When you’re about to submit an offer on a home, make sure that you base that offer on prior sales in the area. In this business, we call that a “CMA,” or comparative market analysis. CMAs tell you what other homes with similar characteristics to your target home have sold for in the same subdivision, therefore allowing you to determine the home’s value.
However, keep in mind that as you start the process of buying a home, there are some expenses that you will incur, even before closing. The moment you submit an offer and it is accepted, you will immediately need two checks:
- The earnest money check that’s given to the title company in order to open title. This check should be about 1% of the purchase price of the home.
- An option check payable to the owner of the home. This shows that you’re really interested in their home and that you’re asking for seven to 10 days to do your due diligence to make sure the home is in great shape once you hire an inspector. This check should be for $100 to $300.
After this, you’ll hire an inspector. Bear in mind that this will cost anywhere from $400 to $600 depending on the size of the home. If you have a propane setup, a pool, or septic tank, there will be additional costs for additional expenses. You’ll also have to pay for the appraisal, but this fee is typically charged before closing. Be prepared to have money for those expenses even before you show up at closing. It’s also worth noting that many of the expenses will be credited at closing, with the exception of the inspection costs.
You also need to get an insurance quote as soon as your offer is accepted. You’ll want to be aware if there have been any issues regarding a variety of past claims that could make that home uninsurable.
Next, find out what the tax rate is in the area of the home you’re looking to buy. There are some areas of town where the tax rate might be 2.2% and there are others where it is 3.2%. This figure will hugely vary your monthly payment, so be sure to be aware of what you’re getting into.
The final point to touch on is to make sure that you have a valid ID. I once had a client show up to the closing table with an expired ID, and they couldn’t close! They had to wait until the next week in order to finish up the process.
Ultimately, just be sure that you go into a transaction fully prepared for each step that comes next. If you are, you should have an awesome experience.
There are more things that I could have discussed today that would be important for you to know, so if you’re thinking of buying or selling a home in the Austin metro area, don’t hesitate to reach out to me. I’d love to help.