Making An Offer: Things You Need to Know

Making An Offer: Things You Need to Know


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making an offerHave you gotten goosebumps when you walked into an open house? Have you found the home of your dreams? Have you looked at the pros and cons of multiple homes and finally decided on one? The next steps you take are critical, no matter how you picked the house. Here are the things about making an offer that you need to know.

1. Analyze Your Market Before Making an Offer

You should look for homes that are a similar size and have sold nearby recently because they can help you determine a fair price when making an offer. A good real estate agent can find these “comparable homes” for you. They can also talk you through the dynamics of pricing and market. Together you can work to figure out an offer strategy that will leave you some wiggle room for negotiation.

2. Be Willing to Negotiate

You need to understand that sometimes making an offer on a home is a psychological game. You want to get the home as inexpensively as possible without losing the house. However, the seller wants to make as much money as possible on the home without driving you away. So where should your first offer start?

One rule of thumb is 5% below the asking price, but market conditions are a big factor in how much wiggle room you have. You also need to keep your budget in mind when making an offer. Finally, you need to set a maximum amount for the highest you are willing to go.

3. Be Prepared for a Bidding War

You won’t be getting a deal in a competitive market or in areas where attractive listings are rare. In these cases, the highest offer typically wins out. However, you might be able to get an edge by being the first to make a solid offer.

4. Make a Formal Offer

Your agent will write up a formal offer for you to review once you and the seller agree on a price. This goes to the seller’s agent to review. A cash deposit, also known as “earnest money,” is usually required as a show of good faith. This money sits in an escrow account until the closing and eventually goes toward your down payment.

Your formal offer should include the terms and conditions of the purchase. It also needs to state how you plan to pay for the home as well as any contingencies. When making an offer, contingencies will give you an out in case something unexpected happens.

5. Hire a Real Estate Lawyer

You will need a real estate lawyer to help you after making an offer until closing. They will help you negotiate any issues throughout the course of the home inspection and securing a mortgage. Always work with a lawyer who has a track record of working with buyers, as well as one that promptly returns phone calls.

6. Don’t Fall in Love

This can be the hardest step in the house buying process. You should prepare to be disappointed because counteroffers are pretty common, as well as rejections. Remember, even if the seller orally accepts your offer, they can still entertain and accept other offers. Issues could even arise after you have signed the contract.

At Affiliated Home Solutions, we have years of experience helping home buyers when making an offer. We understand the market and the needed tactics for the market. Give us a call today and let us help you find your dream home.

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