is losing money every month the property remains on the market. A reasonable offer that’s below the seller’s asking price may be accepted if the home has already been on the market a long time.
Does the home need any repairs?
If the home is in need of repairs, you could use this as leverage in negotiations. Why pay $140,000 for a home when there are thousands of dollars worth of repairs that are needed? Instead you could ask to pay $132,000 (taking the repair costs into consideration). You can find out what repairs are warranted by having the home inspected, or by submitting an initial offer that requires the seller to have the home inspected and then negotiating based off of the inspection report.
Can you use market data?
Many times, a seller will know what they’ve paid for a place, what they’ve put into it financially, and have an emotional attachment to what or where the property is. They may feel it is worth more than current market value based on their time living there, the payments they’ve made, the amenities, or their own labor to improve the place. Don’t try to convince them that the home is worthless, but do use market data to back up your purchasing offer.
Aside from negotiating, there are a few other things to keep in mind while going through the real estate closing process:
- Never show them how much you want the home as this gives them leverage against you.
- Never disclose your personal financial situation. Again, this may be something they can use against you.
- Never ‘talk down’ about the house or be rude to the seller. At the end of the day, they don’t have to deal with you if they don’t want to. If they don’t like you, they probably won’t want to.
The Real Estate Closing Process- Closing the Deal!
Once you’ve negotiated all of the details and you and the seller have reached a bottom-line contract that you both can live with, you need to close the deal by signing all of the papers.
Before you absolutely commit, make sure the Title will be yours free and clear (that no third party or relative can show up and legally claim a portion of the house). Make sure that you understand your mortgage loan, and that your interest rate is one you can afford. Make sure you know the details and can handle the fees associated with the closing, including escrow fees, taxes, etc. If everything looks good, then sign away!
There are other details, reports, and terms that may come up throughout the home-buying process. We encourage you to check out our ‘Advice and Terminology’ section for more info. It defines some of the terms we’ve used in further detail and gets deeper into some of the other issues you may encounter.
As always, if you have any questions about the real estate closing process, feel free to ask by contacting us. We’re here to help!