REMEMBER – When making an offer, everything is negotiable. You can negotiate personal items you like in the home (chandelier, pool table, etc.) and who pays for the closing costs, title policy costs, survey costs, etc.
Your AllQuest Real Estate® Agent will help you draw up an offer that clearly outlines the conditions under which you propose to buy the home. The offer will include a legal description of the property, the amount of earnest money you will put down, the down payment, the proposed closing date, the price you are offering, the length of time the offer is valid, etc.
Before negotiating begins, you will need to decide how much you would like to offer.
There are many factors that come into play when you are faced with this decision.
You need to consider:
- your budget,
- the seller’s circumstances,
- the length of time home has been on the market,
- the local real estate market,
- comparables, and
- other items (minor defects, personal property, etc)
that can sway negotiations in one way or another.
- You need to know how much you can afford and how much you want to spend. Remember, your budget should NEVER be disclosed to the seller. Establish three prices that fit within your budget; 1) the price that leaves you rushing to sign the paperwork, 2) the price that falls within the mid-range of your budget and is acceptable for the home, and 3) the price that is on the high side of your budget and makes you want to negotiate other items in order to make the purchase worthwhile.
- The seller’s circumstances have a huge impact on what kind of offer you should make. There are two kinds of sellers; the motivated seller and the lax seller. Spend some time trying to figure out the seller’s circumstances. Think of the seller as your opponent because they want to get as much money as possible for their home, and you, on the other hand, want to pay as little as possible. While you are trying to figure out the seller’s circumstances, expect them to be trying to figure out your hidden motivation. Don’t show emotions or that you are in a hurry to buy. The seller will probably ask a lot of questions. Answer vaguely and remember to be pleasant. Meanwhile, make sure to ask the seller questions like: Where do you plan to move? What do you like about this community? Do you have family nearby? By asking these kinds of questions, you will gain insight into the seller’s motivation. If the seller is in a hurry to sell the property, you may be able to make a lower offer. If the seller is not in a hurry, you can expect them to hold onto the house until their desired price is offered.
- When considering the length of time a home has been on the market, you need to consider the local real estate market in which you are shopping (addressed in the next section). Keep this general rule of thumb in mind: homes that have been listed for many months are probably overpriced. You may have a negotiating advantage in this scenario.
- The local real estate market can affect the urgency with which you make an offer. If homes are selling quickly and are in slim supply, you are shopping in a seller’s market. This kind of market may require you to make higher offers, and quickly. On the other hand, if there are many homes for sale, and they tend to stay on the market for a while, you are shopping in a buyer’s market. This kind of market is obviously good for you, the buyer. You probably don’t need to worry as much about another buyer snatching the home that you want, and you will probably have more negotiating leverage. Ask your AllQuest Real Estate® Agent to evaluate comparable properties (Comps) before you make an offer.
- Comps offer a great insight into the value of the home you want to buy. Your AllQuest Real Estate® Agent can provide you with information that will show you the value of similar homes in the area. Comps will provide solid leverage in negotiations. Just remember that you probably shouldn’t purchase a home that is priced grossly above the value of the comparable properties.
- There may be other items related to the home that can help you in the negotiation process.
If there are any significant flaws in the property, you might be able to offer a lower price,
and/or require the owner to make necessary repairs. Also, consider items in the home that
you like (i.e. a pool table, sauna, hot tub, etc.) that may encourage you to offer a
slightly higher purchase price.
Once you have made an offer, you can expect to begin negotiating with the seller.
Consider the negotiation process like a sport, or game. Your Agent acts as your coach,
and will communicate with the seller, or their Agent, on your behalf. Be sure to
communicate openly with your Agent by explaining your goals, concerns and ideas.
Try to gain an understanding of the seller’s motivation level and goals.
On the other hand, do not allow your budget, situation, or agenda to be revealed
to the seller. Refer back to the issues you considered when deciding upon your offer price.
Once your offer is accepted, it is time to order an inspection to
make sure the home is safe, structurally sound, and pest free.
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