The Arkansas Real Estate Commission creates the standard Arkansas real estate contracts licensed agents are permitted to use when conducting real estate transactions; most of our terminology and practices originate from these contracts.
4 Steps of the Buyer Journey
#1. Prepare
Motivation. What is the why behind your home search? A deep reflection before starting your search will pay immense dividends by accurately defining your needs & wants for the new property. This will also give you confidence to act when the best fit becomes available.
Meet with an Agent. We make sure you consider all factors when determining where you want to live and what home features you need.
Meet with a Lender. You will understand the downpayment you’ll need, your monthly payments, your buying power and will get a pre-qualification letter you’ll need when you ultimately make an offer.
Make a Plan. Clarity is power which is why once you know your budget, timing, needs and have a clear understanding of how you will make your property transition the home search becomes a lot fun!
#2. Property Search
Buyer Consultation. Establishing well defined search criteria with your agent ensures you avoid wasting your time and can quickly identify great matches. Northwest Arkansas is still a hot market where well located & priced properties sell quickly.
Automated MLS Searches. Once your criteria is set, an agent who is a member of the Northwest Arkansas Board or Realtors will be able to create an automatically updating search in the MLS which emails new listings matching your criteria the moment they hit the market!
Advance Notice. Keller Williams is the largest brokerage in Northwest Arkansas by agent count and total volume. In fact, 1 in 5 transaction in NWA is done by a Keller Williams agent. We are allowed to share forthcoming listings not currently on market within our local brokerage office before they go live on the MLS.
Mailers. We send mailers out to neighborhoods our buyers want to live in when no active inventory exists.
Expired Listings. We search the MLS for old listings that did not sell in neighborhoods our buyers want to live in and contact the owners on behalf of our clients. Below is a house we secured for $99/sqft that was expired.
#3. Make a Winning Offer
Know What is Important to the Seller. We always speak with the listing agent first to learn what is important to the Seller in our offer (often price is not their top priority).
Competitive Context. Was the house just listed or has it been on market for 90 days? We always ask the listing agent if other offers are expected and assess comparative sales to advise what a winning offer may contain.
Include Your Pre-Qualification Letter. A Seller’s greatest fear is spending weeks under contract only for a buyer to terminate. Showing a Seller you are qualified is critical to winning.
Closing Costs. We provide closing costs estimates before making offers so you can decide whether to include an ask for Seller to cover closing costs. Covering your own closing costs makes your offer more competitive.
Non-Refundable Deposits. We usually recommend offering a non-refundable deposit due after the inspection & repair contingency period. This ensures your right to terminate without paying a deposit based on inspection findings while showing the Seller you are a serious buyer for their property.
Escalation Clause. In highly competitive situations where we are competing with multiple offers, it may make sense to include an escalation clause that says you will pay $X over the highest offer received up to a maximum value. example: Buyer to pay $1,000 above highest offer received up to $455,000.
Ensure You Have Complete Clarity. We patiently explain every detail of the offer and provide clarity on if/then situations that may arise.
#4. Due Diligence & Closing
Seller Property Disclosure. Most Sellers provide a written disclosure detailing any past or present issues such as insurance claims, flooding, roof repairs and more. We always review the SPD together before making an offer.
Inspection & Repairs Contingency. Paragraph 16 of the Arkansas Real Estate Contract has two options for buyers: As Is Where Is and the right to inspection. We always recommend electing the right to inspection. The standard language grants the Buyer ten business days to conduct all inspections and make any repair requests from the Seller. Important to note this does not cover normal wear and tear and there is no guarantee a Seller will agree to repairs or cash in lieu of repairs. The buyer is protected by being allowed to terminate during the inspection period and/or if the Seller does not agree to make the requested repairs.
Appraisal & Underwriting. Most buyers get a loan to buy their property. When this is the case they are protected as the property must appraise for the purchase price, or the buyer has the right to terminate if they cannot obtain financing. Once the appraisal is completed the loan goes to final underwriting until we receive clearance to close from the lender. It is critical a buyer does not open any new lines of credit during this phase as it could impact their approval.
