The Art of the Deal – Knowing How to Make an Offer
So you’ve been shopping for a home, and you’ve probably looked at so many that you can’t wait to get it over with. You think you’ve found the one, but you’re not sure, so what do you do? This is where things get complicated, and where making a home offer can be scary.
What happens if you lowball them and someone else gets the home? What happens if you pay too much?
These are legitimate questions, so let’s try to work through them, one at a time.
1. Is this the right time?
Before you even make an offer, you need to make sure that this is the home you want. Most home buyers say they know it when they see it, but try to be as rational as you can. From there, ask your Realtor to perform comps to see what they think the home is worth. Usually, the home will be listed for more than what it’s worth, but that doesn’t mean you can lowball the offer.
2. Are you pre-approved?
You will probably need to fax a pre-approval letter with your offer in order to prove that you’re serious. If the offer is accepted, you’ll also need to pay a small fee, generally called an escrow, which might be as much as 10-15% of your offer. This is something you need to have ready to go.
3. Is the home in obvious disrepair?
When making an offer on a home in need of repairs or modifications, append these requests to your offer. Generally, it’s better to ask for too much and get rejected than pay too much and miss out on a good deal. Depending on your area, you can negotiate closing costs, repairs, furnishings, home warranties, and even allowances for future repairs.
Make sure that your offer is contingent upon inspection, otherwise you risk being mislead or being stuck with a repair bill after the deal is done.
5. Offer price
This is your money, and it’s a lot of it, so don’t be afraid to lowball the seller if you think they are asking too much. That being said, be smart, and put yourself in their shoes. Maybe they have a lot of offers, and you’ll have to raise yours in order to get the seller’s attention. Also, maybe they aren’t motivated, and will only accept offers in their price range. These are things you can’t necessarily know ahead of time, but they are worth considering.
If you’ve worked through these five steps, you should be prepared to make an offer, but before you do, make sure to use our mortgage calculator to double check your numbers. Using the mortgage calculator, you can make sure that your offer is at a price that you can afford. You will also get free access to a list of local mortgage lenders, where you will be eligible for five free mortgage quotes. If you aren’t sure if you have the right deal, then it’s smart to double check and make sure, especially with so much money at stake.