Making an offer on a house can be both an exciting and anxiety-inducing experience. After working with your agent to browse property listings, tour properties, and going over numbers with your favorite loan officer, you have finally found the perfect house for you and your family to build a life, set down root and make memories in. Your real estate agent and you, with help from your lender, put together an offer at a great price and with the best terms. Maybe you even included an "about us" letter to tell the sellers just how excited you are to have found their home. Then your agent sends the offer off to the other agent and contacts them to inform them of the offer. But what happens next?
Once you submit an offer, one of three things can happen: 1) Your offer gets accepted, 2) Your offer gets rejected, or 3) Your offer gets countered.
There are many reasons why your offer can be rejected. Two of the most common reasons that I've found are terms and other offers. When terms are the reason for rejection, it could be that the price offered was too low and the seller did not want to counter (or worse yet, got offended at the low offer!). It could also be that the type of loan you were going to get would not allow you purchase in their area. VA and FHA loans require the house be at a certain level of condition and maybe the house had repairs that the seller wouldn't want to do that the lender would require. It could also be that you were looking to buy in a condo or townhome complex that the FHA and VA will not lend on. Click here for a listing of all the VA and FHA approved condo and townhome complexes in Ventura County.
Another scenario is the multiple offer scenario. It is possible that you were competing against other offers and one of the other potential buyers brought an offer that was a better offer and accepted.
If your offer gets rejected and another one is not accepted, then you have the option to bring in a second offer or to find out why it was rejected, learn from it and move on.
When the seller counters, they can either counter you on price, on terms or on both. This is great, because even though your offer was not accepted, it means you still have a chance. It means that while some aspects of your offer were not what they wanted, others were and they're giving you an opportunity to come up to what they want or meet somewhere along the way.
Congratulations! The seller liked what you offered them (or counter offered them, or you liked what they countered) and you have an accepted offer! Now this is where the real fun begins!
The first thing you need to do, is to contact your lender! Your lender, like you, is now under a tight deadline to get you the purchase money. Your agent will need to send them a copy of the fully executed contract and any counters and/or addenda. The seller's agent will be in contact regularly with your lender as well for status updates and to work with the bank's appraiser, so that they can give the bank an impartial third party opinion of the property's value.
Next, get yourself a home inspection. A home inspection is a vital part of the home purchasing process. This helps you know what the condition is of the house you are buying. Are there problems with the water heater, A/C unit, or did the homeowner make some "DIY" modifications that may not be to code? The home inspector will check and let you know. Not all home inspectors will catch everything and some are better than others. Your real estate agent should be able to provide you with a list of inspectors they've worked with in the past that are good. In some states home inspectors are required to be licensed by the state. In California, for example, there is no such requirement! However there is an organization dedicated to a higher level of training and responsibility for inspectors, called CREIA
Also keep in mind that your home inspector is just a general inspector. They don't specialize in pools, air conditioners, chimneys, roofs, plumbing or electrical. They do some basic tests for some of these systems, but usually recommend a specialized inspector for many of these items and for more specialized potential problems.
Not all things on the inspection report are going to be bad. Most of the good inspectors will break the report down in to "Informational Items", "Warnings" and "Problems". Informational items are things like "The garage door is installed correctly" or "When the house was built it was built to code, but over the years the code has changed and the windows are now too high off the ground for emergency egress."
Warnings can be items such as "Chimney appears to have a crack in it, recommend a qualified chimney inspector be consulted." or "Outdoor electrical socket is not protected from the elements by the current approved cover."
Problems are just that, stuff that doesn't work. Examples can be "Dishwasher does not run" or "water heater is not earthquake braced."
Once you have completed all of your investigations into the physical condition of the house, you can ask the seller to make repairs or give a credit towards repairs (they do not have to say yes), you can accept the house in it's condition or you can walk away from the transaction.
Get homeowners insurance. In addition to it being a lender requirement, it is simply a good thing to have. This protects your home from major damage and (depending on the policy) may protect your personal possessions as well.
The closing of the escrow. During the inspection process, your lender is working diligently with escrow, yourself and your real estate agents to make sure they have all the paperwork they need to submit to underwriting for the closing documents.
While this is happening, don't make any major purchases and don't open up that Macy's charge card and start buying your furniture! Also, if you win the local beauty pageant and get a large cash prize, be prepared to explain that to your lender! Any deposits, especially unusual ones, will send a red flag that needs to be explained. Likewise, buying or leasing that new car or opening that new charge card can lower your credit worthiness and make you lose your loan and thus the house!!!
If you do have a car lease expiring during the escrow period, or your car suddenly dies and you need an emergency replacement, CONTACT YOUR LENDER FIRST! Let them know what is happening and find out how it may impact you. You may have to rent a car from your favorite Enterprise Rent-A-Car for a couple weeks!
Once the lender has given the "thumbs up" on your loan approval and is ready to send title the money, you will need to meet with escrow to sign final loan documents, escrow documents and to let them know how you'll be vesting the property. You will also usually do a final walkthrough of the house with your agent. This step is mainly to verify that the house is in the same condition (or better) as when you bought it. It also serves for the buyer to verify that any agreed upon repairs were completed.
After that, a couple of days later money is wired around and title records the grant deed with the county. Once that deed is recorded, the transaction is complete and you get to move in! But don't worry, you won't be the only one working, the real estate agents still have some paperwork to finish up too.
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