Home Buying Tip: How to Make an Offer on a Home. Congratulations, you found your dream home! You have narrowed it down and made the decision that this is the home you want to make an offer on. Sounds easy doesn't? OK so what are you going to offer?
How much do you offer for your dream home? This is a great question. I want to start off by giving you examples of how some buyers begin this process and the questions / statements they make. See if anything sounds familiar.
- I will just offer the full list price. The seller must have known what they were doing when they priced the home. Didn't they?
- I will just offer X% less than the list price. I really do want the home but I don't want to pay full price.
- I want a steal of a deal. I will just offer XX% less than the list price. The seller is probably desperate and will take anything at this point. They wouldn't be selling now if they weren't. Haven't they been watching the news?
- I have no idea what to offer. And what about all of these other dates and choices. I don't know where to start.
What is the Offer and what does it include? The offer is not just how much you want to pay for the home but is made up many things. There are definitions or descriptions (property description, items included in the sale, terms of the payment or financing, property disclosure, possession, etc.). There are financial items (price you are willing to pay for the home, assessments, prorations, expenses, warranties, pre-closing repairs, etc.). Finally there are conditions for completing the sale (appraisal value, type of title, condition, inspections, repairs, dates, etc.). Aren't you glad you asked.
How is the price of a home determined? Home prices are set by home buyers not by the sellers or Realtors. That probably sounds strange but if you went to a store to buy a TV the prices for the TVs are determined by the manufacturer and the retail chain. The different manufacturers make thousands of the same TV and ship it to many stores. You can shop around the different stores to see who has the best price but it normally depends on the number of TVs the store sells and the agreement they have with the manufacturer. Each home is unique in some way which has a value. Even the same floor plan changes when built on a different lot or in a different neighborhood. The biggest thing that determines price is the amount that someone is willing to pay for the home where it is located.
This is confusing, as a real estate agent what do you suggest? I suggest that you ask your real estate agent to perform a comprehensive market analysis on the home you are interested in. Armed with this information you and your real estate agent can sit down and discuss the offer in great educated detail. Then taking the suggestions of your real estate agent you will instruct them in completing the offer for submittal.
Isn't that a lot of work? Yes it is but it is worth it. Your home is your largest asset and this is a big decision. I recommend this course of action because it allows you to make good decision based on the recent sales in the neighborhood. It eliminates stress by removing the feeling of paying too much or losing the negotiation because your offer was not considered.
Home Buying Tip: How to Make an Offer on a Home. As agents we have to educate, counsel, and then follow the wishes of our clients. In the end you will make the decision on what to offer. Please use the expertise of your real estate agent to make an educated and well thought out offer.
(Donnie Worley is a licensed REALTOR® with RE/MAX Real Estate Service. He is a husband and father living in Sanford, NC and serves Lee, Harnett, Chatham and Moore counties. If you have any questions or comments send them to donnieworley@ymail.com or call/text 919-478-4967)
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