THE ART OF MAKING A SUCCESSFUL OFFER ON A HOME
As of this writing there are only about 350 homes for sale in Nash and Edgecombe counties! Not so long ago, there were four times as many homes on the market in our area on any given day. Why am I telling you this and what in the world does it have to do with you making an offer on a home? The answer is that there are just as many potential home buyers, if not more, out there looking for homes and there are fewer homes on the market. There is competition! For you to be successful in getting your offer for a home accepted, you need to remember competition and become a prepared and savvy buyer.
Let’s start with the basics: 1. Make sure you have gone to a lender and have a pre-qualification letter telling you how much of a home you can purchase. You cannot make an offer without a pre-qualification letter. Do not look first and get financing second. It should be the other way around. What if you find a home and then go to get pre-qualified? While you are getting pre-qualified, someone else is looking at the home and making an offer. 2. Make sure you understand the terms of the loan program you will be using for financing. Ask your lender questions about it. 3. Start looking online at homes in this area. 4. Choose a real estate broker who listens to you, is responsive, and is familiar with the market. 5. Find a home that matches what you are looking for and is in your pre-qualified price range.
Decisions, decisions, decisions: Remember what I told you? There is competition. Chances are, if you like a home, someone else likes that home also. While I am the last person to tell you to make a hasty decision, I am also the first to say, “Think it over, sleep on it, whatever it takes for you to make a decision, BUT do not take a long time to do it.” Get your offer in before someone else.
Respect the seller: I have heard buyers say, “How much do you think the seller will take for this home?” Our firm’s Broker-in-Charge will often quip, “I am sure the seller will take full price.” While that usually takes the deal-seeking buyer aback, it is truer in today’s market than ever. Gone are the days when you could lob a lowball offer over to the seller. I know you want the deal of the century and you say, “The seller can always counter offer.” However, today’s seller will most likely be insulted and will just not respond to your offer. Do not insult the seller.
Pricing: The listing price on a home was not pulled randomly from the air, nor did the listing broker spin a wheel in the back room. That broker carefully studied the market and comparable properties to set the price. In most instances, you can be reasonably assured that the property will appraise for something close to the asking price. Use this information to make a strong offer somewhere around 98% to 100% of listing price -- and that is if you are not asking for closing costs or other concessions. If you are asking for closing costs or if you are making an offer contingent on the sale of a home you are currently selling, you will want to make it 100% of asking price, if not a little higher.
Creating goodwill: There are a couple of reasons for making a strong offer initially. One is that the seller may go ahead and accept it before other offers come in. The second reason is if the home inspection comes back showing that repairs are needed, the seller will be much more likely to agree to repairs if s/he did not have to haggle with you on the price or feel that s/he took a beating.
Counter Offers: You may make a strong offer and still find that the seller chooses to counter offer. Do not be disappointed. It does not necessarily indicate that your offer was not strong or that you are going to “lose” in the negotiations. It could be that the seller cannot afford to take less. Remember, the seller is paying commission and has other expenses that will come out of the sales price.
Multiple Offers: Remember “competition”? With fewer homes and more buyers, you may find yourself in a multiple offer situation. I have heard buyers say they don’t want to get into a “bidding war”. Don’t let a multiple offer situation scare you away from a home you really want. If you really want it, decide how much more you can afford to go up on the price or in making your offer more attractive to the seller and go for it. Consider including a nice letter with your revised offer, appealing to the seller to choose your offer. It may be the only letter the seller receives and if all other factors are the same, the seller may choose your offer.
These are just a few considerations in making an offer to purchase a home. For more information or if you have questions, please be sure to call:
Belinda G. Faulkner, Broker Moorefield Real Estate