Our Real Estate Blog
Shopping for a home is a long, arduous process. When you finally find one that you love, think you can afford, and spend the time to formulate an offer, it can be crushing when your offer is rejected.
However, getting rejected is simply part of the process. If you’ve ever applied to college, you might be familiar with this process. You send out applications that you poured your heart and soul into. Sometimes to get accepted, other times you don’t.
Making an offer on a home comes with one big advantage over those college applications, however--the opportunity to negotiate. As long as the house is still on the market after your offer is rejected, you’re still in the game.
In this article, we’re going to talk you through what to do when your offer is rejected so you can reformulate your plan and make the best decision as to moving forward.
1. Don’t sweat it
One of the most common fallacies we fall into as humans is to think the outcome is worse than it really is. First, remember that there are most likely other houses out there that are as good if not better than the one you are bidding on, even if they’re not for sale at this moment.
Next, consider the rejection as simply part of the negotiation process. Most people are turned off by rejection. However, you can learn a lot when a seller says no. In many cases, you can take what you learned and return to the drawing board to come up with a better offer.
Don’t spend too much time scrutinizing the seller’s decision. Ninety-nine percent of the time their decision isn’t personal. You simply haven’t met the pricing or contractual requirements that they and their agent have decided on.
2. Reconsider your offer
Now it’s time to start thinking about a second offer. If the seller didn’t respond with a counteroffer it can mean one of two things. First, they might be considering other buyers who have gotten closer to their requirements. Alternatively, your offer may have been too low or have had too many contingencies for them to consider.
Regardless, a flat-out rejection usually means changes need to be made before following up.
3. Making a new offer
This is your chance to take what you learned and apply it to your new offer. Make sure you meet the following prerequisites before sending out your next offer:
Double check your financing. Understand your spending limits, both on paper and in terms of what you’re comfortable spending.
Check comparable houses. If houses in the neighborhood are selling for more than they were when the house was previously listed, the seller might be compensating for that change.
Make sure you’re pre-approved. Your offer will be taken more seriously if you have the bank’s approval.
Remove unnecessary contingencies. It’s a seller’s market. Having a complicated contract will make sellers less likely to consider your offer.
4. Move on with confidence
Sometimes you just can’t make it up to the seller’s price point. Other times the seller just can’t come to terms with a reasonable price for their home. Regardless, don’t waste too much time negotiating and renegotiating. Take what you learned from this experience and use it toward the next house negotiation--it will be here sooner than you think!
You can ask any homeowner-buying and owning a home is expensive. Mortgage payments, property taxes, utilities, and other bills quickly add up.
If you want to buy a home but don’t have a large down payment saved, odds are you’ve discovered something called private mortgage insurance (PMI).
PMI is an extra monthly payment that you make (on top of your mortgage payment) when you don’t have enough to make a large (20%) down payment on your home.
However, if you want to buy a home and don’t want to tack on an extra monthly payment for PMI, you have options. In today’s post, I’m going to talk about some ways to avoid paying PMI on your mortgage so you can save more money in the long run.
Before we talk about getting rid of PMI, let’s spend a minute on what to expect when you do have to pay it.
PMI typically costs 0.30% to %1.15% of your total loan balance annually. That means that your PMI payments will decrease a moderate amount as you pay off your loan.
Furthermore, once you have paid off 22% of your loan, your PMI will be cancelled and you’ll only be responsible for your regular monthly mortgage payments.
Getting PMI waived early
With conventional loans, you can request to have your PMI cancelled once you’ve paid off 20% of the mortgage. However, many buyers with PMI are using some form of first-time buyer loan, such as an FHA loan.
With an FHA loan, you’ll be stuck with PMI for the lifetime of the loan if you don’t make a down payment of 10% or more. That’s a lot of PMI payments, especially if you take out a 30 year loan, and it can quickly add up.
If you have an FHA loan with FHA insurance, the only way to cancel the insurance is to refinance into a non-FHA insured loan. And remember--refinancing has its own costs and complications.
Making it to the 20% repayment mark
On conventional loans, the best way to get rid of PMI is to reach your 20% repayment mark as soon as possible. That could mean aggressively paying off your mortgage until you reach that point.
This can be achieved by making extra payments, or just paying more each month. However, you don’t want to neglect other debt that could be accruing costly interest in favor of paying off your loans. Make sure you do the math and find out which debt will be more expensive before neglecting other debt.
Once you do reach the 20% repayment mark, you’ll have to remember to apply to have your PMI canceled with your lender. Otherwise, it will be canceled automatically at 22%.
If you’re a first-time homebuyer, you might be wondering what all of the expenses you can expect to have when it comes time to close on your home.
Ideally, you’ll want to understand all of the closing costs months in advance so that you can plan accordingly. However, even if you’re close to purchasing your first home, it’s still useful to get to know closing costs better.
In today’s post, I’m going to cover the closing costs that are typically the buyer’s responsibility.
Buyer’s closing costs
There’s good news and bad news when it comes to closing costs for buyers. The bad news is that buyers are typically on the hook for the majority of the closing costs associated with a real estate transaction. The good news, however, is that many of these fees will be grouped together as part of your mortgage, meaning you won’t have to devote much time or thought to them individually.
That being said, to ensure that you know where your money is going, here’s a breakdown of the main closing costs that you’ll likely be responsible for as a buyer:
1. Attorney fees
Real estate attorneys research the ownership of the home, ensuring that the seller actually has the right to sell you the property. Though this is usually a formality, it is an important one.
