Making an offer to purchase a home has its own set of factors. Rely on a Level5 Realty Agent’s experience and knowledge to make a successful home buying offer
Once you’ve found your ideal house, it’s time to get started with the financial and contractual side of the purchase. Let your Level5 Realty professional guide you through this process. Purchase contracts vary in length and terms from state to state, and sometimes within a state.
Multiple offers on the same home are not uncommon, so you may only get one chance to make an offer that the seller will consider. That’s why it’s important to think carefully about your strategy. In most cases it is better to have your real estate professional present the offer. If you have any personal interaction with the homeowner, avoid sharing any information about your move, your current housing status, financial status or your feelings about their property – positive or negative. This could work against you in future negotiations.
TIP: You and the seller have different goals, so it’s important to consult with your Level5 Realty Agent. He or she can bring order to the process, and will know what questions to ask to help you reach a desirable outcome.
Making a purchase offer and actually buying a home are generally two different actions, but home buyers sometimes confuse the two. Especially in states such as California where the purchase offer is not the final negotiation due to contingencies in contracts.
In some states on the East Coast, it is common to write a letter of intent to purchase and, in many ways, it seems the more civilized way to buy a home. However, many other states contain provisions in standard purchase contracts that let a buyer cancel the contract and get back their entire earnest money deposit.
If the home you are thinking about buying is likely to quickly sell, and if you have a way to later cancel the contract, you should immediately make a purchase offer. Don’t sleep on it or try to get every single question answered beforehand or you may very well lose the home. Somebody else could beat you to the draw and steal it out from under your nose while you’re busy weighing the pros and cons.
If you like the home, odds are several other active home buyers will, too. You’re not the only smart cookie in the marketplace who can spot an excellent buy. And no, losing the home doesn’t mean it was “supposed to be that way.” Consider instead that you were supposed to buy it, and you messed up.
When a home seller accepts a purchase offer, the seller is hoping the buyer will complete the transaction at the price agreed upon and believes there is nothing wrong with the condition of the home. The home buyer, on the other hand, is hoping the transaction will close because the home is in A-1 condition and perfect. It’s rare that either of those expectations is in line with reality. No home is perfect and many conditions can change once a contract is accepted.
* Buyers often submit repair requests.
* Low appraisals can threaten to blow the deal.
* Mortgages can be denied in underwriting.
In seller’s markets, almost every home sells within 30 days. In buyer’s markets, the DOM will be longer. There are many inherent characteristics and qualities that determine whether homes are likely to sell fast, but these are the top two combinations:
* Turnkey homes in high-demand neighborhoods, excellent condition, and priced right.
* Cosmetic fixers in good locations and priced below comparable sales.
If the home you want to buy falls within those two categories, you should quickly make a home offer, providing you retain cancellation rights.
Some real estate agents do not like to waste time writing an offer that a buyer might later cancel and will try to dissuade you from making an offer to purchase. Some might not even disclose to you that you have a certain number of days to change your mind. Don’t hire an agent who doesn’t have your best interest at heart.
The obvious reason to make a purchase offer right after finding a home you love is you will prevent anybody else from buying it. When the seller accepts an offer from you, the seller cannot accept another, except a backup offer, good only if your contract is canceled by you.
If your offer is first and sole, you can negotiate on price and terms. You can make a lowball offer. Your negotiation power is minimized if there are multiple offers.
Even if other buyers are interested, they will generally slink away once the seller accepts an offer, opening the door for your re-negotiations, if any, after the home inspection.
If you’re undecided between two homes and go into contract on property A, property B might not be available if you should change your mind and cancel the first transaction.
Return of an earnest money deposit is not automatic. Both parties are required to sign cancellation instructions. In California, for example, a seller can delay signing for 30 days, without penalty, an authorization to return the good faith deposit.
Buyers can incur appraisal, credit report and home inspection fees that are non-refundable. Generally, title policy/escrow and other closing costs are waived upon cancellation.
Given the alternative of losing the home you want, however, it is advantageous to learn from the mistakes of others who have lost opportunities — because they were hesitant to act with urgency — instead of learning this painful lesson yourself.