You Like a Home, You Make an Offer. Easy, Right? If you are purchasing a new home or apartments converted to a condominium, you have it easy. You typically pay what they ask although there are some exceptions if you are purchasing in a “buyers” market. If you are purchasing a home from a private owner you have a much more complicated process. Whether you are buying or selling a home, consider the sale of a home as a transaction beneficial to both parties. It is true that an asking price is exactly that — an asking price, but very often buyers and sellers become emotional, feel slighted or even offended if neither party makes responsible and realistic offers. For all purposes, this is a business transaction that requires multiple parties and often outside services and financing. The “other” services require more time than most people think, but the key to moving the entire process along is an agreement, legally binding, between the buyers and sellers of homes. The Offer Process The buyer gives an offer to a buying agent who writes an offer letter. The buying agent meets with the selling agent usually with the sellers present. The buying agent presents the offer. The sellers decide to accept the offer, counter the offer or reject the offer. Sometimes there are contingencies with the offer, the counter offer or both. A contingency is an offer with a set of specifications or requirements attached. Some of these contingencies include:
- I will purchase your house if and when I sell my current house.
- I will purchase your house if you fix the back stairs to the house.
- I will purchase your house if my mortgage loan is approved.
Sellers can also add contingencies in their counter offers. Also, either party has a time limit set to respond to the offer/counter offer and can withdraw it prior to that time if there is no response. Doesn’t this make buying a car seem simple? Offer on a Home From the Buyer’s Perspective The process begins with a warning for home buyers. Because the commission that the buying agent gets comes from the sale of the home and hence the seller, your buying agent may have legal responsibility to the seller of the home. If this is the case they are legally an “underagent” for the seller. Even though they are helping the buyer in the process they have disclosure responsibility to the sellers. This means if you disclose a bid but tell the agent you would be willing to come up if they reject it, your buying agent would have to reveal that to the sellers if they ask. In some states there is “buyer agency.” BUYER AGENCY means an agent is contracted to work exclusively for the buyer and that agent has legal responsibility to the buyer. If your state has an “underagent” arrangement (the agent buyer is responsible to the seller), don’t be dismayed. Although this is not ideal, it has worked fine in states for a long time. The main thing to do is ask the agent to whom they are legally responsible and to not divulge information that the agent would have to reveal to the seller. In other words make a bid but don’t talk about how you’ll offer $125,000 but would be willing to pay $140,000. When you are seeking to make an offer make your most reasonable offer. You aren’t haggling over a used car, and it is unlikely that the buyer will make more than one counter offer. When you are seeking your deal make sure you understand all the items included in the sale. If you want the kitchen appliances make sure that is understood. Items that are permanent attachments are included in the sale of a house but if there is some special item (for instance an antique chandelier) make sure it is part of the offer. The last thing either a buyer or seller needs to do is haggle over an old stove. Closings have failed for less. As a buyer, use the following guidelines.
- Let the Realtor do the negotiating.
- Do not call the seller.
- Don’t give a rock bottom bid unless you are aware that the seller is open to them.
- Include everything in the bid that you want, including inspection service, repairs, appliances, etc.
- Don’t request personal property, including washer and dryer unless you know they are looking to leave it.
- If the seller is present during viewing don’t give your personal opinions about the home.