House Hunters Question #3 - Does It Really Only Take 1 Piece Of Paper To Buy A Home?

TV Show may end up giving a distorted view to home buyers.

With all of the recent focus on real estate, one show that has stood out is House Hunters, where the host, Suzanne Whang highlights the process of a buyer or a family buying a home who are escorted around to 3 homes by a real estate agent. After seeing the 3 homes and a strategically placed commercial break the buyer comes to the real estate agent 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 ad for The Home Depot, 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. 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 been working with a real estate agent and has toured only 3 homes and they are prepared to make an offer.

The buyers have made their decision and are prepared to make an offer to the seller. We as the viewing audience 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 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? This requires an examination of what the entire contract offer includes.

The offer 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 in the property. The buyer will disclose what they are willing to pay for the property along with the financial details with the down payment amount and the mortgage amounts and terms. The buyer may also ask the seller to pay for some or all of 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 been sold and settled 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.

20 pages sound like a lot of legalize and information, but, 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.