Buying a Home 101 series – Week 7
This step-by-step series will take you through the entire home-buying process — from finding a buyer’s agent to settlement day, and all the details in between. Every first-time buyer will find this information-packed series easy to follow and understand. Make sure to tune in for the next few weeks!
You’ve done it … you found the home you want to buy! Now you’re ready to make an offer and tackle some of the next steps that will make you a homeowner.
First, it’s time to determine your offer price and the amount of your due diligence to show you’re a serious buyer. You’ll need liquid funds for this deposit, so make sure you’re ready to write a check with your offer.
You also need to get prepared for some negotiation tactics. DO NOT forget about your deal breakers and the maximum amount you’d be willing to offer for a home. (Remember, you have a “monthly” budget in mind!)
Here are some smart tips on getting a home for a price you’re happy with in the end:
Step 1 – Evaluate the home and determine an offer price
• Work with your agent to agree upon a competitive price. You’ll have to consider current market conditions.
• Don’t just accept the asking price. Homes can be overpriced or underpriced initially so you need to validate the price.
• Use comps of homes similar to the one you are interested in for the same neighborhood. Calculate the difference between the asking prices and final sale prices to get a feel for market conditions. Also look at those final sales prices to get an average of the current market price for your type of home.
• Closely compare the features of this home to the others that recently sold. Determine if this home has any valued-added features that might make the price go up OR if it lacks something that would bring the price down.
• Consider ALL variables. Has this home sat on the market for a while or has it just been listed and may sell quickly?
• Find out about competing bids since these will affect your own offer. If there will be multiple offers coming in, then going above the asking price is most likely required. You and your agent can determine how much to go over.
• Determine your walk-away price and stick to it. Know your own price ceiling if the sellers continue to counteroffer. Don’t get swayed to go over budget … you might regret this!
Step 2 — Make an offer and be willing to negotiate
• If you make an offer under the asking price, make sure you back it up. That helps to ensure that the sellers don’t view it as just a “lowball” offer. Show them current comps or indicate any valid issues that may decrease the home’s value.
• Keep your offer simple with little stipulations if possible. This makes it easier for the seller to accept your offer and can help seal the deal quickly. If you’re a first-time buyer, you won’t have to deal with another home to sell, so that’s a plus!
• On the other hand, be flexible when taking into account any stipulations by the seller. If you can accommodate the seller, do so if possible. For example, they may want to rent back from you for a month until they can move out of the home.
• Be cordial and not critical of the home. Sellers can be sentimental and may select buyers for more personal reasons than just price. Use that to your advantage! Write your own “love” letter about the home and why you and your family will be the right owners to care for it. Your agent also can pass along information about you.
• Make your offer contingent upon the findings of a professional home inspection. You’ll want to be able to renegotiate or back out if major defects are found. NEVER skip this step!
• Offer to pay all or most of the closing costs if possible. This could increase your chances of being chosen and set you apart from other potential buyers.
Step 3 – Show you are a serious buyer
• Include your pre-approval letter and put up a reasonable amount for your earnest money deposit. You want to show the sellers you are serious and capable financially to buy this home.
• Your due diligence fee should send an encouraging signal to the sellers. If you are willing to put 1% to 5% down, this will show the sellers you really want this home and have put in a serious offer.
• Make your BEST offer based on that particular home’s situation. Offers should vary on the circumstances:
- If the home just came on the market and already has multiple offers, you may need to go higher in price and/or have fewer contingencies. A seller is going to choose the best offer first and start negotiating with that offer. So, give it your best shot right out of the gate in these circumstances.
- If the home has been on the market for a time, you’ll need to write a completely different offer — one that is more favorable to you versus the seller. Always back up such offers with comparables to support a lower price.
With these tips in mind, you should be able to close the deal on our new home. Just a few more steps ahead and you’re almost there!
Don’t let this step scare you! Negotiating for a home can seem overwhelming, but I have a very educational, step-by-step way of making sure you are knowledgeable, confident and comfortable with every decision along the way. I’d love to share the way I do that and the steps I take to help you get the right home for the price. Email me at your convenience and I’d be happy to share my secrets with you! 😉
Next up is the in my 13-part Buying a Home101 series. You’ll learn what you need to do once you’re under contract to buy a home in Under Contract: Locking in Your Mortgage Rate and Getting a Home Appraisal. These two very important steps can affect your sale and the interest rate of your loan. Stay tuned!
