Paradise Home Team
Jones & Co. Realty
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HOW MUCH SHOULD YOU OFFER ON THE HOME YOU FELL IN LOVE WITH?
You’ve spent the last few months looking for a home and now the only thing that stands between you and having the right to negotiate full ownership of the home you fell in love with is preparing an offer that will be acceptable to the seller. The purchase and sales agreement are the first formal communication that leads to the final deal and eventually a closing when it’s time for you to take ownership of the property. The total agreement between buyer and seller combines financial details with overall efforts of both parties geared towards reaching an agreement and working on the steps towards the closing itself. Over the last five-plus years, it’s been a seller’s market, which means that in general, homebuyers were at a bit of a disadvantage as they competed with other buyers for a limited supply of homes that got snapped up quickly from the market.
The Buying Process
How much to offer?
There’s a lot of work that needs to go into putting the proper price on your offer to buy a home. In all likelihood, the seller has met with a real estate agent who provided a significant amount of detail as to why the home is priced the way it is.
When you’re ready to make an offer, your real estate agent will be able to sit with you and review the sales history of comparable properties in the area to help determine the home's approximate value versus what else has sold in the market.
Putting an offer together
In light of how things are happening at breakneck speed, putting together an offer that will be acceptable to a seller is not just about the price that will make the seller say yes, but also about squeezing out other potential buyers as well. You want your offer to the seller to be as easy as possible to review, negotiate and accept. Specifically, the price, terms and conditions should make sense and be as acceptable as possible on your initial offer.
Putting an offer on a House
Making an offer on a house isn’t just about telling the seller how much you’re willing to pay. You must prove to the seller that you can afford the amount you’re offering, determine a closing date that works for the seller and you, explain how you’ll handle the closing costs on your end (or ask them to pay closing costs) and lastly, what you want the seller to do, if anything, leading up to closing. In submitting an offer, you’ll want to put down earnest money to show the seller that you’re serious about buying the home. The more money you put down, the more peace of mind the seller will have when it comes to your offer. That dollar amount can range from $500 to 10% (or more) of the agreed-upon price.
When to submit your offer
Time kills deals. What that means is if you find a home that you love and it makes sense financially, then you need to move quickly to put in an offer on the home. This holds especially true when you’re in a hot market where inventory is low and homes sell quickly, but it still makes good sense even when competing offers aren’t as likely, so you don’t miss out on the home you fell in love with. If you’re in a lease or have another home to sell, you’ll want to make sure that your obligation with your current dwelling is handled properly, i.e., notice is given to your current landlord, or you have your home listed and under contract with a qualified buyer. Doing this allows you to not only move forward with confidence, but it also makes it easier for the seller of the home you want to buy to feel more comfortable with your offer. The fewer strings that are attached with your offer, the better your offer looks to the seller with whom you’re looking to negotiate.