Home Buying in Plainville>Question Details

Denise Mchugh, Home Buyer in Stoughton, MA

how do i go about making a reasonable offer on a townhouse?

Asked by Denise Mchugh, Stoughton, MA Tue Jan 25, 2011

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There are several resources online that will help you prepare to make an offer on a home. Freddie Mac & HUD have many helpful tips and resources that will prepare you to make an offer, http://www.freddiemac.com/corporate/buyown/english/purchasin… A real estate professional can provide you with market statistics and recent sales comparables to help you make an informed decision. Feel free to email me for a buyer’s checklist at greg@novelre.com.

1)Homes Under Agreement, Sold & Market Statistics

Before making an offer, buyers should ask their real estate professional for the latest market report on the area. Buyers should know what homes are selling for, as well as what homes are under agreement. If you hear the term “under agreement” or “under contract” that means the house has a signed contract or offer between the buyer and seller, but they have not executed a purchase and sale agreement. This gives the buyer the opportunity to do their due diligence. Many offers have contingencies, such as a home inspection contingency.

2) Low-Ball Offers May Create Backlash

It is not uncommon for buyers to submit low-ball offers in a down real estate market. The caveat is that the low offer may offend the seller and they may decide they would rather sell to someone else. I had a client that submitted a low-ball offer that made the seller so upset that they refused to do business with my client. After several conversations with the sellers broker, the seller did eventually negotiate with the buyer, but it took well over a week for negotiations to recommence.

3) Review Contingencies with Your Real Estate Professional

During the offer process, you should speak to your broker about contingencies that should be built into the contract. Common contingencies in Massachusetts are home inspection and financing. It is essential to have these contingencies built into your offer, so that you can back out of the contract should the house have serious issues or if you cannot get financing. You do not want to be stuck with serious structural, systems, or other expensive home repairs. If the home inspection reveals expensive repairs needed and you still want to buy the house, then you now have the leverage to offer a lower price, with the home inspectors report as your ammunition.

4) Property History

Ask your real estate professional to gather as much history on the property as possible. It would be nice to know the age of the appliances, hot water heater, roof, HVAC, electrical, and other high ticket items that come along with home-ownership. I tell my clients to budget for appliance repair and replacement in their first 2 years of owning their new home. This way when a hot water heater bites the dust, you have a little bit of extra cash socked away to cover the cost.

5)Review Personal/Family Budget

This is a good time to review your personal/family budget. Ask your real estate professional to give you a quick update on mortgage rates. Here is a link to Ginnie Mae that will help you calculate the mortgage payment you can afford:
http://www.ginniemae.gov/2_prequal/intro_questions.asp?Secti… You can also visit http://www.bankrate.com/ for a rough idea on rates. Feel free to email for a free family budget spreadsheet.

6) Get Pre-approval Letter
When a person/family decides they want to purchase a new home, then they should start the process of looking for a lender. It would be wise to have a pre-approval letter in hand before you start to make offers. The pre-approval letter gives the buyer more leverage; because the seller knows that the bank has reviewed the buyers financials and are willing to lend them the money. It is a good idea to have your real estate professional, mortgage broker, or lender inform you often about current mortgage rates. I recommend working with your real estate professional or mortgage broker to get quotes from several banks. Below is a link to the HUD website, which has an informative brochure on getting the best mortgage. http://www.hud.gov/buying/booklet.pdf
Concessions & Conveyances
Think about what concessions you would like the seller to pay for or offer. For example, you may want the seller to pay for closing costs or a portion of the closing costs. You may want to ask for appliances to be a part of the sale. Make sure you put these in writing and in the offer.

8)Offer Price

Keep in mind that the seller may counter your offer with a higher price. Consider what is the most you are willing to pay for the property. It is a good time to review the sales comparables and homes under agreement with your real estate professional to ensure you are not overpaying for the home.

Remember, if your offer is accepted it becomes a legally binding contract, so think carefully about what you want and what you can afford.
0 votes Thank Flag Link Wed Mar 2, 2011
I always suggest writing into offer "Subject to appraisal at or above sales price". It may seem implied, but your mortgage contigency clause does not always cover this. Also spell out everything to be included regarding appliances and fixtures in the offer.
0 votes Thank Flag Link Thu Jan 27, 2011
Get an exclusive buyer broker and they can help you draft an offer and protect your interest from start to finish.

http://territory.com
Web Reference: http://territory.com
0 votes Thank Flag Link Wed Jan 26, 2011
get a buyer's agent. there is no advantage to making an offer through the list agent unless YOU are going to get a better deal, which usually isn't the case.
0 votes Thank Flag Link Wed Jan 26, 2011
Denise,
As my colleagues below have suggested, working with a buyer's agent is important. He or she can look at sales of comparable properties to determine a value for the property. Also, your buyer's agent can work with you on a strategy for making that offer - determining where to start, what your high point is and the best approach to handle those negotiations. Once you come up with an offer amount, your buyer's agent will write up the Offer for you and submit it to the listing agent, who will then present it to the Seller.
Good luck!
Christine
0 votes Thank Flag Link Wed Jan 26, 2011
Hi Denise,

I think my colleagues covered the basic idea of how you need to proceed. Find yourself a buyer's agent if you don't already have one, and ask him/her to do a Comparitive Market Analysis (CMA) on the property you are interested in.