Final Walkthrough. After the completion of the Inspection & Repairs contingency and successful appraisal, a final walkthrough to confirm the condition of the property is conducted before closing.
Closing. We can conduct closing remotely or at the local title office. Typically, the title company will only need your driver’s license and downpayment check. Possession, title, keys & openers are all transferred on closing day unless a delayed occupancy was previously agreed to. It is important to schedule utilities to start on closing day. Congratulations, you’re ready to enjoy your new home!
Common Terminology
Offer: an agreement between a buyer and seller to purchase real estate. Also known as a sales contract.
Closing Cost: fees paid at the end of the transaction either by the seller or buyer, or both. They include lender fees, title fees, appraisal costs and agent commission fees.
Home Inspection: examination of the property’s condition. Usually performed by a qualified home inspector of your choice.
Appraisal: property and/or land valuation completed by an appraiser who determines the market value.
Insurance: choose your home owner’s insurance and provide the information to your lender.
Contingent: offer on a home has been accepted, but finalized sale is contingent upon certain criteria. Typically appraisal, home inspection, mortgage approval, and/or the sale of another home.
Non-refundable Deposit: deposit made to the seller by the buyer that is non-refundable.
Earnest Money: deposit made to a seller showing the buyer’s good faith in a transaction. Typically held by the title company or in an escrow account.
Title: refers to the ownership of a home and the rights that come with it.
Recording: The process of officially documenting the transfer of ownership for a home with the county or local government.
Buyer Agency: the right to represent buyer’s interests as a licensed real estate agent in the capacity as a fiduciary
Buyer Agent Fee: fee charged for representing the buyer in a real estate transaction, often a percentage of the home sale and frequently paid in full or in part by the Seller (negotiable)
Legal Description: the full legal description of the property on file with the local county (address alone is not sufficient)
Loan Types: Conventional, VA (Veteran Affairs), FHA (Federal Housing Authority), In-House (provided by a bank), USDA-RD, Commercial. Each type has different requirements for approval and all require an appraisal.
Down Payment: amount required to be paid by the buyer at closing to fund the loan which ranges from 0%-20% depending on the loan type
Title Insurance: type of insurance that protects you from financial loss if there are any issues (disputes) with the title of a property
Survey: certified survey provided by a professional indicating boundaries of a subject property, easements, landmarks and more
Fixtures and Attached Equipment: attached property legally considered to be included with the home purchase unless specifically excluded such as dishwashers, ovens, water heaters, HVAC systems, mailboxes and more.
Escape Clause: part of a purchase agreement that allows the Seller the right to continue to show the property and take a new offer as long as notice is given.
Home-Warranty Policy: policy through 3rd party company that covers unexpected mechanical failures due to wear and tear to items such as HVAC, water heater, and appliances.
Inspections and Repairs: very common contingency in Arkansas real estate transactions wherein buyer receives up to 10 business days to conduct inspections on the property and request repairs from Seller.
AS IS, WHERE IS, WITH ALL FAULTS BASIS: buyer acknowledges and agrees to voluntarily waive and decline any right to further inspect or require repair of the property.
Seller Property Disclosure: Arkansas does not require a Seller Property Disclosure, however they are very common wherein the Seller discloses any past or present know issues with the property to the Buyer.
Termite Letter of Clearance: requires a Termite Protection Contract with One Year Warranty be transferred to they buyer at closing for the property.
Lead Based Paint Risk Assessment: Disclosure required if property was constructed prior to 1978
Closing Date: mutually agreed upon date of closing and transfer of property title to buyer. Very important to meet this date or extend as necessary to avoid falling out of contract.
Delayed Possession: Allows Seller to remain in property after closing date for a set period of time typically less than 30 days
Early Possession Prior to Closing : Allows Buyer to move into property before closing date
Counter Offer: typically used by Seller to change the terms of a particular offer from a buyer such as purchase price, close date, closing costs etc.
