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- make an offer
When you find the house you want, it's time to make an offer. Before submitting it, consider the following:
- The asking price versus the market value of the house
- A comparative price analysis of neighboring homes
- The home's condition and potential renovations or repairs
- Your price range
- Negotiable items with the seller such as closing costs, repair work, closing dates, etc.
Is the asking price too high?
While considering how much to offer relative to the asking price, keep in mind these signs of an overpriced house.
- The house has been on the market more than four months. If no buyers are interested, the house may cost too much.
- The seller has reduced the price. This may indicate that the seller may be willing to go even lower.
- Your comparative price analysis is drastically different from the asking price. Consider making an offer that's in line with recent home sales in the neighborhood, even if it's much lower than the asking price.
Writing an offer letter
If you are working with a buyer's agent, your agent will typically help you compose the offer letter and can advise you on the conventions of making an offer in your local area.
- The letter should state the purchase price you are willing to pay as well as any conditions that would cancel the offer.
- If you are working with an experienced buyer's agent, he or she can likely provide all the advice you'll need to write it.
- If there are any special concerns you may have about the transaction, you may want to hire a lawyer to review your offer.
- Remember, once accepted by the seller an offer letter is a business contract, so you should understand exactly what you're signing before you move forward.
Negotiating a price
Your offer letter is simply an opening bid on the purchase of your home. The seller may accept your offer or make a counter offer. Your buyer's agent will help you negotiate the purchase price with the seller of the house. If you and the seller can't agree upon a purchase price, it's time to look for a different property to buy.
Have a back-up plan
To get the price you want from a negotiation, you need to be willing to walk away from a property if necessary. Before you make an offer, have some additional properties in mind as alternatives in case your first choice doesn't work out. If you're focused solely on one property, the negotiation process could potentially favor the seller.
