So, you’ve found your ideal neighborhood, drawn up your dream house, decided on an agent, become preapproved for a loan, shopped around town to see what’s on the market and have finally found the right home for you! Now it’s time to get to the nitty gritty of writing an offer, but where should you start? Our expert real estate advisor Jim Droz clued us in on what steps to take when you’ve decided on the one.
1. Be sure you are 100% committed to the property of choice. Understand that by writing an offer, you are creating a contractual obligation between yourself and the seller.
2. Make sure you have your loan ducks in a row. In other words, that you have the coveted preapproval and have talked with your lender about moving ahead with the next step in the loan acquisition process.
3. Ensure that you have the ability to have a home inspection done and to approve of the results. The inspection period usually lasts seven to 15 days, during which you can rescind your offer if something is defective or make the offer conditional on repairs, etc. We will talk more about the importance of a home inspection in next week’s installment.
4. Now comes the actual offer writing. The number one thing to remember when writing an offer is to make sure it’s fair. Low balling, although more feasible in some circumstances (including if the home is vacant, the seller lives out of state, the home is in bad condition or has been on the market for a long time), usually results in a higher selling price. This is because once a lower-than-listed price is offered, a business decision turns into an emotional one for the seller. This rings especially true if the seller feels insulted (which automatically means game over). Also, don’t calculate your offer based on a certain amount of dollars per square foot—you need to take everything into account, from renovations to lot size. Furthermore, don’t take a standard percentage (e.g. 10%) off of the listed price to create your offer price; remember that all sellers are different, and therefore their motivation for selling varies too. In short, the amount you end up offering will be dependent on both the physical state of the house and the emotional state of the seller.
5. Exercise care when dealing with service companies (including title and escrow businesses). If you don’t, the exciting experience of buying your first home may transform into a complete hassle.
6. Make sure to provide your agent with as much background and personal information you deem necessary in order to make the offer more intimate. Ensure that s/he passes on this information to the selling agent and to the seller.
7. Also provide proof of funds and your preapproval form with your offer. You can even include a hand-written note with the rest of your paperwork, detailing why you are the best buyer for the home, what you love about the house and how the purchase of the home will improve your quality of life.Newbie Home Buyers Series, Part 6: Writing an Offer for the Right Home by Lolly Spindler