Kathy & Ben
What’s In Your Offer to Purchase?
Okay, you found a home and are ready to make an offer. What do you do next? First thing is having a Comparative Marketing Analysis of the property done. Is the property priced correctly? Have other homes in the area sold for the same and similar values? Were those sales bank owned homes, owner occupied sales, or short sales? Find out as much as possible about those sales so you can substantiate to the seller your offer. Price is not the only factor, condition of property, upgrades, seller contributions, seller repairs, length of time home has been on market should all be taken into account.
Be Flexible on Closing Date
While determining a price to offer on a home there are other factors to an offer that will be important to you and the seller. When do you want close and take possession of the home? If your lease is up in 30 days and the seller needs to find a home, you may want to do a 45-day closing and continue your lease for another month. Your flexibility on the closing date may make the seller more flexible on price. If a bank or third-party own the home, to close within 30 days will be preferable. If the home is being sold as a short sale, closing will be some time in the future, they can take anywhere from 60 to 180 days easily to close. If your lease is up in 30 days, a short sale may not be a wise choice.
Asking for Closing Costs
Closing Costs are monies that need to be paid at closing. They include items like title insurance, cost of getting a loan, attorney fees, funds for escrow accounts, etc. These funds can be paid by buyer, seller or shared. The more reasonable your request for the seller to pay such fees, the more likely he is to accept your offer. Request of unreasonable costs could be added back into the selling price.
Show You Are Serious
Another item to consider in any offer is the earnest money. Earnest money is good faith money; it is your way to show a seller you are serious about purchasing the house. A good rule of thumb is 2 to 3% of the sales prices. The earnest money will go towards the down payment or closing cost of the house or if you break the contract in a bad faith manner, it can possibly be given as restitution to the seller for not performing. These situations are rare if you are working with an experienced agent and don’t get cold feet without a valid reason.
Contingencies and Inspections
Other items in purchase offers include the right to have the home inspected by a professional home inspector. The home inspector is checking to make sure systems in the home are in proper working order, the structure is sound, and you have no unexpected surprises upon moving in. Other common Contingencies are for financing and appraisal. The more contingencies and items you ask a seller to accept in an offer, the less flexible he will become in the price since each of these items reflect what his net dollars will be.
Time to Put It in Writing
Once you have determined what you are including in your offer, decide on an offer price and be ready and able to explain these items to the seller. Have you figured out what the seller nets? Can the seller realistically move in the time frame you have set? Have you made the seller feel you are a serious buyer that loves his home as much as he does? Your goal is to get the best terms that you can negotiate while also making the offer attractive enough for the seller to accept.