We provide some advice for first-time and experienced home buyers on how to make an offer that is acceptable to all parties concerned.
You’ve found the home of your dreams (or near enough) and you’re dying to close the deal so you can move in, but first you have to complete one of the most important steps to buying a house: You have to make an offer.
The question is, how do you go about it? After all, the offer has to be too good to be refused, but you don’t want to pay too much in the process.
Know what is reasonable and fair.
The seller wants to get the best possible price for their house, but you, as the buyer, want to keep the price as low as possible. The trick to balance both of your needs is to get an accurate idea of what the property is really worth.
To do this you should do three important things:
Get a comparative market analysis (CMA). Tepilo or your current estate agent can carry out the CMA on your behalf so you don’t get lost in a maze of property jargon and statistics. Essentially, what you’re looking for is how the property you’re interested in compares to other similar properties in the neighbourhood. Factors include square footage, the number of bedrooms and bathrooms, sold prices vs. list prices and average sales prices. The end result is an accurate estimate of the property’s true value.
Hire a professional surveyor and appraiser. Estate agents, such as Tepilo, offer valuations, and professionals have a better eye for features and flaws and can weigh them against each, which, when combined with knowledge of the current and local property market, can be used to provide a very good idea of the home’s worth.
Conduct your own inspection. Do all the invasive things that experts recommend you do, like open and close all the cupboards and doors, try all the lights, look under the sinks and basins – be really nosy. Yes, you might feel like you’re invading the seller’s privacy but if you’re going to hand over a small fortune to buy the house, you need to know that the doors don’t stick, that the cupboard shelves aren’t rotting, that the electrical wiring is good and that the pipes don’t leak.
Now that you know what the house is worth you can put a price on it. According to Audrey Arkins of First time home buyers tips, homes tend to sell for about 6% less than the asking price. The CMA will help you see if this is true for the houses in the particular area in which you intend to buy. Perhaps the houses in the area fetch prices that are only 4% less than the asking price or maybe it’s a buyer’s market and they sell for 8% less than the asking price. They might even sell at more than the asking price, if it’s a strong seller’s market. That’s why research and preparation are so important.
If you find that your offer needs to be on the upper limit of your budget (which you should never go over), you can always request some reasonable terms, such as a contribution to closing costs or a warranty on certain fixtures and appliances.
Should you start off with a low offer?
Tara-Nicholle Nelson of FrontDoor.com, recommends that you make your first offer your best offer. It shows sellers that you’re a serious buyer and is less likely to result in a counteroffer cycle, which can be frustrating and tedious. However, she says that you should never offer more than the property’s value, which again points to the importance of research and preparation.
Other schools of thought favour the lowball approach. This works best in a buyer’s market, so use it with caution. If you go in too low, you might be dismissed as pushing your luck and your intentions as a serious buyer will be questioned.
Make a good impression.
If you can get the seller to like you, they are more likely to accept a borderline offer, accept your terms or favour you in a bidding war. So, you not only have to be friendly and polite and make their kids laugh and their pets beg for your attention, but you also have to compliment their home, ooze love for it and overflow with admiration. Sellers can be sentimental creatures; they want to know that whoever buys their property will love it and care for it as much as they have. Pluck their heartstrings, acquaint them with your family and show them exactly why their house will never be in better hands than yours.
Submit a written offer.
To make it all official, you need to submit a written offer. Tepilo’s state-of-the-art ‘offers system’ does this all for you. It also asks you to confirm your position and your chain details. All in one place. To meet certain legal requirements, the formal offer to buy a home must contain certain information; such as the address of the property for sale, the offer, additional terms, to name but a few. Your agent will organise this and any other detailed information that is required.
Don’t be disheartened if you receive a counteroffer. Talk with your estate agent and discuss whether it’s reasonable and you can enter negotiations. Again, Tepilo can do this on your behalf. Don’t be afraid to withdraw your offer if the seller isn’t willing to meet your most important terms or if negotiations become drawn out. You’re legally entitled to do so, but it might be a good idea to cover your bases with your estate agent or solicitor.
Making an offer is the single most crucial process of buying a house, so get all of your ducks in a row before you embark on this important step. Your estate agent is there to help you through the process, so don’t be afraid to rely on their support. Remember, you don’t have to do it alone that’s what we are here for.
Good luck and happy house hunting.
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