Archives for December 2013

Step 3 of the Home-Buying Process: Make an Offer and Negotiate

3.1 Determine what you are willing to pay for a property

The buyer should determine the price they are willing to pay, not the broker.  However, a broker can do a market analysis of the area to make sure that the price is reasonable.  We will check recently sold houses to see what they sold for, how long they were on the market, and any other indicators of value.

Many buyers feel like they ought to go in with a really low offer and let the seller give a counter-offer.  This is usually not the best strategy, as many sellers will not see this as an opportunity to sell their house, but rather as an insult.  Although a buyer views each house as an investment, the seller may not see it the same way anymore.  They have made memories in that house and established emotional ties.  Make sure to take that into account with your offer.  If you insult the seller, they may decide to not work with you anymore.

The offer is more than just the price you are willing to pay though.  There are things to consider such as the amount of earnest deposit, down payment, inspection period, contingencies, and more.  The purchase agreement is an agreement that can be adjusted for many different factors.  Don’t worry though, that is why you have a broker.  We will help make sense of it all.

 3.2 Submit your offer

Once we have hashed out the details of your offer, we will submit it to the sellers.  There is usually an expiration period on the offer, so we will need to wait until the either the seller responds or the offer expires.

3.3 Negotiation

If the seller accepts your offer, then congratulations, you have just made a very important step to owning a house.  However, if the seller objects to your offer, they usually do one of two things… 1) submit a counteroffer, or 2) reject your offer completely.  If they have submitted a counteroffer, we determine whether it is acceptable or keep going back and forth.  Remember, negotiation is business, so don’t take anything personal.  We may just have to change enough features on the offer until both sides like it, or walk away if it is not reasonable.

If a seller rejects your offer outright with no counteroffer, there could be a number of different reasons.  The offer may have been too low, they could have changed their plans, or timing was just not right.  It is frustrating, but don’t let it get you down.  There are plenty of homes on the market to continue trying until one works.

Photo Credit: “Number Three on Train” by on Flickr. CC Licensed.