Now, once you have seen enough houses to feel like you have a handle on what you want and what your price range will get you and you finally find the house that you think is going to be a perfect fit, it is time to discuss how to make an offer. The house looking part might be the most fun, but this is where I get the most excited. I love a good negotiation and when it comes to writing an offer on a piece of real estate, that is where it really gets fun.
The first step to writing an offer is to figure out where your negotiation position is. You figure that out by asking a few questions:
Is the house a short sale, bank foreclosure or being sold by a traditional seller? Short sales can be priced aggressively to compensate for the rigors of dealing with a short sale or it may show it is available, but really have several offers on it already. That can effect whether it is worth your time to make an offer or how aggressive you have to be about your offer and what kind of offer you give them to satisfy their mortgage. Bank foreclosures sometimes have date specific requirements such as HUD houses that are only offered for sale for the first 10 days and then take the highest offer on the 10th day. There is no rush there unless you happen to look at it on day 9 and the offer price is pretty important because they almost always price them well below market and typically get lots of offers so your competition is steep.
How long has it been on the market? If you are looking at a house that is brand new on the market and it is price well, acting fast can be critical. If the house has been on the market for 4 months, it might not be as big of a deal. Also, if the house has been floundering on the market for several months it may indicate some room for negotiation on price if the sellers are motivated.
Have there been any recent price reductions? Again, an indicator of pricing flexibility and seller’s motivation.
How aggressive is the current market? If you are looking at houses in December, there may not be near as many buyers out there looking and competing for the same houses as say if you were looking in April or May. We have certain parts of the valley here in Salt Lake that are almost always hot, especially in certain price ranges and that will often times require a buyer to be ready to offer right away.
Is the house priced well for the area? I can usually get a pretty good idea on most houses after seeing it and after looking at houses for a few weeks you will likely have a pretty good idea yourself, but if we need to know for sure, I will often pull up recent sales in the area just to get a good handle on whether they are overpriced, at market or even aggressively priced for the area. This will also give us a good idea of how motivated the sellers are, where we might want to offer on price and how quickly you need to act.
Do we know anything about the seller’s position? Sometimes, if I can get answers to the right questions from an agent of seller or if we get indications from homeowners if they are present when we see it, we can get an idea of how motivated they might be. It doesn’t happen often and doesn’t always yield results, but it’s handy if we can get it.
Are we coming up on a holiday or a weekend? It can make a difference as to how quickly we act, how much time we give the sellers to respond etc.
Once we get answers to as many of these questions as we can, we are armed and ready to contemplate what you need to offer, how aggressive you need to be and how quickly you need to act. These factors can determine whether or not your offer gets accepted so it does make a difference and if always the best place to start from.
At this point I will sit down with you, answer your questions, explain the process and we will make some decisions on what kind of offer you want to present to the sellers. We then go through the contract and proceed to design the offer and fill out the paperwork. There are lots of important details to this part of things that I won’t get into here, but suffice to say, this is one of the biggest reasons why you hire a Realtor to work as your buyer’s agent. This is where the good stuff happens and having an experience agent to walk you through all the details and decisions to be made is absolutely crucial.
Once we get your offer put together just the way you want it, I will then present your offer to the seller’s agent of the seller themselves. In days gone past we could actually present your offer to the sellers in person, but in today’s world of electronic communications and anonymity, that isn’t really done anymore. I usually email the offer to the buyer’s agent along with a well thought out message to the seller’s. Not to pat myself on the back at all, I have actually been told that the information and story I told in a particular offer was the reason that the seller’s decided to accept our offer over another. I say that only to show that it does matter and the right presentation can make all the difference. At this point, we wait to get the seller’s response to your offer. Sellers can respond one of 3 ways; they can accept your offer as-is, they can reject your offer or they can counter your offer with adjusted terms of their own. My favorite is writing a really solid offer at the outset and having the seller’s accept our terms without any dickering at all, but a counter offer is fairly common and not anything to be concerned about. They may want to negotiate the main point of focus to any offer, the price. Or they may request more time to get moved out, or decide they didn’t want to include that antique mirror in the hall after all. It can be anything and in reality almost everything is up for negotiation. Having said that, it is always a better plan to keep your offers as clean and as straightforward as possible. A happy seller is so much more pleasant and amenable when it comes to things like inspection requests and move-in dates when we haven’t run them around in the beginning negotiation’s too much.