Seven Ways to Protect Yourself During House Buying and Get Your Offer Accepted

Every state has its own real estate purchase agreements where you fill in the blanks. If you’re working with an agent, he or she will handle all the paperwork. If you don’t have one, you’ll probably need an attorney to ensure that the paperwork is filled out correctly and that you’re protected. It’s all too easy to get into a dispute with a seller over an earnest money deposit if the deal flounders.

1. Make sure the offer is subject to you qualifying for the loan. Even though you’re approved by the bank, you still need this protection. In one case, a buyer didn’t want to write a loan approval contingency because he was approved for the loan and didn’t want to weaken his offer. But suddenly, a few days before closing, he lost his job when his company had to lay people off because it lost a major contract. The loan approval contingency his agent insisted on putting in saved him from losing his $1,000 earnest money deposit.
2. Put in an addendum with a list of all items the sellers agree to include in the sale. Also, take digital photos of the items and create a print in album format (four to six images per page) and attach to the list. Every experienced agent has horror stories of sellers taking items on moving out that they shouldn’t have. Most common are appliances, light fixtures and chandeliers, air conditioners, ceiling fans, and window coverings. If you have an addendum—which the sellers must sign—with photos of the items, they are less likely to get loaded onto the mover’s truck.
3. Make sure you get copies of all documents, including the addendums numbered 1/x, 2/x, etc. Getting a complete set of documents up front is the only way you can protect yourself from problems that can come up later on.
4. What are the sellers’ hot buttons or problems? The more of these you can solve for them, the better your offer, and many times they don’t cost you anything. For example, if they need to close in three weeks or less and you can speed up your financing, you’ve strengthened your offer. On the flip side, the sellers may be 60 days from having their new home finished. You can do a delayed closing or a 30-day (or whatever works) rent back after closing, where the sellers pay rent equal to your monthly payment. The key is to make your offer as hard as possible for the sellers to counter. Sometimes the terms, timing, or moving schedule are more important than the offer price.
5. Make your offer subject to a professional inspection. This is one of the more important contingencies. An inspection will cost you a few hundred dollars, but it can save you from making an expensive mistake. And if there are problems, you can use the inspection report to leverage a price reduction or repair concession.
6. Make sure your agent presents the offer in person. If the property is vacant and the sellers are not in the area, a conference call between the seller and both agents will work. You absolutely don’t want your offer faxed to the listing agent. She can shop the offer by calling other buyers and agents who have recently shown the house, trying to top it. One step further on this is to write the offer to expire on presentation. You don’t want your offer sitting on the sellers’ kitchen table for a day or so while their agent shops for a better deal. No way do you want your offer to motivate other buyers looking at the house to write just a little better offer and knock you out of the deal.
7. If you’re going in with an offer less than the maximum loan you qualify for on your prequalification letter, have the lender rewrite it for the offer amount. You don’t want the sellers to know that you qualify for $150,000 when you’re making a low offer for $135,000. In one instance, an inexperienced agent cost his clients several thousand dollars when he presented an offer on a home $7,500 under the asking price of $142,500. The listing agent asked see the buyers’ prequalification letter and immediately noticed the amount they qualified for was $150,000. The sellers, under pressure to sell, would have taken the low offer, but when they saw that the buyers qualified for much more, they increased their counter $4,000.