You’ve found your dream home and are eager to make it your own - but before you can do that, you will need the home owner to accept your offer to purchase. You might even be competing with other buyers - here's how you can put yourself in the best position to have your offer accepted.
Checklist for making an offer on a house:
1. Get Prequalified:
The prequalification process determines what home loan you will qualify for. During the process, you’ll be able to check your credit record, which is the primary factor banks will assess before approving a home loan application.
Following pre-qualification, you’ll be granted a certificate that says you’ve qualified for a certain amount. You can then look for a home that falls within that price bracket, and when you make the offer, you’ll be able to show the seller your certificate to prove you can afford the price of the home. This will strengthen your position with the seller.
Here is a general overview of how the prequalification process works:
- Gather your financial information: You'll need to provide information about your income, expenses, debts, and assets. This might include pay slips, bank statements, and proof of any other sources of income.
- Check your credit report: Banks will assess your creditworthiness based on your credit report. It's a good idea to check your report beforehand to ensure there are no errors or issues that could affect your loan application.
- Calculate your affordability: Banks will use your financial information to calculate how much you can afford to borrow. They'll consider factors such as your income, expenses, and existing debts.
- Get prequalified: Once you've gathered all the necessary information, you can approach a bank or mortgage lender to get prequalified for a home loan. They'll review your financial information and give you an estimate of how much you can borrow.
- Receive a prequalification certificate: If you meet the bank's criteria, they'll provide you with a prequalification letter. This letter will outline the amount you're prequalified to borrow, which can help you when making an offer on a property.
2. Get advice from an estate agent:
While estate agents are generally seen as an asset to sellers, they can also be a big help to buyers. An estate agent can provide advice on how much to offer for a house in Namibia. They’ll investigate prices in the area and market trends. Ultimately they’ll give you the best chance of making an offer the owner will accept.
Find a knowledgeable real estate agent
3. Be accommodating during the negotiations:
The negotiation process may be the biggest headache, but it’s a critical stage in securing the home. You can use this as an opportunity to get the best price for yourself, or you can use it as an opportunity to curry favor with the home seller. It’s pretty hard to do both at the same time. So decide whether your priority is securing the best price or getting ahead of other potential buyers. Waiving conditions you originally included in the offer to purchase, raising your price, and agreeing to the seller’s time frame are some ways to get in their good books.
How to make an offer to purchase
- Determine how much you want to offer - Before you determine how much you want to offer on the property make sure you have a clear indication of just how much home you can comfortably afford. As this is one of the biggest purchases of your life, one of the most important financial questions you have to ask yourself is: How much house can I really afford? Here we have set out four steps you should take to determine how much you can afford before you start your house hunt.
- Submit the offer to the seller, along with any contingencies you want to include, such as the need for a home inspection.
- You and the seller sign the offer to purchase - The offer to purchase is a binding agreement, and neither party can withdraw without incurring penalties (unless the other party fails to meet a clause in the agreement).
Once your offer to purchase is accepted, it’s time to apply for a home loan. This might be a daunting step but thorough planning long before you start your home buying process is key to easing any worries you might have. Here are some financial mistakes you need to avoid before applying for a home loan:
- Overspending and financial strain - One of the most common mistakes made by prospective homebuyers is overspending. To avoid this pitfall, it's crucial to conduct a comprehensive financial assessment. Calculate your affordability, taking into account your income, expenses, and any outstanding debts. Understand your loan options and seek pre-approval to determine the maximum loan amount you can secure. By doing so, you'll avoid overextending yourself and make a more prudent purchase decision.
- Hidden costs and unexpected expenses - Failing to account for hidden costs and unexpected expenses is another common pitfall. Many buyers focus solely on the purchase price but forget about additional costs such as property taxes, insurance, maintenance, and potential renovations. To prevent this, engage in thorough financial homework. Create a comprehensive budget that includes all these ongoing expenses and set aside a contingency fund for unforeseen circumstances. By doing so, you'll be well-prepared to handle any surprises that may arise and maintain long-term financial stability.
- Failure to consider long-term financial goals - Buying a property is a long-term commitment, and it should align with your broader financial goals. Neglecting to consider factors like career prospects, family planning, or future financial commitments can lead to an ill-suited purchase. It's crucial to evaluate how the property fits into your long-term plans and whether it supports your personal and financial objectives. This consideration ensures that you make an informed decision that aligns with your broader financial goals.
- Inadequate home loan research - Securing a home loan is a significant aspect of buying a property. Rushing into a loan agreement without proper research and comparison shopping can have serious consequences. Buyers who fail to explore different lenders, mortgage rates, and terms may end up with a loan that is not the best fit for their financial situation. This can result in higher interest rates, unfavorable loan terms, or inadequate mortgage protection.
