We’ve talked a lot about VA home loan eligibility, the importance of good credit and how to get prequalified for a mortgage. But that’s only half the battle when it comes to getting your dream home.
There’s also that little matter of negotiating a contract with the seller. But how exactly do you do that?
Chris: How do I know if I should make an offer?
Jessi: You’re not ready to make an offer until you’re confident you’re selecting the best house at the best price.
Scrutinize the market and carefully consider each option. Shop, shop, shop. Even if you fall in love with the first house you tour, keep looking.
Evaluate your feelings after touring at least five homes. Do you have a litany of reasons for purchasing a certain home? If not, then you’re simply not ready. Keep searching. You’ll eventually find a home that’s a great fit for you.
Chris: What if the home isn’t perfect? What if I can’t find my dream home?
Jessi: Most buyers have a conceptual “dream home.” It’s gorgeous, full of character and perfect in every sense.
But real-life dream homes can be hard to find, especially after factoring in budget and location constraints.
And that’s OK! There’s a reason first homes are called “starter homes.” Your first home should represent a solid investment that meets your basic needs, rather than each and every desire.
Focus on the factors that are most difficult to change about a house: size and location. Once you find a house that fits your basic size and location needs, try to be flexible on the lesser details.
Chris: How do I make an offer?
Jessi: When you sign an offer, you’re actually signing a purchase contract. It’s a legal document with important ramifications, so it’s not to be taken lightly.
Make sure you’re working with an experienced agent who can provide sound advice. We recommend our partners at Veterans United Realty, a network of experienced, military-friendly real estate agents.
Your agent will perform a Comparative Market Analysis (CMA), which will evaluate similar properties and help you come up with a fair purchase price. Most buyers will initially offer an amount below their desired purchase price, which provides some room for negotiation with the seller.
Chris: Do I need to be preapproved?
Jessi: It certainly doesn’t hurt. Lots of transactions are sidetracked when buyers can’t get financing. Sellers try to avoid this mishap by dealing only with buyers who are preapproved.
Our partners at Veterans United Home Loans can provide quick preapproval analysis and a preapproval letter that you can include with your offer. You can start the preapproval process with a simple online form by clicking here.
Chris: Do I have to include earnest money?
Jessi: You don’t have to, but you should.
If your offer doesn’t include earnest money, which is basically a good faith deposit to the seller, it may not be taken seriously by the seller. Earnest money practices vary by location, so ask your agent what is standard for your area.
If you’re using a VA purchase loan, you may even get a full refund of your earnest money at closing, assuming you have negotiated seller paid closing costs. Check with your lender for more information.
Chris: What should I ask for in my offer?
Jessi: Buyers often include certain contingencies in their offers. Contingencies provide a safe exit for buyers in case certain conditions aren’t met.
Most offers include an inspection contingency. If big problems are revealed during the inspection, a buyer can walk away from the purchase with a return of the earnest money deposit.
Read more about purchase agreement contingencies and talk to your agent about what to include in your purchase offer.
Chris: What if my offer is rejected?
Jessi: It’s fairly likely that a seller won’t accept your first offer. Most sellers make counter-offers to continue negotiations. Buyers can accept the counter-offer, make another offer or simply walk away.
Chris: Any last bits of advice?
Jessi: Be prepared for buyer’s remorse.
No matter what kind of a deal you get, you’re probably going to experience a bit of buyer’s remorse. Buyers typically feel they could have landed a better price or more favorable terms if they had done something differently.
Ironically, sellers often feel the same way. It’s extremely common for both parties in a big transaction to wish the deal had gone just a little more in their favor.
But at the end of the day, you’ve landed a great home for you and your family. Congratulations, enjoy your new home!
To learn more about the overall homebuying process using your VA eligibility check out our VA Loan Comprehensive Guide.
Photo courtesy of WordRidden