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Making an offer to buy
When you find the right home, what can you do to maximize
your chances of actually getting it? The first step you should take is to
make a prompt offer.
Whether you are in a buyers' or sellers' market, taking too much time to
initiate an offer can cost you money, especially if you are planning to
offer less than the asking price or will be asking for special terms. If
your offer is the only one on the table, the sellers will consider it, and
if they don't accept it, they may make a good counter offer. While you are
"sleeping on it", however, you risk the possibility of another offer coming
in. If another buyer appears on the scene, you lose an important advantage
if you and the sellers are going back and forth with offers and counter
offers.
If you really want that special house, make the best offer
you can as quickly as possible, while observing the following key points:
Making the Offer
Try to consider all of the relevant facts when determining your offering
price. Homes often sell for negotiated figures that are below the asking
price - sometimes considerably below, so give serious consideration to your
initial offer.
Consider Market Conditions
Home pricing and sales activity is strongly affected by the strength of the
underlying market. In a weak market purchasers may be able to negotiate
substantial reductions from asking prices. Conversely, it is risky to make a
low offer in a strong market - another buyer may appear suddenly and pay
full price.
Review the Specifics of the Property
Does the home suffer from a lack of curb appeal or other problems? If so,
you may want to be more aggressive in your negotiations - chances are there
will be less competition, even in a strong market. If the house needs
renovations or repairs make sure you know exactly what to expect so you
don't have any unanticipated expenses after closing.
How Badly Do You Want the House?
Will you (or your family) be extremely disappointed if you lose the house?
If so, consider being less aggressive in your negotiations — especially in a
strong market. Conversely, if you are willing to take a chance you may be
able to get a better deal.
Evaluate the Seller's Motivation
A homeowner who is under pressure to make a sale is more likely to accept a
low offer. Recognizing a motivated seller is a major step toward making an
advantageous purchase. Common causes of pressure on a seller include
financial difficulties, divorce, or the need to move by a certain date.
Consult with Your Agent
Your realtor is an experienced professional with deep knowledge of the local
market, so make the most of this resource. Your agent can tell you how long
a home has been on the market and can provide comparable sales for review.
It's even possible that your agent may know of a motivated seller.
Are You Buying a New Home?
Many builders have a general policy of not negotiating prices (particularly
in major developments), so if you are buying a new house you may have to pay
full price. Nevertheless, you may be able to get a deal occasionally -
particularly if the market is weak or sales in the project are slow. You
have little to lose by trying.
Writing the Offer
An offer can be in the form of either a letter or an actual purchase
contract (the preferred format when working with an agent). Whichever format
you choose, make sure that you clearly specify all of the required
information and terms in the offer. If you are pre-qualified for a mortgage,
offer to provide a copy of your approval letter to strengthen your hand.
Counter-Offer and Negotiation
Instead of accepting your initial offer the seller will probably respond
with a counter-offer. After reviewing the counter-offer you are essentially
back to the beginning of the offer process - but with a better idea of the
seller's negotiability. Consider all of the information and decide if you
are willing to increase your price. This offer and counter-offer phase of
the negotiation is often done verbally - through the agents or even at a
meeting of buyer and seller - with revised contracts signed after price and
terms are accepted by both parties.
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