You found a house you love, and you’re ready to make an offer. This is where the process really begins to get serious and the paperwork starts to build. The listing price does provide some insight into the seller’s expectations, the value of the property and the work that needs to be done also plays a role.
You and your real estate agent will sit down and look at recent sales and current buyer activity, you also need to factor in your personal needs. Consider the pros and cons of this house and the amount of work you may have to do. Take into account details such as: how much is house worth, distance to work, schools and stores, neighborhood amenities, age of major systems and appliances, including the HVAC, roof, plumbing and electrical, deferred maintenance and/or renovations that need to be done.
Below are 3 tips to help buyers make the right offer on a home:
1. Make a Competitive Offer
Submitting a lowball offer that isn’t supported by sales data could easily backfire, especially in a sellers’ market. Buying a house isn’t like haggling at a garage sale. So don’t offer $200,000 for a house worth $250,000, and expect a counteroffer. In turn, the seller will be insulted by your “opening bid,” and won’t bother to return your calls after that.
2. Place a Deposit
An EMD (earnest money deposit) is the sum of money you put down as evidence to the seller that you’re serious about buying the house. If the seller accepts your offer, the earnest money will go toward your down payment at closing. However, if you try to back out of the deal, you might have to forfeit the cash to the seller. In most cases, the title company is responsible for holding the earnest money in an escrow account. In the event the deal falls through, the title company will disperse the funds appropriately based on the terms of the sales contract.
3. Limit Your Contingencies
Contingencies can add time to the home negotiation process. Although they are beneficial to buyers, they can be a nuisance to sellers. It’s important to avoid any unnecessary contingencies. Obviously, the home offer with the fewest contingencies is often the most attractive. Bottom line: don’t expect a seller getting multiple offers above asking price to accept a contingency. Yet, don’t be afraid to ask if one of the houses you’re looking at has been on the market for a few months.
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