1. Presenting an offer: You would think that this is a pretty straight forward action, but it takes a bit of strategy. I will provide you with a professional opinion backed by a comprehensive market analysis. Please remember that your name is on the offer and the possibility of offending a seller is real. Some have no issue, but some have denied any further offers because they were offended by an amount. Tricky spot, each seller is different.
    1. Price: Days On Market (DOM) sometimes plays a role in seller motivation, but not always. You must consider the market, is it stagnant, a buyers’ market or sellers’? Source of funds – cash talks but third party financing is still favorable. VA loans prohibit buyers from paying some closing costs.
    2. Earnest Money (EM) is collected within 3 days from he accepted and executed date of the offer – contract. It is typically 1% of purchase price (5/2020) so a $400,000 home would have EM of $4,000. Check is written to the title company chosen (seller typically picks title company and pays title insurance) and is held in escrow. You will get this back should you decide to not purchase the home while you are in Option Period (OP – more on that momentarily).
    3. Title Policy – Folks once made real estate transactions on a hand shake, but it has become imperative, in my opinion, to obtain title policy insurance. This is basically additional homework done by title agency to ensure no other person or entity holds ownership in this property and that there are no liens on the property. In an established residential community it is not always necessary to ‘amend shortages in area’ which takes a visual inspection of the property to ensure there are no encroachments and cost a mere 5% of the title policy. (For a $250,000 home title policy is currently $1,623 so shortages in area coverage would be $81.15.)
    4. Survey – The seller will most often have an existing survey and will supply it to the title company. If it is acceptable to them, the seller will need to provide a T-47 disclosure that they have not made any major alterations affecting the survey, if not, it is negotiable who will pay for it. It you want an aggressive offer, offer to pay it, otherwise ask them to.
    5. Objections – usually not necessary unless you are planning on running a home business, survey for the possibility of putting in a pool, or vacation rental. If no restrictions exist, we will put ‘residential’.
    6. Property Condition – Most sellers are required by law to provide a Seller’s Disclosure, which is just that – a promulgated form to document any known deficiencies, repairs completed, etc. You can ask that they change out all the windows but in a traditionally seller’s market, these requests may be denied.
    7. Residential Service Contracts, or more commonly known as a Home Warranty, is an added protection the buyer can ask for the seller to purchase a separate insurance plan on the home’s major systems for the first year of ownership. Most homes can be covered for $450-$600.
    8. Closing – if you have a lender, the minimum realistic timeframe is 3 weeks, but can be amended to extend. Cash deals can close in as little as one week with some properties. Lender backed homes will need to go through the appraisal process.
    9. Tons of additional coastal addendums – basically the Texas Real Estate Commission is comprised of 6 brokers, 6 lawyers, and one normal person – the process is more litigious than ever – each addendum is most likely due to someone suing someone over lack of knowledge of things like the property is seaward of the intercostal water way.
    10. VERY IMPORTANT – Termination Option – Lines out how much a buyer will pay the seller to take the property temporarily off the market (the amount of days in Option Period-OP) to allow the buyer to preform necessary inspections (general, then possibly HVAC – A/C, foundation, termite, electric, plumbing, etc). Consideration must be given for this privilege – usually $10/day, but negotiable. Most sellers will not go over 10-14 days unless the offer is very strong/extenuating circumstances. You may decide to back out of the contract within this time frame and only lose your OP, you will get your Earnest Money (EM) back from Title.
  2. Re-negotiations – Depending on what you find through inspections (remember inspectors are TREC licensed and their eligibility requires them to point out every little deficiency, by law) you may be able to lower your offer. The seller is obligated to sell you the property for the price on the executed contract, but you can try to reduce the cost if the HVAC or another major system is failing eminently.

TAXES AND INSURANCE

It is important to factor in the taxes that you will be responsible for at the end of the year. The seller will reimburse you for the amount of days prorated for the last year’s tax record that they had possession at closing. Taxes are paid in the rears.

It is important to obtain flood, wind and homeowners estimates to accurately calculate your cost to maintain the property. If you are buying with cash, you can decide if the piece of mind is worth the annual premium.

However, I have found that people’s general idea of how much coastal insurance costs is way inflated. I recommend anticipating about 3% of home value for insurances, but you must corroborate that with one or several insurance agencies.

Always remember, if this offer does not go through, we will try again!