If you are looking to buy a home you need to be aware that the current market conditions are very competitive – Multiple offers on a property are very common right now! Here are some tips to help you get your offer accepted. Time is always of the essence and good communication is key!
1.) If you are going to finance, make sure you have a pre-approval letter from your lender to accompany your offer.
2.) Having a good agent with knowledge of the local market and proven negotiation experience is invaluable.
3.) Be prepared to act fast when you find the home you really like. Make your first offer your best offer, assuming you are potentially up against other offers, or you might miss out otherwise. Time is of the essence, even while an offer is being negotiated, another offer could come in and cut in. A seller can accept any offer he/she chooses. The highest price offer may not necessarily be the best offer for the seller and the seller’s current position. Once buyer and seller are in full agreement in writing, an offer is considered “accepted”.
4.) If you start your home search prepared and with an open mind, you’ll already be one step ahead, especially during “HOT” market conditions, when properties are selling very quickly. Keep in mind, there are a lot of things about a house that can be easily changed such as paint, appliances, counter tops and flooring.
5.) Do the math during negotiations of a sale price. Think in terms of how much of a difference the sale price would make on your monthly payment, and if it would be worth losing the right home over, when your monthly payment amount might only change by very little in the overall. Of course, also consider expenses such as taxes, insurance, estimated utility expenses, HOA fees (if applicable), etc.
6.) What price to offer…
Base your offer on the home value, not just the list price. The recent sales activity in the neighborhood and area market should give you and your agent the needed information. If a home is priced at or below market value, you are likely not going to be able to get it for less, especially not during the current market conditions! If the home is priced above market value and has been on the market for a while, a lower offer may get you the home. Ask your agent for a Comparative Market Analysis (CMA), this should not take long. Keep in mind, every sellers’ motivation and circumstance is different. Some sellers are very motivated, some sellers are more conservative and don’t mind waiting and keeping their home on the market for extended time periods, as they are just not in a hurry and their asking price may be more important to them, than a quick sale. Also, be careful not to insult a seller with a ‘low-ball’ offer, this may offend him/her, you may not even get a response at all. While agents are required to present all offers promptly, sellers do not have to respond to an offer. This is where a good agent is invaluable in guiding you how to best proceed with a good strategy.
Keep in mind: If you are planning on obtaining a mortgage, the sale price of a home will need to meet the appraisal value, otherwise an offer may fall subject to renegotiation of the sale price. If the parties can’t come together on a new price, financing may not be possible and the transaction may fall apart.
7.) Ask questions, the more you know about what is important to a seller, the more you and your agent(s) can do to make your offer as strong as possible. Keep in mind, sellers’ agents are only allowed to share personal details with permission from the sellers. One can ask, but that does not mean one will get the information, but it’s definitely worth a try!
Does the seller already have a new place and want a quick closing? Does the seller not yet have a new place to move to and therefore would prefer a longer time period to closing, possession and/or even a rent-back agreement? The more you know, the better strategy you and your agent can put together to make things work best for both parties and to make your offer as appealing possible.
Remember, your offered terms could even be more important than the price. And there are many ways to make an offer appealing and attractive to set it apart, good real estate agents can get VERY creative. 🙂
A note on home inspections: Don’t assume that a home inspection will automatically allow you to renegotiate. While it’s not uncommon for buyers to ask for a credit, repair, or correction, if the inspection reveals any major unknown problems, you need to be aware that your accepted offer could then be off the table and there may already be a back-up offer. A seller may not be willing to make significant repairs, be willing to issue a credit, or to reduce the sale price. Remember, items noted on an inspection report should not translate into a “to-do list” for a seller, it is an evaluation of the current condition of a home and the question to ask yourself is: Are you willing to accept the home in its current condition?
Questions? Contact us, we’ll be glad to help!
Randy and Yvonne Hoyt
Licensed REALTORS® and Listing Specialists
2300 W. Michigan Avenue, Jackson, MI 49202