Buyer Resources - Articles

Buying Your Home - Making an Offer

Deciding to make an offer

Once we have determined which neighborhoods you are happy with and have selected a home or homes that would fit your family well, we prepare to make an offer to buy.  I will do a thorough Market Analysis of the home and its neighborhood including a history of the house's sales going back up to 12 years.  We check the home's tax records and include that information in our market study as well.  We then determine the home's range of value and decide what you are willing to pay for the house.  If the market is "hot", which it is now, and the list price is within the range of value, we make a very strong offer to get our foot in the door.  If the house is priced above its market value, we can negotiate quickly to try to get its price withing the range of value.  If we cannot get any price movement from the seller, it will be your decision as to whether or not to continue pressing for a reduction, pay the seller's price, wait to see if the seller may change their mind, or walk away.  Homes right now are selling very quickly. 

Can you buy homes below market?
While a typical buyer may look at five to 10 homes before making an offer, an investor who makes bargain buys usually goes through many more. Most experts agree it takes a lot of determination to find a real "bargain." There are a number of ways to buy a bargain property:

*Buy a home that has been on the market for a very long time with a seller who is beginning to get scared of the market.

*Buy a fixer-upper and improve it.

* Buy a foreclosure property (after doing your research carefully). 

* Buy a leftover spec house in a new-home development.

What is the difference between list and sales prices?
The list price is the price the seller would like to get for the property. The sales price is the amount a property actually sells for. It may be the same as the listing price, or higher or lower, depending on how accurately the property was originally priced and on market conditions. 

Are low-ball offers advisable?
A low-ball offer is a term used to describe an offer on a house that is substantially less than the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be rejected. We always do our homework about comparable prices in the neighborhood before making any offer. It also helps to know something about the seller's motivation if possible. A lower price with a speedy escrow, for example, may motivate a seller who must move, has another house under contract or must sell quickly for other reasons.

Who gets the furnishings when a home is sold?
It depends. Fixtures, any kind of personal property that is permanently attached to a house (such as drapery rods, built-in bookcases, tacked-down carpeting or a furnace) automatically stay with the house unless specified otherwise in the sales contract. But anything that is not nailed down is negotiable. This most often involves appliances that are not built in (washer, dryer, refrigerator, for example), although some sellers will be interested in negotiating for other items, such as a piano.

How do you determine the value of a troubled property?
Nowadays almost all troubled properties are listed by a listing agent.  Banks realized a few years ago that they will get a better price for their properties if they are in the MLS and have more competition to buy.  HUD homes are harder to see, but, we do have a set of "HUD" keys that will give us access to most HUD homes.  I tend not to like HUD homes because of hidden problems and bad conditions.  The government just does not take good care of their properties.

What are some tips on negotiation?
The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow.  Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home.
Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. 

Steve Ritchey
Steve Ritchey
Exclusive Buyer Broker