How to Make an Offer on a Property
When you’re on the journey to becoming a homeowner, searching for the home is the fun part. Every trip to a potential home is rife with possibility. Could this be it? Could this be your most valued asset? Could this be your home for the rest of your life, and maybe your childrens’ home after that?
But after you find the perfect home comes the hard work. You’re not the only person with plans for the place – other people are imagining their lives playing out there as well, and the real estate agent is working closely with the vendor to get the best price out of whoever buys it.
We’re not saying that it’s all doom, gloom and conflict. But we must acknowledge a simple truth: Your interests are not the same as the interests of others. That means, sooner or later, you’re going to have to negotiate an offer.
The concept of negotiation is daunting for a lot of people, but it’s not as hard or as cut throat as you might believe. Negotiating is just a mutual acknowledgement of conflicting interests, and an agreement to find a sweet spot in the middle that all parties are willing to agree to.
You don’t have to be a master at it to get a reasonable price for your home. Just keep these things in mind and you’ll be fine:
The more prepared you are when it’s time to make the offer, the better you’ll do.
Research the property thoroughly before making your offer. See if you can get the vendor’s asking price without revealing your own budget, then study other comparable properties that have sold in the area recently.
This simple act will help you determine what your starting offer should be, and it’ll give you leverage if they try to ask for too much.
You can express interest in the property so that the agent considers you a “qualified lead” and follows you up with regular updates, but don’t reveal your budget or how attached to the home you are. The biggest source of power in a negotiation is the freedom to walk away. If they realise that you’re not considering other options and are desperate for that particular home, you’ll have a hard time moving them off a steep asking price.
Figure out what the process is for making an official offer in your state (it varies). Sometimes a verbal offer is okay, but for the most part, a written offer is your best bet.
A written offer eliminates the possibility of confusion around what the conditions are. It’s impossible to misunderstand, and it can be viewed again if memory should fail the real estate agent (or yourself).
Before you actually make an offer, your relationship with the agent might span a few phone calls, inspections and visits to the property. During these interactions, any good agent will be probing for information. That is to say, they’ll be trying to get an understanding of your budget and urgency to buy the home. They’re just doing their job – assessing prospects for the vendor.
But you’re under no obligation to give too much away. Be perfectly pleasant, but think before you speak and be careful what you reveal. Ask yourself before speaking, “Can this be used against me in a negotiation?”
The way you make your offer will depend on what method of sale the real estate agent is using. If they’re going through expressions of interest, then you do exactly that – express your interest (offer) to the agent.
But auctions are different.
If the agent’s going to be selling by auction, add “attend auctions” to your preparation. It will serve you greatly to see how they play out. Take note of who seems to be in control, and who seems inexperienced.
Of course, if the thought of “competing” at auction terrifies you, you can always get a representative. Just be sure to set a firm maximum price.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.
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