Buying Your First Home In Washington, DC: The Art Of The Deal - Part 5 Of A Series
When you find "The One", your Realtor's® job is to make it happen. This is where a great buyer brokers earn their keep.
The first step is to prepare the paperwork for your offer. In the Washington area, your agent will work with you to put the offer together using boilerplate forms provided by our local board of Realtors®. And as you go through to fill in the blanks, it's time to kill a tree! Our forms run from about 35 pages on up.
This document will govern the price and terms of your home purchase. And how negotiable the seller might be will depend on a bunch of factors:
- Are you the only offer on the table? If your not, a lot of your negotiating power goes down the drain. And even in this market, the good houses that are well-priced are sometimes attracting multiple offers. This is one reason for acting quickly once you find your Dream House, because the longer you wait, the greater the chances are that other buyers will be in there bidding against you.
- How long has it been on the market? It's usually easier to get sellers to lower their prices if it's been on for a while. It's usually hard to get the owners of a brand new listing to take a huge price cut, even though they may have to lower their price even lower than your low ball offer in a few months.
- How does the price compare to recent sales of similar homes in the neighborhood? And I mean recent - not last year or the year before. Last month, maybe. Your agent can prepare a market analysis for you to give you an idea of how it stacks up against the comparables. If the numbers make the list price look high, even if it is a new listing, it's probably worth trying to make an offer with a price supported by the comps.
- What do you know about the sellers' motivation to sell? Is it a transfer? Is the house empty? Is it a happy move or a sad one? All of these factors can have an impact on how the sellers will respond to an offer.
- What did they pay for it, and will they have to bring money to the table if it's worth less than their mortgage balance? There are a lot of sellers clinging to the hope that they can get just enough to pay off the mortgage, without regard to the home's actual value. This type of seller might just have to sit on their place for a while before they see the light.
Then there are the terms that can make a contract attractive, even it the price isn't ideal:- Offer to settle at a time that is most convenient to them.
- Accompany the offer with a large earnest money deposit.
- Keep the offer as "clean" as possible with few contingencies that give you the opportunity to get out of the deal. Those that you do include (home inspection, appraisal, etc.) should be as short as possible so the sellers will know they have a deal within a week or two of signing the offer.
I always call the listing agent to ask what terms the sellers might need. When do they want to settle? Do they need anything like a post settlement occupancy period. Whatever it might be, I try to work their needs into the offer whenever it works for my buyers.
Once your agent delivers the offer to the listing agent and the sellers, they will have three choices:
- They can sign the thing, meaning they have a done (or pretty done) deal.
- They can do a Broker Bryant and TLW thing and nail it to a tree and shoot it.
- They can make a counter offer.
In this market, I've seen offers and counter offers go back and forth a few times before they finally work. You have to stay patient and remember that old bit of negotiating wisdom: if both sides are less than totally happy with the final product, you both got a good deal!
Next: Part 6: Buyer's Remorse
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