A CMA takes into consideration properties that have sold recently that are comparable to the property for sale. Using this data, you'll be able to get a general idea of what the home may be worth. Then you can proceed with your offer.

Of course there are many other considerations that will play a role in how much you offer, which is why a competent buyer's agent is recommended.

Happy hunting,
Akop
Web Reference: http://www.vchousehunt.com
0 votes Thank Flag Link Tue Jan 25, 2011
Good Evening. In purchasing a home whether it be a condo or a single or multi family home it is most important to look at the homes in the vicinity or complex which have sold within the past six months, the closer the better. I would not use the assessed values of a property as an assessed value is based upon past history usually eighteen to twenty four months ago. With our current climate of housing stats I feel this is too far back into history to accurately predict a fair market value of a condo. Along with the past data on pricing you would likely compare on a townhouse placement in the condo complex as well as which amenities this condo has in comparison to your past sale data. Also please keep in mind just because two condos are for sale in the same complex does not mean they have the same square footage, one may have an extra bath or a half bath, an additional bedroom or loft and more. I presently have a condo listed in Plainville, we do have inventory to compare to inorder to establish a fair market value of the condo for sale. The condo I have listed is well below the past comps as it is a short sale and does need third party/lender approval to go forth with the sale of this condo. Plainville is a great community and offers you a handy commute to Boston or Providence, should you need further assistance, please do not hesitate to call on me. I will be in Plainville this coming Saturday morning.

Regards MaryBeth Mills Muldowney
0 votes Thank Flag Link Tue Jan 25, 2011
Denise--that is a good question to ask. You don't want to offend the seller by making an offer that is not reasonable, as that could make negotiations more difficult. If you know what similar properties in the area have sold for, you can get an idea of what this property is worth. You can find this information on Trulia. Once you have this information, you can decide if the asking price is reasonable, and then decide what you are comfortable offering. A buyer's agent can help you through this process, at no cost to you.
Good luck!
Best,
Fran
0 votes Thank Flag Link Tue Jan 25, 2011
Hopefully you are working with a buyers agent, who can pull comps and help guide you through what fair market value is on the condominium. So I would suggest:

-Make sure you have a strong pre-approval.

- Determine fair market value of the condo.

- Put a negotiation plan in place, taking in to consideration your risk tolerance in losing the property, the competition for the property, what you are ultimately willing to pay for the property and the other strengths of your off (all cash, quick closing, etc.....) All of these are very individual to a buyer. If you have looked at 40 properties and u love this one and are afraid of losing it, don't play around with price give them fair market value or close to fair market value....... if you want the best price and you would have no regrets over negotiating hard and losing the property start negotiations 10-15% off of fair market value.

- Write your offer and have your agent submit.

One things buyer's need to remember is that just because you have tendered an offer, it does not mean some other buyer can't come in and scoop the property from you. A property is not taken off the market until an offer has been signed by both buyer and seller. Until it is, anything can happen.

Good luck!!
0 votes Thank Flag Link Tue Jan 25, 2011
Denise,
the first thing you need to do is to make sure you are working within your budget or very close to it. Second, try to figure out your monthly payment including taxes, insurance and condo fees, if any, then work with a monthly payment you are comfortable with. That is the most important thing. I've seen many people focus on a sale price and then struggle with monthly payments once everything is added. You can then get your buyers realtor to give you a report on recent sales comparable to yours so that you get a better understanding of value. If you need further assistance you can contact us
Web Reference: http://www.wenrealty.com
0 votes Thank Flag Link Tue Jan 25, 2011
Denise,
a. hire a buyer's agent (in case that you do not have one, it will be no additional out of pocket cost to you)
Screen a few of them and find out who is the best fit for you
b. Ask your buyer's agent to provide you with a CMA
c. ask your agent if they have any personal opinion in reference to those sold listings and the listing that you want to put an offer
and then you will have a reasonable offer.
Best regards,
Yannis
0 votes Thank Flag Link Tue Jan 25, 2011
Consult with a local Real Estate Agent.
The agent will be able to advise you of recent comparable sales in the general vicinity.
With this information and an idea of the condition of the property you should be able to make a reasonable offer. And if you are not being represented by an agent; you should be so that a contract protecting your interests is in place.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Tue Jan 25, 2011
Do you have a Buyer's Agent? If not, now is a good time to contact one. A buyer's agent does not cost you a penny - they are paid by the seller., and s/he can come up with comparable properties that have sold recently, and figure out the true market value for the property, as well as put together a well-written offer. Remember, as Agents we write contracts and offers for a living and a good agent will get as many details into the offer as s/he can. If you need help, feel free to contact me at 617-340-3986
0 votes Thank Flag Link Tue Jan 25, 2011
are you working with a realtor as your buyers agent?
0 votes Thank Flag Link Tue Jan 25, 2011
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