Pre-Qualify Yourself
Much like the Boy Scout's motto of "Be Prepared", it's often smart to be prepared during a real state residential sale. Here, I prepared some tips on how to be ready
By far, the most effective strategy for moving a sale from accepted offer to contract is to be prepared--a.k.a do your homework. Or, as we are calling it here: pre-qualify yourself. What does it take? Being pre-qualified means that you have an understanding of your financial affairs, your papers are organized in such a way that you could sign a contract within a week (if you had to), and you have identified your real estate team. Specifically by doing the following:
The most important thing you can do is to hire a lawyer. If you are a buyer you need to do this before you begin shopping for a home. If you are the seller you need to do this before you put your property on the market. For more on this see What Happens Now?
You have made, or accepted, the offer in writing. This is not a binding contract; this is just the offer, in writing, to cut down on the ambiguity. Why in writing? Here are some things that I have actually heard people say - "that's not what I offered;" "I only said 10% down;" and "no, I meant $559K, not $595K." If you are the seller, you should have a pre-printed Offer to Purchase Form or Deal Sheet ready to be filled out. If you are the buyer, you should have your own Offer to Purchase Form, in case the seller doesn't have one. At a minimum you should fax or e-mail the other party the following information: your contact information; the offer amount; the amount of down payment; where the down payment is coming from? (i.e. is it coming from the buyers' savings or are they borrowing it); and any contingencies (i.e. the buyers need to sell their own property/home in order to purchase the one at issue)
If you are a buyer, you have obtained a pre-qualify letter from a bank or mortgage broker. If you are the seller, you will ask the buyer for this. If he or she doesn't have it, then the sale is a no-go (unless of course the buyer is paying all cash, in which case you just won the lottery!). Besides having a letter to present to the seller, this process will inform you about how much of a house you can afford
If you wish to inspect the property before going into contract then you have hired an engineer. This means that you have spoken to them and they are aware that you may be scheduling an appointment soon
You have sat down and gone over your finances--for example, if you plan on liquidating assets to put toward the down payment, you know what is involved and how long the lead time is
You have located the documents you will need to give the mortgage lender, such as pay stubs and bank statements
There is a lot more that can be said on this topic, so feel free to leave your own tips/suggestions as a comment at the bottom of this post. Thanks for reading, Jim.