09 Feb 6 Negotiable terms within a real estate transaction
Did you know?
When submitting the offer on your dream home there are at least six negotiable terms within the contract other than the sales price.
First: Earnest money is a promissory check submitted with the offer. If the seller is worried you will not be able to obtain a loan they may request a larger amount be submitted. If you fail to execute the sale without proper reason you will have to forfeit this amount to the seller. I recommend 0.05% of the sale price so you always have a little extra to work with if necessary.
Second: Appliances seem to be easy negotiates within a real estate transaction. If you need a washer, dryer, or refrigerator always request it. Even if these appliances are not installed in the home you can still request the seller provide them. There is no guarantee they will be new, but they will be free and you can always back them up with a home warranty.
Third: A home warranty usually covers the repair or replacement of major home systems and appliances, including parts and labor. There is a $75-$100 service fee, but well worth it if any major unexpected problems occur within the first year. I always recommend a minimum of $500 paid by the seller.
You will have the option to renew your warranty coverage at the end of the year, but the rates will most likely be increased.
Fourth: Most sellers are looking for a 30 day close. If you have flexibility on the specific closing date, I personally like to request closing be set 45 days out. This way the buyer always has the upper hand with this negotiating advantage. Also, if you close on the 15th your first payment isn’t due until a month in a half later, prorated of course.
Fifth: Closing costs paid by the seller is another popular request. Many of my clients are looking to buy with little money down. If you play your cards right you can potentially get the seller to cover your appraisal, survey, and inspection costs, as well as all your closing costs, by simply requesting that the they pay 4-5% towards closing, prepaids, and points. What is more exciting is that if there is any money left over the lender can use the remaining amount to buy down your interest rate so no funds go unused!!
Sixth: Lastly, the loan commitment date is very important. Your agent should always contact your lender to make sure they are giving them enough time to obtain this. Typically 25-30 days, sometime sooner if you are a well qualified buyer. This date is so important because if for some reason you cannot obtain commitment by this requested date the ball is back in the sellers court. They now have the option to accept an amended date and tend to ask for something in return or they can terminate the contract all together and keep the earnest money which is the worse case scenario.
Now that you have a better understanding of important negotiable items within a real estate transaction, you should always have the upper hand as a buyer. If you are like me, always on the hunt for a good deal,then you should consider investing in the real estate market this year. Interest rates are still in the threes and fours, private mortgage insurance premiums just dropped from 1.35% to 0.85%, and MHDC funding is still available for first time home buyers.
If you have any questions feel free to call me at (314)308-0356 or email at Kelly@hermannlondon.com.