So, you’ve found a house you want and you’re ready to buy! It’s not as simple as knocking on the front door and announcing that you’ll take it. Your decision triggers the start of an intricate dance between you and the seller, typically with real estate agents guiding and advising you both, then maybe an inspector, title company, appraiser, lender, permits, codes, etc… You’re about to make an offer, which can be daunting whether you’ve done it before or are a first-time buyer.
In any market, you may want someone in your corner. Someone who has seen it all and can offer you the most help for what you want. Some people just want a “deal” on a house. Some people want their dream house and just want to know how to get it. Some people want a mix of both. Whatever it is though, explain that to your agent ahead of time so they can help you achieve that goal.
When you make an offer you are telling the seller not just what you’re willing to pay, but how you’re going to do it. There is a time limit, closing date, price, inspection, appraisal, “trust money” amount, financing type, or any other list of demands, offerings, or contingencies involved.
Set your price
The seller set their price when they listed the home. With your agent’s help and your own research, you are an informed consumer. So now’s the part where you set your price. If the market’s hot, and the house just came up, you may actually offer more than what the seller was asking. If it’s been languishing on the market, maybe you offer less than asking. You won’t know what to offer until you do your homework and talk with your agent.
If you offer less than what the seller listed the property for, it could be a shock to them. Or they could be offended. You can’t rely on their agent to present them the comps you found, but they are legally bound to provide anything you present in writing to the seller. So, let them know how you reached your offer price and that it isn’t because you didn’t like their taste in window coverings. Your letter will both help them understand your offer and the market conditions that led you to make it. It can also set you apart in a negotiation with multiple offers. While some people aren’t emotionally attached to their home, a lot of them are. And them knowing who will be moving into it, may make the difference in you getting it or not.
Time is of the Essence
Just like milk, an offer to buy a house has a shelf life, and you get to set it. How long your offer is good depends on what’s customary in your area and how hot the market is. It can range from hours to days. There are different strategies for setting this sell-by date, depending on how competitive the housing market is and your real estate agentwill help you decide that.
In a hot market, you want a short window for the seller to consider your offer to prevent someone else from sneaking in another offer and getting the house. (In a really hot market, you may want to consider an escalation clause.) And in some cases where the seller is already gathering multiple offers, they may set a specific time that they will open and consider all offers.
Your offer will also include a closing date for when you want the deal to be finished and the house to be yours. Part 2 of 3 will be Monday, Feb. 17
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