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 â€œunder agreementâ€ or â€œunder contractâ€ 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.
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.
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.
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.
Regards MaryBeth Mills Muldowney
-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.
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
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.
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.