Tuesday, January 10, 2012

Making an Offer on a Home

Yes, I know, it’s winter and it’s not really home-buying season. But, winter can be the best time to start looking if you’re in the market for buying a home! There will be less competition when looking for homes and you may be able to get a home at a good price.
Let’s say that you took advantage of the holiday break and decided to start venturing out into the real estate market. And, all of a sudden, you find one that you love! What next?

Prepare an offer on a home

The next step is to prepare an offer on the home. You and your real estate agent would get together and talk about a reasonable offer. This involves looking at similar homes in the immediate area that have sold recently. This will help determine whether the home is overpriced or if the price is reasonable.

Another important step is to gather as much information about the seller as possible. Is the seller motivated to sell? Or is the seller willing to take time to find the “right” offer? This will be important because it will give you an idea of how the negotiating process will pan out.
Some of the things included in the offer are:
  • Address of property
  • Names of the potential buyer(s)
  • Offer price
  • Proposed closing date
  • Contingencies (e.g. a successful home inspection)
  • Items to be included in sale
  • Earnest money deposit (your agent helps determine the appropriate deposit amount)
  • Deadline to respond to the offer. Having a deadline can put a little bit of pressure on the seller to respond.
If the seller accepts the offer and signs it, then it means you got the house! Unless, of course, you find a major deal-breaker during the home inspection and you decide to walk away from the deal.

If the seller doesn’t respond for several days, it means that the seller rejected the offer. You have the option of just walking away and looking for another home. Or, if you really loved the home, you could make another offer.

If the seller counteroffers, this means that they are willing to keep the negotiation going. If you don’t like their counteroffer, you could keep the negotiation going until the deal is accepted or one side quits.

Tips for the home-buying negotiation process

A few things to keep in mind during negotiations:
  • Don’t let your emotions take over. If this deal doesn’t work out, there will be many more homes out there. Maybe you’ll find one that you’ll like even more!
  • Don’t offer more than what you can afford.
  • Be willing to compromise. Some may feel their competitive side creep up and feel like they have to counteroffer even the smallest things. Don’t lose sight of the end goal, which is to get the home.

What if there are multiple offers on a home?

Even in a buyer’s market, it may still be hard to find a nice property in a great location. Once one becomes available, it will most likely attract several potential buyers. So, if you find yourself in a situation where the house you like has several offers, you may end up in a bidding war. In this scenario, your options are to just walk away and keep looking, or you could arm yourself with plenty of patience and get into the negotiating game.

The seller’s agent may set a deadline for you to place your “best and highest” offer, in which case, the seller may accept the best offer, decline all of them or counteroffer.
However, keep the maximum price you’re willing to pay in mind so that you don’t get carried away with the idea of “winning the bidding war” and end up offering more than you can afford.
Contributor Gabriela Islas

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.

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