Are there guidelines to how much a buyer should offer?

Rubik's Cube You’ve found the home you want, now how much should you offer to pay for it? This can be a tricky puzzle, because there are no carved-in-stone guidelines. Some homes are overpriced, while others are a “real steal” at the full asking price. Here are some tips:

  • Ask your agent for comparables To determine a fair purchase offer, ask your agent to prepare a written comparative market analysis showing the sales prices of similar neighborhood homes that sold recently and the asking prices of comparable homes currently on the market.
  • Compare the details To calculate your best offer, compare the features of the home that interests you with the features of similar homes that have sold recently in the same neighborhood.

Buying a home directly from the owner will save on the cost of the home, right?

For Sale Sign Wrong! The “for-sale-by-owner” sellers are doing their own marketing to save the commission a professional real estate agent would charge. So what is left for you to save? In fact, you might end up paying more if the property is overpriced. Beware of these costly pitfalls:

  • Confusion You end up dealing, in many cases, with an untrained novice who is not familiar with real estate law or the real estate code of ethics. Something might be overlooked that will cost you money later.
  • Additional legal costs You will need a lawyer to draw up your sales contract, which should include safeguards for you that an experienced agent would typically suggest, such as making the contract contingent on a home inspection and approval of your mortgage loan.
  • You will have to be your own negotiator Also, without agents involved, you would have to conduct your own negotiations on the contract and make sure all the details are taken care of before closing.

    As professionals with the answers to your home-buying questions, we can make your search for a new home less confusing. Call or e-mail us, or click on "Ask Your Own Questions."

What happens after I present my offer?

Pen When a buyer presents a purchase contract, it is usually the starting point of negotiations, so keep your mind sharp and your pen handy. The seller can accept, reject or modify the contract. Most often changes are negotiated and the sale goes forward. Here are some points to remember:

  • Keep the calculator handy Both the buyer and seller should total up the value of negotiable items, and keep in mind how the price bid by the buyer compares to recent sales of comparable homes. If the bid is already low, the seller may not be willing to pay points or closing costs, but when a home price is a little high, the seller has room to offer financial considerations.
  • Try to nail down intangibles Other negotiable items may be hard to quantify, such as including the drapes or a special chandelier, or the five-year old washer and dryer. Anything pertaining to the sale is up for negotiation and has a value. For example, changing the date of settlement to accommodate one of the families or inserting a mortgage approval contingency can be discussed.
  • Put it all in writing Be sure all changes to the contract are made on the original form, no matter how messy it gets; important items can be missed during retyping.

How can I be certain I’m getting what I think I’m paying for?

Vertical Blinds When you have found the home you are ready to buy, you might assume you will get everything you see, besides the family’s furnishings. That is not always the case. Even if the multiple listing profile lists certain items that are to convey with the property – lawn furniture, window shades, a special chandelier, washer and dryer – those items might not remain behind.

How can you be certain you are getting what you think you are paying for? Here are some tips:

  • Make a list List everything in the purchase contract, a legally binding document that defines the terms of the sale. When offering a price for the home, state exactly what you expect to convey with the property.
  • Keep all negotiations on the same form Even if it gets messy, do not retype the original contract, because some provisions could get left out.
  • Be prepared to negotiate You can also list items not specifically indicated by the seller, such as living room drapes, that you want to convey with the property, and negotiate for the value of the added items.

As real estate professionals, we can help you understand every step of the home-buying process. Call or e-mail us, or click on “Ask Your Own Questions.”

How does a “drive-by appraisal” help me bargain better?

Home Search If the home you are interested in seems over-priced, there is a new tool to help you get a quick and inexpensive second opinion before you make an offer.

  • Consider a limited-scope appraisal The new, limited-scope appraisals use databases as a source of information to estimate the value of a home. The information comes from prior appraisals, property tax assessments, sale and resale information and, sometimes, a drive-by to come up with a professional estimate in a few hours. The cost is generally under $100.
  • Get less than a full appraisal The more traditional, complete appraisal -- required by lenders for a mortgage loan -- can take several days, usually involves a personal inspection of the interior as well as exterior of the property and costs several hundred dollars.
  • Negotiate a more accurate price Determining the fair value of a home with a quick, limited-scope appraisal before signing a contract may help the buyer negotiate a lower sales price. Also, some lenders now accept limited-scope appraisals for refinancing, thus saving the borrower both time and money.

What are some inside tips to close a deal if the seller won’t budge on price?

Doorknob Negotiating is an important part of many home sales. If you have found the home you want, but the price isn’t just right, both you and the seller may have to adjust your expectations to close the sale and get you in the door.

  • Keep searching for common ground If the seller won't budge on the price, perhaps there are other items that can be negotiated, such as closing fees or loan discount points to bring the cost of the home within reach. Or perhaps the seller will add the washer and dryer, drapes or other amenities not originally included in the sale. The key is to keep talking until you find common ground.

We can answer your specific contract negotiation questions. Call or e-mail us or click on “Ask Your Own Questions.”

Can a previously owned home compete effectively against newly constructed homes?

Film Clapper In some boom markets, the well-orchestrated efforts of new-home developments can make selling a “used” home seem impossible. But you can direct your own award-winning performance, and truly compete in the home-selling business.

A successful builder designs homes and decorates models with specific “profile families” in mind. Every detail of a model home – from the name of the style to the decor of each room – is calculated to emotionally grab families who resemble the profiled family. “This is us!” the prospective buyers may say to themselves as they tour the home.

Then the builder arms a professional sales staff with a variety of easy mortgage plans, making possible an on-the-spot home sale.

New Isn’t Everything

To compete with this professional plan, “used” home sellers need a professional plan of their own. Work with your agent to:

  • Target prospective buyers. Decide who would be a likely buyer for your home and make sure your home is appealing to most any buyer but especially to the "profile family." Of course, you'll welcome an offer from any prospective buyer.
  • Apply elbow grease. Make your home shine like new, inside and out.
  • Put your best foot forward. Ensure prospective buyers learn about your home's upgrades and unique features as well as the neighborhood amenities.
  • Research the competition. Research the competing new homes and the builder's incentives, and offer to assist the buyer with points or other closing costs, as needed.
  • Provide a warranty. Buy a one-year major systems warranty.
  • Price realistically. Price the home to sell.

Remember, mature resale neighborhoods and properties have their own unique appeal. New isn’t everything. Set the stage, and get ready to yell, “Action!”

What do you suggest if I have to close a real estate deal from a distance?

Suitcase If you suspect you might have to handle a real estate transaction while you’re traveling and are unavailable to sign important documents, take precautions before you leave town. Ask your attorney to draw up a Power of Attorney, giving your spouse full authority to buy or sell your home and to sign the necessary documents in your absence.