So many homes are lost all do to presenting a bad offer. If you are in love with a home and really want it; why offer anything less then what it is really worth? In the housing market buying a home for a fair price is the goal. There is a lot more involved with buying and selling a home than just showing the seller a piece of paper with a number on it and signing your closing documents. Presenting the perfect offer is tricky and many sellers reject offers only due to an insult.
The perfect offer leaves the buyer and seller with good feelings at the closing table. Neither the buyer or seller should be left sour. This is a major part of a real estate agents job. Helping the buyer come up with a presentable offer or helping the seller read and determine if an offer is genuine or deceitful.
A perfect offer consists of these items: A fair price, a worthy earnest money amount, a reasonable closing date, and understanding how closing costs work.
First, let’s go over a fair price. To determine an offering price; have your Realtor do a Comparative Market Analysis on homes in the area that have recently sold and homes that are currently on the market. By looking over the analysis you will be able to determine a good offering price that should be inoffensive to the seller and will show a sign of respect.
Second, some buyers have not been informed about how important earnest money is in an offer. Earnest money shows the seller just how serious you are about wanting to complete the sale. If you, as the buyer, offer $500 earnest money and ask for the seller to pay closing costs at the listed price; the seller will most likely be insulted and reject the offer, and in some cases even ignore and not respond to the offer. If you offer $2,000 earnest money and ask for closing costs at the listed price; the seller would be more willing to take a look.
Third, a proper closing date will determine if you are a reasonable and serious buyer. Ask your agent what the average closing length of time is at that moment in your area. If you have been searching for a home for a while closing times may have lengthened due to the amount of time it will take to generate your loan or if the home is a short sale or bank owned. Also, depending on what type of loan you are obtaining it may take longer to set up. Allow for time to prevent added paperwork that can frustrate you and the seller.
Fourth, closing costs are probably the most confusing aspect of an offer for a buyer to take in to consideration. Every Realtor should sit down with a buyer and explain how much closing costs will be and how to work in the closing costs without putting a damper on your checkbook or having your offer rejected because you made a low offer.
Here is an example of a unfavorable offer:
The buyer has his agent write up an offer for $245,000 which is $10,000 under the original listing price of $255,000. The buyer wants a deal and figures, without doing market comparisons that the home is worth $10,000 less. Now in this instance, the home was already listed $5,000 under value to move it quickly. If the buyer had looked at a CMA he would have seen the home was already a deal. That is not all; he also doesn’t want to pay closing costs and has his agent ask for the seller to pay 6% of his closing costs. Some buyers think that this is no big deal, but by asking the seller to pay this 6% the buyer is actually offering the seller $230,300 instead of the $245,000. That ends up close to $25,000 less than the original listed price. This is going to be extremely insulting and the buyer will probably not get a response.
Now if the buyer would have offered the listed price and the 6% closing costs; he may have received at least a counter offer, and possibly an accepted offer. Asking the seller to pay 6% closing costs at the listed price would not be offering full price. The complete offered price would be $239,700; which is still way below the listed price, and far below the market analysis.
Making a good solid offer is more beneficial for the buyer and seller. Buying and selling a home has its own stress, but when you add in the emotional aspect of pride and insult; that stress is amplified and makes the process highly unfavorable. My goal with this article is to guide buyers and sellers together and help both sides understand how valuable a good offer is. I don’t like watching the stress and turmoil that both sides go through when all that is needed is some information and knowledge to understand how the process works.
Buyers deserve to find a great home at a great (fair) price, and sellers deserve to sell their home for a great (fair) price also.
