Finding a new home is indeed a time-consuming process, but making an offer for it can even be more of a challenge. You don’t want to make an offer that is too low, which can result in rejection, or too high and you end up overpaying. Let’s quickly take a look at some factors you should consider before making an offer.
Pre-approved Loan Amount
This is where the lender looks into your financial capacity before giving you a pre-approval letter. It is advised not to offer the total amount of your loan, says Anthony Wardan. It sends the wrong signal to the seller. Meaning any rise in interest rates before you get the loan officially can lead to not being able to pay your offer. Also, you will need money for other things like home inspection, earnest deposit, and closing costs.
To be able to estimate the value of a property you need to know the real estate market in that area. Do market comparison or better still talk with a real estate agent. The following information should be noted: how long has the house been on the market, what was the asking price, was there a reduction of price, and the final selling price. For proper price estimation.
Your Competitor Offers
Offering less when you know others are also making offers for the same house. You can risk losing the new home to a higher bidder. Your real estate agent can help you with the information on house research.
The Asking Price
This will help you know how much the seller is willing to sell. Low price means there will be a lot of people bidding for it and if the price is high then the chance of getting a good deal is very slim.
Tips for Making an Offer –
House Worth Estimation
You need to be very careful with your first offer to the seller because it can affect how the negotiation goes. This will determine how serious you are in buying a new home. Know the condition of the house, market analysis, and what can motivate the seller. You can get an idea from your realtor to know how much the property is worth.
Make the First Offer
When making your first offer you or your realtor need to tender an official letter to the agent. In the letter are details of when your offer expires, your first installment, payment made to the escrow, and the proposed closing date.
Start your bargain
Your first offer might not interest your agent as it may be too low, says Anthony Wardan. And this may make the agent decline your offer, they might as well give a counteroffer response. Don’t be discouraged, you can as well sit with your agent to discuss the conditions of the counteroffer or you can decide to go with a second offer. But you have to understand that counteroffers have expiration dates which may take 24-48 hours.
Draft sale contract
Once you and the agent reach an agreement and payment of the new home is done, you are almost done with the process. Then you can start the process of drafting your contract, a purchase agreement, and an official inspection.
Going through the process of buying a home should be done wisely. Tips and factors of buying a new home should be the first thing to start with. Once that is known, buying a new home will be an easy process.