Strategy for Making an Offer on a House

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Someone purchasing a home may not have coined the term “emotional roller coaster,” but it sure fits the process. It’s one big up-and-down affair. Looking for a house is fun and exciting. Making the final decision to purchase a particular house may be fraught with doubt. Making an offer on a house may be downright terrifying.

While there are common elements in every home purchase, not all transactions are the same. Some are more complicated while others hum along smoothly. Carefully crafting your offer on a house is a big step toward humming down the purchase highway.

Evaluate Price Before Making an Offer on a House

Deciding how much to offer the seller of a home is one of the most confusing parts of the home buying process. Many factors influence home values, and there’s a fine line between getting a deal and lowballing to the point of insulting the seller and closing off the possibility of future negotiations. In a fast-moving market, price becomes even more important - there’s always that chance that someone else has a more attractive offer. Here are some things to think about to help you determine a fair offering price:

  • Ask your real estate agent to compile a comparative market analysis (CMA). This is the same research the listing agent performed to help the seller determine her asking price. A CMA concentrates on recently sold homes in the area. With it, you can compare the house you want to buy to those sold and determine if the seller’s price is in line with current market conditions.
  • Learn as much as possible about the seller's needs. This may be challenging, as you and your agent may not have direct access to the seller. Your agent can ask questions of the listing agent, but he is under no obligation, and may be in violation of his fiduciary duty to the seller, to divulge personal information. A pending divorce, job transfer or death of one of the owners are conditions under which the seller may be laboring and prompt her to sell the house quickly. The motivating factor for the seller determines how willing she is to negotiate price.

Understand the Terms of the Purchase Agreement

Real estate purchase agreement forms and processes vary throughout the country on a regional basis. All of these forms, however, are legally binding contracts. While your main concern may be the price you are offering, pay close attention to the terms of the contract. Have your real estate agent or attorney explain anything you don’t understand. Never sign the papers unless they include your true intentions and you have a full understanding of every word. Some items to pay close attention to include:

  • financial concessions you would like the seller to make, such as paying closing costs, or cash back for required repairs
  • date on which you'd like to close and take possession
  • financing contingencies (such as being able to get a mortgage at an acceptable rate)
  • home inspection contingencies, pest report contingencies, etc.
  • personal property to be included in the purchase (such as appliances, window treatments or patio furniture)
  • your proposed selling price and earnest money deposit

Use the Counteroffer to Your Advantage

Ah, the negotiating process. While the absolute worst news your agent can give you is that the seller declined the offer, the second worst is the counteroffer. While you may have considered your offer to be reasonable, fair and in line with current real estate market conditions, the seller may think otherwise. Sometimes, however, counteroffers are used to change terms, not price. Perhaps the possession date needs to be changed, or maybe the seller has decided not to include some of the personal property you’ve requested.

So, the counteroffer isn’t necessarily bad news. Think of it as yet another bargaining chip. Don’t be surprised if your counter back to the seller results in a counter-to-the-counter-offer situation. This is, after all, what negotiating is all about.


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