House Hunters Question Part 3 of 9 - Does it really only take 1 piece of paper to buy a home?

What they don't show you on House Hunters that could cost you serious dollars in the long run.

With all of the recent focus on real estate, one show that has stood out is House Hunters, where Suzzane Whang showcases the process of a home buyer or a family buying a townhouse who are guided around to 3 homes by a real estate professional. After seeing the three homes and a strategically placed commercial break the home buyer comes to the real estate professional office or works with the agent on the hood of the agents car to fill out a one page contract form. After another regularly placed break, viola, the buyer has the home and we get the opportunity to drop in on them 1-2 months after they have moved into the property they selected. (Somehow, they always get the one that they selected, but I am getting ahead of myself.) All of this half hour, made for TV house hunting got me to thinking, How does House Hunters compare to the real home search and buying process?

Part 3 of 9

Lets review. At this point the home buyer has already been working with a real estate professional and has taken a look at only 3 homes and they are prepared to make an offer.

So now the buyers have made their decision. The viewers at home have been left in the dark as to which property that the buyers are truly interested in. This leaves us guessing which one that the buyers are selecting. What we are shown is that the agent has prepared a very thin folder that has a single page contract offer in it that is presented to the buyers. The buyers then sign this one piece of paper and we then are taken to commercial. This begs the question, Is it really that easy? Most first time home buyers that come to us believe that it is that easy and they along with the show could not be further from the truth.

The current standardized Northern Virginia Association of Realtors contract form for the base regional contract is 10 pages long. Take into consideration all of the addendum and contingency forms to the overall contract offer, the entire pacakge is over 20 pages in length. Why so long? Lets take a moment and see what the contract offer is made up of.

The offer to purchase contains the names of all of the parties involeved in the potential transaction along with the names of the companies that they are using as their agents, the definition of the property and the legal description of what is actually being sold along with all of the items that will be staying or conveying in the home. The buyer will put on paper what they are willing to pay for the property along with how they are planning on paying for the property with the down payment amount and the mortgage amounts and terms. The buyer may also ask for the seller to help assist the buyer with the seller contributing towards the buyers closing cost. The buyer will use the offer to disclose how much of a earnest money deposit they are putting up with the offer. The offer may contain a contingiency that will allow the buyer of the property to perform a home inspection along with an opportunity to void the contract if the buyer finds something that is not to the buyers liking. One of the most important factors of the offer is the proposed settlement date. This will establish when the seller will need to move out and when the buyer can expect to move in, along with when the buyers mortgage company needs to have the loan completed.

So how does a buyer come up with the information as to what to offer? Lets look at the price first. The show never lets you know what the buyer offered or how much the sellers ended up selling the property for. The Program also doesn't show you how they came up with the price that they offer.

How it really works: In the real world, an agent will take the time to do a comparative market analysis of not only what is active and available on the market, but more importantly, they take a look at what has actually sold during the past 3 to 6 months in the Northern Virginia Real Estate Marketplace and for the specific community that the buyer is interested in. This gives the buyer a true indication of what home have actually been selling for an what buyers are actually paying. The last thing we want is for a home buyer to overpay for a property.

The 20 plus pages contract is mainly boilerplate, yet, most of the contract offers is designed to a). protect the parties and b). explain what will happen if one of the parties does not do what they promised to do.

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