LoanRateUpdate.com » Home Buying Tips » Making An Offer
Whew! Are you still with me? Hopefully your house-hunting resulted in some fruitful results. But before you rush into an offer you can’t refuse, take several hours to compare the properties you’ve seen against market conditions, comparable properties, your Wish List and your Check List. These are the building blocks of your buying decision and, later, your offer. Let’s go over the things you need to know before you approach any homeowner with an offer:
1. Prioritize. By now you have visited enough homes to know that many of them just don’t fit your wants or your needs. Grab your Wish List and the Check List’s from the remaining homes that you are considering and take the time to compare them until you find the home with the qualities that best match your priorities.
2. Market Conditions. By now the subject should have came up with your sales agent, or you’ve probably heard it on the television or from reading a newspaper, but gaining a knowledge of current market conditions is essential. Home prices always reflect market dynamics; for example, if the current market is referred to as a “seller’s market” that would indicate that there are generally more buyer’s than there are seller’s which results in higher market prices and less negotiating room especially when seller’s have multiple bids on their homes, sometimes resulting in the buyer paying more than the asking price. When the market is referred to as a “buyer’s market” that would indicate that there are more homes for sell than there are buyer’s. This of course benefits the buyer because it gives them more choices and generally allows for a more negotiable price. One note here: During a buyer’s market you can generally take more time to ponder your decision because homes have a tendency to sit on the market longer, however, in a seller’s market you usually don’t have much time to make a decision because homes are selling so fast. If you want to avoid “Ya snooze, ya lose” a quick decision may have to be made. That house you looked at yesterday that was close to what you wanted and you liked so well was probably viewed the same way by everyone else who saw it too! The first to the well gets the water.
3. How much to offer. Without an idea of what similar homes in the area you’re interested in are currently selling for or have recently sold for, you’re pretty much blind as to what a fair offer would be. Your Realtor can prepare a Comparative Market Analysis (CMA) report for you in a relatively short time providing you with the tools to make one of the most important decisions you may ever make. One that could save you thousands!!!
4. The offer. Once you have chosen the home you want, have reviewed the CMA, and decided on what you feel is a fair price, you can now write an offer that will be presented to the agent representing the home seller who will then present it to his client. The offer will also need to be accompanied by a good faith deposit which your sales agent can advise you on. The offer should include any contingencies i.e. an extended escrow period or a carpeting allowance, basically any condition that you want written into the contract. Of course the home seller has the right to counter your offer if they feel that it was not adequate enough and if they do you can revise your offer and try again until both parties have reached agreement. Then it’s time to close the deal.