The negotiation of a real estate transaction can be tricky business. Ideally, it would center on the price, but there are other things that come into play such as timing, home inspection findings and legal requirements.
While considering the current real estate market, analyze recent sales in the area and your financial situation, a CENTURY 21® real estate professional can help you determine a competitive offer price. Your agent may be able to include stipulations in your initial offer that make your offer more viable than others.
When you contact a lender, ask to be pre-approved. When you become pre-approved, you actually apply for a loan. The lender checks credit, verifies employment, and often verifies that you have sufficient funds to close. Then once you find your dream home, just about the only thing left is the appraisal.
The reason savvy buyers obtain loan approval before shopping for a home is that it strengthens their negotiating position when they make an offer. All sellers want to sell their home to a pre-approved buyer. Pre-approval can also cut days, even weeks, off the closing process.
Making an Offer
When you make an offer on a house, the seller can accept it, reject it, or counter it. If the offer is too low, the seller may reject it outright. Or the seller may counter the offer, naming a price or other specifications that are more in line with his or her expectations.
If a property is in strong demand, it may receive several offers. Then the seller may choose to accept the highest one or the one from the most qualified buyer.
Here are some tips to make sure your offer is accepted in any market:
- Be pre-approved by a lender, not just prequalified. This strengthens your position. (see above)
- Provide a substantial earnest money deposit. This is “good faith” money that shows the seller you are serious about the property.
- Limit your contingencies to those most important to you, such as financing, inspections, and the sale of your current home if necessary.
Once Your Offer is Accepted
When you make an offer on a new home and it is accepted, one of two things usually happens:
1) Buyer’s Remorse: You’ve made an offer. It was accepted. You’ve almost bought your dream home. Then, later that night, or the next day, you start worrying. Did I make a good decision? Can I afford it? What if this happens? What if that happens? Anxiety and stress set in.
This is a very normal reaction. It is called buyer’s remorse.
The best way to handle buyer’s remorse is to take out a sheet of paper and draw a line down the center. On one side, list all the positive things about buying this home. On the other side, list all of the negatives. You will come to realize that buying this home is a really good decision. I will be with you step by step to help answer any questions and concerns.
2) Shopping Spree: Buyers are frequently so excited about the new home that they go out and order new furniture, appliances, window treatments, and sometimes even a new car! This can create havoc with your credit and debt ratios that lenders look at to approve your loan. Sometimes excessive purchases can cause the lender to reduce the amount of your loan, placing your home purchase at risk. Your best strategy is to postpone additional shopping until after closing. Once you have moved in and are settled, you can start thinking about all the amenities and extras to make the new house your home.