How to Make a Smart Offer on a House
Making a smart offer when purchasing your primary home or an investment property is an art that is perfected over time. There should be a balance. When you offer too much to outbid everyone you’ll lose the power to negotiate. You’ll also end up paying much more than the market price for the property. Consequently, if the offer is too low there is a slim chance of winning the bid. With the help of your realtor and information on how to make a smart offer, this will be quite easy.
You may be sitting at different sides of the negotiating table but every party involved wants the home to be sold at the end of the day. As the buyer, you want to purchase at the lowest price possible while the seller wants to get the highest possible price. However, it doesn’t necessarily mean you have to be at war.
It only takes working together as opposed to working against each other to make that happen. It can be tricky if you make impulsive decisions. Your impatience might cost you the property or even have you spending way above your budget just to get the satisfaction of winning. It won’t be a win for you per se if you have gone above and beyond to get the property.
Ask your realtor for help
Working with an experienced local realtor will make all the difference when it comes to negotiating and making an offer. If the asking price is too high you should consult your real estate agent. This means you shouldn’t be doing this on your own especially if your knowledge on matters to do with the real estate market is limited. The realtor will then speak to the seller’s agent and get any pertinent information about the home. You’ll be informed whether the price is fixed or the seller is open for negotiation.
Real estate agents are more experienced in negotiations hence they will do much better. Also, if they are going directly to the seller’s agents they will get information about a possible price reduction in advance allowing you to prepare for that. You can expect your realtor to also do a comparative market analysis to find out what other homes have sold for that are similar. This not only helps you make an educated offer but gives you something to back it up with.
Leave room for negotiation
The first thing you should do is have your agent find out the home’s value. Next, you shouldn’t offer the exact amount you have to spend. Leave some room to negotiate. Offering everything upfront means you have no power for negotiations in the future which puts you in a fix. The bid should be on the lower side so that when the counteroffer is made at a slightly higher price you can still manage that. However, remember to bid a figure that is reasonable so that it won’t be rejected without a counteroffer. A reasonable offer means the sellers will be inclined to come to a decision that will be acceptable for both of you.
Remember the seller isn’t your opponent
Don’t view the seller as an opponent just because he or she is on the other side of the table. When deciding who to sell to, sellers consider more than just the price. Some will want to close within the shortest time possible hence they will be open to lowering the price if you can speed up the transaction. Nonetheless, you have to be smart about it as well. When you bid at a price that is a bit lower than what you have you can use the extra money to pay for closing costs if the seller wants the sale to happen fast. Remember that the sale is just as emotional for the seller as it is for the buyer so do not insult them with a lowball offer.
Offer to split closing costs
Closing costs can get out of hand and they catch many people by surprise. When buying or selling property people only think about the price of the property and rarely about the closing costs. That’s why many people are surprised when they see the total amount needed for the closing to happen. It will be too much if only one party is covering that. Thus, offer to split the costs to ease the burden on the seller. If you ask the seller to pay for everything they may feel like you are trying to nickel and dime them and will not want to do business with you.
Research the process
You need to look at the transaction from an objective point of view. This allows you to make a better deal. There are several factors to bear in mind besides the price. Consider the physical condition of the house, the demand and supply dynamics in the region, the health of the overall housing market and how long the house has been on the market. Also, your resale motivation and seller motivation should be considered. Being informed helps you prepare for the negotiations. Besides, you will make a great first offer. Rarely will the first offer be the final price. it is usually just a starting point that opens up a room for negotiations.
You’ll receive a counteroffer after you make your initial offer on the house. The seller will let you know about unsatisfactory terms on your offer which are mostly related to contingencies or price. There may be several rounds of counter-offers and you need to prepare on how to handle those negotiations. Have your real estate agent help you with that if you aren’t a great negotiator. Above all, you have to remain calm and be patient throughout the process. Being impulsive will end up hurting you.
Danny Margagliano is a realtor with 30a Local Properties in the Panhandle of Florida. With over a decade of real estate experience he has a lot to offer his customers. Danny’s primary focus is helping buyers find the best condos for sale in Destin FL. He works alongside of his wife, Michelle, and his mother, Arlene. Together their team brings over 1/4 century of real estate expertise to the table.