Home Buying 7-Step Plan, Step 3

Home Buying 7-Step Plan, Step 3

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Negotiating the Offer

You’re ready to start shopping for a home, understanding that mortgage rates are low and the housing market has cooled. As a buyer, this could be a great time for you to snag a deal, especially if you have done your homework.

The Market: Hot or Not?

If you listen to the news, you may be under the impression that the housing market is in bad shape. True, overall sales have eased on a national level, but there are some markets which are very weak while there are also some that are quite strong.

In the northeast USA, home sales are down and housing prices are flat or dropping. In my area, Raleigh, NC, the market isn’t as hot as it was one year ago, but it is still favors the seller — lots of people want to move to Wake County. Therefore, if you are planning to negotiate the price of a home, you need to understand what the local market conditions are before you proceed.

Buyer v. Seller

Concerning real estate, it is truly a buyer v. seller market. The seller wants top dollar for her home and you, as a buyer, want to find a home that you can afford and is a decent buy.

In a strong selling market, you’ll likely be up against other buyers who can bid against you, driving the price of a home up and beyond the seller’s asking price. In a weak selling market, you may be the only buyer or at least the only one qualified to buy. You may not be able to shave ten or twenty percent off of the price of the home, but you could possibly save several thousands of dollars.

Making An Offer

When you are ready to present an offer, your real estate agent will provide you with the standard documents that list the terms of the contract. The agent should review the contract with you and understand what your purchase price is, the terms of the sale (e.g., is the refrigerator included or not?), your earnest money, financing, down payment, etc.

Before You Make Your Offer

Before making an offer, you’ll want to be clear what you are buying. You’re getting the house and the property, but does that include all fixtures, window treatments, appliances, etc. What if some work still needs to be done on the home? Who will pay for these repairs? Your contract should have a provision outlining what must be done before you close on the house.

Presentation and Counter Offer

If the seller accepts your offer, then you are done and the contract will be signed by both parties. If rejected, you’ll likely get a counter-offer which you can either accept or reject. Until you come to an agreement on the price, then the deal hasn’t been finalized.

Keep in mind that if a deal isn’t quickly reached, the seller has the right to entertain other offers. It is in your best interest to move quickly and craft a deal acceptable to both parties. Once the contract has been signed, then a binding contract is in place.

If you back out of the contract, you could lose your earnest money and even be subject to litigation. Conversely, if the seller backs out after the contract has been signed then the earnest money must be returned to you. Moreover, you can sue the seller for financial damages.

Work With An Agent

A qualified and experienced real estate agent can help you through the home buying process. The seller pays your realtor’s fees, but you get the wisdom and experience of an agent who can help your home close smoothly.

Happy house hunting!

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Categories: Home Buying, Relocation

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