Buying a house is an exciting experience because it is a chance for buyers to settle down in a space of their own. However, submitting an offer can be daunting – whether or not you are a first-time buyer.
The best way to present an offer is including the right information and being flexible to the seller’s needs. If a buyer can accomplish those factors, the offer negotiations will be less intimidating for everyone.
Formulate a reasonable offer
Before submitting, you have to develop an offer. Buyers rely on the comparative market analysis (CMA) to determine the value of a property. A CMA is used to evaluate the number of bedrooms, square footage of the property and any details that may increase or decrease a home’s value.
The analysis also relies on the current real estate market, so it looks into surrounding properties and their value compared to a specific property. CMA often produces accurate valuations for homes, so it’s a solid starting point for a potential offer.
Buyers can also research recent homes in the nearby area and the purchase price. Homes should be comparable in location and size because any differences can change the purchasing price.
Other factors may influence an offer such as the state of the economy, housing availability, how long has the property been on the market and current interest rates. It’s important to incorporate all the factors when deciding on an offer.
Include important information
Your offer is more than a price tag; it’s a binding sales contract. It includes invaluable information that the seller relies on for a sale. Buyers should include details about:
- Special terms of an offer – such as contingencies or special provisions.
- Unique characteristics of the buyers, for example, an all-cash offer, being a first-time buyer and being preapproved by a bank
- A time limit for the offer
- The target closing date
- A description of how utilities and taxes will be prorated between the buyer and seller
A well-crafted proposal makes the decision process easier for sellers – whether they accept or reject the offer. Relators will recommend additional documents, such as a cover letter or a mortgage pre-approval letter. The additional letters only highlight a serious interest in the property.
Expect any outcome
It is easy to get excited about a particular property, but submitting an offer – even at the selling price – does not guarantee a yes. You need to expect any outcome. First, anticipate an accepted offer and set up any necessary documentation for mortgage loans, tax information, etc.
If the seller rejects the offer, buyers can counter with a new proposal or continue househunting. If you submit a new offer, you can consider earnest money, a deposit you give a homeowner to show your interest in the house. Earnest money is from one to three percent of the purchase price, and you can receive a refund if the sale does not go through.
Often, your first offer will not be successful. Buyers have to be flexible and understand that a competitive offer does not always have to go above asking price. Consult with a realtor or financial advisor to decide what the best course of action is for you.