04 May 5 Things To Know About Writing An Offer
Writing an offer after searching for the perfect home consumes the attention of every buyer. The thrill of the hunt kicks in as we scour the internet for a hot new listing. Our senses are on red alert as we drive through a new neighborhood scanning for swing sets, bikes, and kids. We notice parks, commute routes, roofs, siding, backyards, and decks like we have never seen them before. Then we spot it, the perfect house. It’s a race back to the office to put in an offer.
Bam! Reality hits and the thrill of the chase turns into a never-ending string of questions and decisions to make. Your agent starts to pepper you with questions. How much earnest money do you want to put down? What type of financing to use? When do you want to close? Which personal property should we include? Do you want to make the offer contingent upon inspection? And then the big question: how much money do you want to offer on the home?
Knowing these 5 fundamentals will help you make confident decisions and keep your focus on the ultimate goal: buying your new home.
1. Do your homework!
Look through listings online and visit enough homes to gain confidence in your judgment of value. Stay focused on solid features of homes instead of enticing photos. Compare homes based on square footage, locations, updates to mechanical systems and items like bedrooms, baths, and garage space. Look past wall colors, carpet, and other flooring.
2. Know your mortgage type.
Talk to your mortgage officer about loan types until you are comfortable with your level of understanding. Ask your agent or loan officer to help you calculate several scenarios regarding purchase price, down payment and interest rate levels. Keep these examples and refer to them as a good approximation of your house payment.
3. Prepare your initial funds.
Set aside your earnest money. Have the funds available and dedicated to a checking account. There are no minimum requirements. When writing an offer, a common amount of earnest money for homes in the south metro is about 1% of the offer price. Round up to the next $1000 to ensure a slightly stronger offer.
4. Understand value.
Value does not mean the same thing as cheap, especially in home purchases. The entire marketplace is fit with really good values. Some buyers will get a great value because they negotiate many $1000’s off the list price. Others will get their great value when they select a home listed for a nice price and pay close to asking price. The third group of buyers will achieve value by writing an offer on a home which is under-listed. But they may even pay many $1000’s over the asking price. Don’t be afraid to pay the full price, or more, for a listing if you see it’s value. This is where your homework pays off!
5. Be flexible!
Quite often buyers know they may receive a counteroffer from a seller. They’ll even talk about it as they write their offer. A counteroffer comes back from the seller and the buyers’ enthusiasm and interest in the home deflates rapidly. When we write the initial terms of an offer, it seems to take root in our minds and we bond with the numbers. Anticipate a counteroffer. Especially on the terms of price, closing date and financing commitment dates. A counteroffer is good and guarantees you are not overpaying for the home or leaving money on the table.
Searching for a new home is an adventure! The offer process requires focus and detailed decisions. Follow the 5 fundamentals of writing an offer and capture the home of your choice.