Making an Offer
Now that you’ve found the home you want, you’re ready to make an offer on it. Keep in mind you want to get the best possible terms and you want to be able to back out if you find out something is wrong with the home or you can’t get financed.
How Much to Offer
Consider these three factors when deciding how much to offer the seller:
- The asking price
- What you can afford
- The prices for comparable homes in the area
The asking price is really only a rough estimate of what the seller wants to receive.
How much you can afford to pay for the home depends on how much your lender is willing to loan you. They take several things into consideration to determine how much you can borrow including your credit history, your debt-to-income ratio, your credit worthiness, etc.
Before making an offer on a home, you should find out what comparable homes in the area have sold for recently. Your Realtor should have the comparable sales data available.
Know the Market
Is the current real estate market hot or cold? Knowing this will work in your favor because you will know if you need to offer a little more than the asking price (in a hot market) or a little less (in a cold market).
Why Are They Selling?
Find out why the owners are selling their home. You may be able to use this information to your advantage. If it’s been on the market for quite a while, they might be more motivated to sell at a reduced price. If they’re relocating, they might be willing to take less to get it sold quickly.
Develop A Bidding Strategy, If Necessary
If you find that other prospective buyers are interested in the same house, developing a bidding strategy could make you a winner. You could set a limit on how much you’re willing to overbid on a home. You could also write a letter to the seller to accompany your offer telling them about you and your family and explaining how much you want the home and your plans for it. This might provide enough incentive for the owners to accept your offer over the others.
Contingencies to Your Offer
You may want to add contingencies to your offer such as qualifying for financing, or based on the finding from the inspection, or contingent on the sale of your existing home. Keep in mind that the more contingencies you have, the less likely the buyer will be to accept your offer.
When the negotiating process begins, things can get "sticky". First, there are personalities involved, and real estate transactions can be stressful and challenging. When professional real estate agents are involved, the process is much less adversarial. The two parties see very little of each other until the rough edges have been smoothed out and there has been a meeting of the minds. Good real estate agents know how to keep personalities out of the transaction and to help both sides reach a mutually agreeable compromise. Tony has 25 years of experience negotiating contracts world wide for major retailers. You will be in good hands as he leads you through this process.
Often, a seller will respond to an offer with a counteroffer. This counteroffer may include certain changes to the terms. Most counteroffers propose changes in these areas:
- closing date/occupancy date
- inspection time
You can accept, reject or counter the counteroffer and the negotiations will continue until an agreement is reached by both sides. A contract is written when one party accepts all the terms and conditions of an offer or counteroffer in writing.
If you need more information about making your next offer, contact us today!