Once you’ve found the home you wish to purchase, you’ll need to determine what you are willing to offer. There are several basic negotiating strategies:
• You can make an offer slightly below the price you’re willing to pay to allow room for a final counteroffer from the seller: this strategy works best in most cases.
• You can make your best offer and hold firm: this strategy works best if you’re sure of the home’s value and of your price limit, and you can walk away from the home if the seller counters or refuses your offer.
• You can make a low-ball offer: use this strategy only if you’re not in love with the house and can walk away from it, because if the seller feels insulted, he/she may simply refuse to negotiate. If you want to make a low-ball offer, it’s not enough to pull a number out of the air. You should be able to show that, compared to other comparable properties in the neighborhood, this property is priced far above market value. That gives you an objective base to begin negotiations.
Your Realtor® should do a market analysis to guide you in making an offer that is neither too low (and will be rejected) nor too high (you don’t want to overpay!). Also remember that “terms” are a big part of negotiating an offer. The sellers may be willing to accept a lower price if they can get the closing date they need. Your offer will also contain any contingencies, or conditions that have to be met, such as the inspection contingency, finance contingency and appraisal contingency.
When you write an offer you should be prepared to provide a pre-approval letter from the lender you have decided to work with, and to pay an earnest money deposit. The earnest money will be held in a Broker’s Trust Account and be credited toward your total sale price.
After your Realtor® presents your offer to the seller, it will either be accepted, rejected, or countered. Depending on the seller’s response, you may have to further negotiate the price and terms of the offer, or you may end the negotiations.
This step-by-step procedure for most home purchases is standard, and the Purchase Agreement used is a standard document approved by your local Board of Realtors®.
The purchase agreement constitutes your offer to buy the property. It becomes a valid legal contract once it is signed by the seller and delivered back to the buyer or the buyer’s representative. For this reason, it is important to understand what is written in the contract. Expect to spend from 1-2 hours writing the purchase agreement, to assure that you understand all the terms and conditions.
Janet Contursi has been a Twin Cities Realtor® for more than 10 years. She is expert in all types of residential real estate, including short sales and foreclosures, and she especially enjoys working with first-time buyers and sellers. Contact her at (612-655-1207) or: realtorjanet@msn.com
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