Your first-time homebuyer’s guide (part three)

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Welcome to Your First-Time Homebuyer’s Guide, Part Three!

If you’ve completed parts one and two of the series, you’re practically a first-time homebuyer pro as we’ve covered a lot, including: financing, how to find your home, partner with a real estate agent, and more. In the third installment of this series, we’ll continue to add to your homebuying knowledge base with tips featured in Your First Home (Second Edition), written by Gary Keller and Jay Papasan.

Making an offer

No matter the market, there are three basic components of any offer: price, terms, and contingencies (or “conditions” in Canada).

  • Price: The right price fairly reflects the market value of the home you want to buy. To find this price, your agent will pull together a competitive market analysis (CMA), which is a set of recently sold homes that resemble one you want in size, condition, location, and amenities. These records are also called “comparables” or “comps.” You’ll get the best market insights from the homes most similar to the one you’re looking for. Your set of comps will enable you to determine an average cost per square foot, which forms the basis of a competitive offer.
  • Terms: You and the seller have to agree on many details, such as when the deal will close, whether the seller will keep any of the decor (such as window treatments or appliances), and who pays for closing costs. (Though, in Canada, the buyers always pay the closing costs.) These factors are called “terms,” and they give buyers and sellers additional flexibility in crafting a winning deal. When it comes to terms, remember that everything is negotiable. However, different markets have informal rules governing the kinds of requests you can make of sellers. Your agent will let you know what the seller will probably expect, as well as the pros and cons of deviating from market norms. The six basic terms in a real estate offer are: schedule, conveyances, commissions, closing costs, home warranty, and earnest money
  • Contingencies (or Conditions): These clauses let you out of the deal if the house has a problem that didn’t exist, or about which you weren’t aware, when you went under contract. They specify any event that will need to take place in order for you to fulfill the contract.

Common contingencies include:

  • Inspections – protecting you from paying too much for a home that’s hiding MAJOR problems.
  • Financing – letting you out of the contract in the event you don’t qualify for a mortgage
  • Appraisal – guarantees that the home will be professionally appraised and you will only purchase if the value of the appraisal is at least as much as what you agreed to pay on the home.


Once you and your agent have written a contract, your agent will submit it to the seller’s agent. The seller may write a counteroffer that, for example, asks for an earlier closing date and a slightly higher price. Then the ball’s back in your court to decide whether to accept their changes or to counter their counter. Your agent will do all the talking with the seller’s agent, providing a buffer between you and the seller and saving you the stress of in-person negotiations.

When you and the seller reach an agreement and both parties sign the contract, that check you wrote as earnest money will be deposited into an escrow account.

Your agent will do all the talking with the seller’s agent, providing a buffer between you and the seller and saving you the stress of in-person negotiations.quote

Do your due diligence with a home inspection

Next, it’s important to complete a home inspection. An inspection exposes your dream home’s hidden flaws, so you can go back to the seller to negotiate. Typically, sellers will either agree to fix the problems or reduce the sales price to cover the cost of fixing them.

Before you hire your inspector, review the seller’s disclosure (known as a “seller’s property information sheet” in Canada), a written statement of the owners’ knowledge of the property’s current condition. Your agent will get the disclosure from the seller’s agent. The requirements for what exactly must be shared in a seller’s disclosure vary state by state, but they usually must include any information about large repairs or structural issues.

Make sure to attend the inspection if you’re able and thoroughly read the inspection report after. Once you’ve reviewed and partnered with your agent to decide what to have fixed in order to make your purchase, your agent will convey your requests to the seller for final negotiations.

After the inspection and negotiation, the last few steps between here and closing – which include a survey, title work, and appraisal – are handled primarily by your agent and lender.

Head over to the fourth, and final installment of Your First-Time Homebuyer’s Guide to round out your knowledge on all things homeownership!

Begin your journey home with Keller Mortgage

From beginning to end, Keller Mortgage professionals bring clarity and ease to the homebuying experience. Contact us today to begin the process or request more information. We recognize how special purchasing your first home is and are committed to helping you every step of the way!

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