OFFER TIME!
So after narrowing down all the available properties that suit your needs, identified your select few, evaluating them, and completing a comparative market analysis we’re ready to make an offer. There are a few things you need to consider;
1. How will you be paying for this property? Your ability to close the purchase of the house could affect the price the seller is will to take. Let’s look at it this way, if you’re selling your car and someone comes to your house and offers you a bit less than you listed it for but has cash in their hand, versus the other person that just left and said they needed to go talk to the bank about getting a loan, who would you rather sell to? Almost every time the car will be sold to the person with cash before the other buyer ever gets a chance to return with their bank loan. When it comes to real estate, the saem premise exists, the stornger you appear to be able to close the deal, the more likely the seller will accept your offer. Seldom do homes sell for cash in our area, however having a pre-qualification or pre-approval letter from a lender shows a seller you are organized, serious, and prepared to purchase their home.
2. How much money are you willing to put down for your due diligence period and how much time do you need? Due Diligence money is money given directly to the seller of a property in exchange for them to take the home off the active market and allow you to investigate the purchase of their home. Your investigation will consist of things like a home inspection, pest inspection, lender approval, repair negotiations, appraisal, insurance estimate, etc. There is no specific amount that is required or amount of time for due diligence, however the stronger the amount and short the period of time, the more serious you’ll be received by the seller. This money is non-refundable(unless the seller cannot produce clear title to their home at closing) and is simply the purchase of time that will be credited to your purchase price in the event you elect to buy this specific property.
3. How much earnest money are you willing to put down? Earnest Money is money you provide or at a later date during the contract period that is held in trust by the agent’s firm or an attorney and is refundable up to the end of due diligence period so long as all parties sign a release of earnest money document. This money is attached to the transaction and will be credited toward the purchase price at closing. However if you do not close on the house and have not notified the seller’s agent / firm prior to 5pm on the due diligence date, the money becomes the seller’s sole remedy for your termination of the contract. The greater the earnest money amount offered, the greater likliehood the seller will seriously consider your offer.
4. Personal Property desired? In addition to the purchase of the real property, you may wish to receive personal property at closing. This is common with washer and dryers, refrigerators, swingsets, etc. Some sellers woudl probably pay you not to have to move those heavy items and are interested in purchasing new items when they move into their new home. This can be a win-win scenario for everyone, but not every seller wants to give you extra stuff just to sell their home. Be careful when you ask for value added items that are considered personal property. If your offer price is really low and you want a laundry list of items thrown in the deal, you’ll likely be getting a negative response. Be realistic!
5. Closing Date Every seller wants a closing date that works best for them! Remember they may have to pack, move, find a new place to live, complete repairs, etc. In addition, you need to be able to close the deal, which means have your cash or loan approved. Typically lender approval on a purchase takes around 45-55 days and thsi is a commony time frame made on offers. However, this will depend on your situation as well as the seller’s. Be willing to be quick but flexible!
6. PRICE!!!!!!!!!!!!!!!!!! Although we put this at the end, it is certainly the most improtant factor for most sellers! The closer your offer to the list price, the greater chance the seller will accept your offer with little to no negotiating. We’ll have a comparative market analysis of the house completed before you make an offer. This will allow you to see the real market value of the home and determine what you wish to offer. We NEVER suggest you pay more for a home than it’s worth!
Remember the keys to completing a successful offer are simple; be fair(price), be reasonable(personal property), be strong(due diligence, financing, earnest money), and be patient(time and closing date)!