Attorneys can either charge a flat fee or hourly rate.
2. Origination fees
The origination fee is paid upfront to the lender. It’s the fee that they charge for processing your mortgage application and getting you approved as a borrower.
3. Prepaid interest
Many buyers pay their first month’s interest in advance. This is the amount of interest that will accrue from the time you purchase the home until your first mortgage payment is due (a month later).
4. Home inspection
Inspections are one of the closing costs that can save you a ton of money in the long run if they find anything during their visit to the home. Inspectors should be licensed in your state, and you should choose your own inspector based on ratings and reviews (not at the recommendation of someone who is incentivized to sell you the home such).
5. Escrow deposits
Escrow deposits are typically shared between the buyer and seller and it is the fee that escrow agents charge for their services. You can think of an escrow as a neutral third party that keeps your money safe while purchasing a home.
6. Recording fees
All real estate purchases have to be recorded by the local government. Typically, this is performed by the county or town hall. Recording fees are charged whenever a real estate transaction occurs.
7. Underwriting fees
Mortgages are all about determining risk. A lender wants to know whether they will see a return on their investment by lending to you. To do so, they research your credit and income history. The fee the charge for this work is called the underwriting fee.
A home showing is a valuable opportunity for a property buyer. In certain instances, buyers will set up dozens of showings to review a wide range of residences. Meanwhile, a buyer sometimes finds the perfect residence during his or her first home showing.
Ultimately, there is no set number of showings that you will need to attend before you find your ideal house. It also is important to note that there is no time limit on a showing, and some showings may be shorter or longer than others.
Regardless of how many house showings you schedule, it is paramount to do everything possible to get the most out of a showing. Lucky for you, we are here to teach you about property showings and ensure you can optimize their value.
Now, let's take a look at three tips to help you prepare for a house showing.
1. Review a Home Listing
A home listing may include various information about a house's age and condition, but you likely will require additional details about a residence before you decide whether to submit an offer to purchase. Fortunately, a home showing enables you to gain additional insights that may be unavailable in a listing.
Take a look at a home listing and put together a list of questions about a home. Then, when you attend a showing, you can receive instant responses to your queries.
2. Give Yourself Plenty of Time
There is no need to rush through a home showing. As such, you should give yourself plenty of time to check out a house and walk through it during a showing.
Oftentimes, it is beneficial to bring a pen and paper so you can jot down notes during a showing too. You also may want to take a camera with you. This will allow you to capture photographs of different areas of a home so you can review them after a showing and decide whether a house is right for you.
3. Consult with a Real Estate Agent
A real estate agent is happy to help you prepare for a house showing. He or she will learn about a home prior to a showing and may be able to provide you with insights that you won't receive elsewhere. Plus, a real estate agent will offer honest, unbiased feedback about a residence and ensure you can make an informed decision about a house.
In addition, if you find a home that suits you perfectly, a real estate agent will help you craft a competitive offer to purchase. And if you ever have concerns or questions during the property buying journey, a real estate agent can provide in-depth responses.
For those who want to get the most out of a home showing, it generally is a good idea to plan ahead. Thanks to the aforementioned tips, you can prepare for a home showing and use this event to analyze all aspects of a residence.
A homebuying plan is a must-have, particularly for those who want to enjoy a successful property buying experience. Lucky for you, there are many things you can do to execute a homebuying plan to perfection.
Now, let's take a look at three tips to help you put your homebuying plan into action and achieve the best-possible results during the property buying journey.
1. Establish Realistic Homebuying Goals
As you craft your homebuying plan, it generally is a good idea to establish milestones. That way, you can take a step-by-step approach to go from homebuyer to homeowner.
Of course, it is paramount to set realistic homebuying goals. Think about why you are pursuing a home in the first place, and you can map out your homebuying plan accordingly.
It may be beneficial to hone your home search as well. If you narrow your house search to a select group of cities and towns, you may be better equipped than ever before to streamline the homebuying journey.
2. Maintain Flexibility
Although you may devote many hours to craft an effective homebuying strategy, it is important to remember that problems may arise as you search for your dream residence. Fortunately, if you maintain flexibility, you will be ready to adjust your homebuying plan as needed.
If you have to modify your homebuying strategy, there is no need to worry. Instead, adjust your plan and continue your pursuit of your ideal residence. Because if you are flexible as you search for your dream home, you can minimize stress and boost the likelihood of discovering a residence that may serve you well for an extended period of time.
3. Collaborate with a Real Estate Agent
When it comes to developing and executing a homebuying plan, you do not have to work alone. In fact, you can hire a real estate agent who is happy to help you find and purchase a terrific residence at an affordable price.
By consulting with a real estate agent, you can receive expert homebuying support. A real estate agent knows what it takes to acquire a first-rate home at a budget-friendly price, and as such, will work with you to ensure your homeownership dream can come true.
If you are unsure about where to search for homes, for example, a real estate agent can help you determine where to pursue residences. He or she also can help you get in touch with banks and credit unions so you can obtain home financing. Plus, a real estate agent is ready to help you submit an offer to purchase your dream residence. And if you have concerns or questions during the homebuying journey, a real estate agent is prepared to respond to them too.
For those who want to seamlessly navigate the homebuying journey, you may want to craft a property buying plan. Thanks to the aforementioned tips, you can get the most out of a homebuying strategy and ensure you can quickly find your dream residence.