You make an offer by submitting a formal request to purchase a property. Terms and price are the primary inclusions and should be accompanied with a lender pre-qualification or a proof of funds (POF). The home seller can counter, accept or reject the price of the offer with a different offer.
💁♂️ Make an Offer?
Normally, to make an offer there’s room for the buyer to deliberate over the price to be negotiated. However, as a buyer, you need to consider some factors to allow you to make the best or perfect offer.
⚖️ Find out about options
Before you make an offer, take into account the market values and take a look on steps in buying a house.
Knowing the prices of similar properties will allow you to estimate the cost of the property you wish to purchase.
If you are very sure of the specifications or the details of the property you desire, then you can probably estimate the price offer based on surrounding home sales of similar homes.
Real estate agents are always a great resource for researching the area and should be able to supply these comparable properties that have recently sold (within the last 6 months is best).
Agents who are active in a neighborhood will have direct knowledge of homes that they sold to or for their clients.
The key is to gain a good grasp on home values in the area before crafting the offer.
📜 Ask about property requirements
Real estate procedures and paperwork usually vary from one city to another.
The local requirements of your dream house will guide you in making the best offer.
It’s often advisable to go through the property valuation report of the home you desire.
Also doing a background check about the real estate history allows you to propose a better offer.
You can also hire an appraiser to help assess the house you wish to purchase. Most of the time this is done when the home is under contract.
All of this information can direct you in making a compelling offer that stands out to the seller.
🔍 Do More Research
Although several approaches to making offer exist, some real estate companies have standard operating procedures.
Experienced agents use repetitive systems to help their clients seek, find, and buy the home of their dreams.
In our process, we think of the agent and the buyer as a team. They work together to move toward the end goal.
Setting Criteria & Finding Your Home
These are the basic steps to finding a home you love:
- Dial in your top needs (not wants)
- Create a realistic wishlist of features
- Make your MLS search
- Decide on city and zip codes
- Narrow down the search to a specific neighborhood or two
- Select favorite properties
- Arrange showings
- Go see the homes
- Reevaluate the property you like best
- Make your offer
- Listen to your agent when seller responds or accepts
Crafting Your Offer
If you wish to put down your offer in writing your agent will gather the needed forms so that the offer can be presented. In Arizona this will include:
- Real Estate Purchase Contract
- Real Estate Agency and Election
- PreQualification (PQ) or Proof of Funds (POF)
*A number of accompanying forms may also be necessary. For example: if the property has a septic tank there will need to be an On-site Wastewater Treatment Facility Addendum included in the offer. If there is a well on the land you will probably need a Domestic Water Well Addendum. If there is leased or financed solar equipment at the home you will need a Solar Lease / Solar Loan Assumption Addendum.
Make sure to include all needed forms. Above all, make sure that your loan is thorough. A prequalification form is loaded with checkboxes. You want yours to have all the boxes checked that scream to the seller: “HEY I’M QUALIFIED LIKE A ROCKEFELLER” to buy your house. You don’t want to leave the seller wondering if you have a job or money in the bank to buy. If the checkboxes are left unchecked, the seller will assume the worst.
Stand Out Above the Crowd
Ok, you have found the house. Your forms are ready. Now, what can you do to make your offer even stronger in a sellers eyes. Yes, you can raise the price. That’s easy, and sometimes it is crutial to do so. That being said, we should explore other ways to make your offer stand out.
Here are a few things that you can do that will not cost you a lot of money:
- Work with a lender who can close quickly (under 3 weeks). If the seller is under the gun to get going this could be the difference between you getting the house and buyer number two getting the house.
- Abbreviate the inspection period. Inspections take time. The customary inspection period in Arizona is 10 days. Why not cut it in half. This removes 5 days of uncertainty from the sellers mind. Such a term WILL get noticed.
- Don’t ask for concessions that you don’t need. This goes for double if you are buying in a strong seller’s market.
- Increase your earnest money. Look, if you are making any kind of a down payment, you will eventually need to put that money in the hopper when you close. Why not use a larger earnest deposit instead of a small one. A very common amount is $1,000. If you are making an offer with $5,000 earnest money this WILL make you stand out.
- If there are multiple offers consider an escalation clause. This allows you to automatically increase your offer in incremental amounts up to a specific ceiling based on verifiable competing offers. So if the asking price is $525,000 and 4 other people are trying to buy the home you may want to include an escalation clause. Of course, you will want to be comfortable with the market value before doing so. Your escalation clause could implement that you are willing to pay $1,000 over any verifiable offer up to $538,000. It’s a great tool in some circumstances.
🙅 Don’ts when you make an offer
- Spending your time dealing with a non-motivated seller
- Emphasizing much on the seller’s desired price.
- Not remembering to be mindful of your costs to close
- Altering home price offer immediately before negotiation
- Determining the final price offer to start bargaining on
- Not doing enough research to estimate the perfect offer.
💰 Do You Need to Sell Your Current Home?
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