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You feel you are ready to make an offer on the house. You need to determine what the initial offer should be.
There are some things that you should consider when determining the amount to offer:
Sale price of similar houses in the neighborhood for the past 2 or 3 months. This gives you a pretty good estimate of the current market value of similar properties.
Inspection results
Go over the inspection checklist and weigh the good points against the bad. Also, estimate the cost of fixing the problems. The severity of the problem and the cost of fixing it, may impact your offer amount.
Mood of the market, in general and the neighborhood, in particular.
If it is a seller's market, the houses are moving fast and close to the asking price. If you really want the house, consider offering close to the market value of the house. This will ensure that you are a serious contender, even if the buyer gets multiple offers.
On the contrary, if the market is slow, or the house has been on the market for a while, or the seller is eager to sell, you might want to leave more room for negotiations after your initial offer.
Making an Offer to Purchase
When you are ready to make an offer, your REALTOR® will prepare a written offer, to be presented to the seller. Typically there are standard forms supplied by the Real Estate Board that can be filled out to make a formal offer. The intent of the offer forms (also referred to as contract of purchase & sale), is to make a binding contract between the purchaser and the seller.
An offer usually includes an offer price, closing date, financing information, contingencies and deposit money as a token of buyer's commitment to buy the property. Deposit money could vary from $1000 to $20,000, to the entire purchase price. Your deposit is held in the real estate brokerage's trust account and is applied to the purchase price if your offer finalizes. You may make your offer contingent on some outstanding issues being resolved, for instance, finalizing your financing, having the home inspected, the sellers fixing some/all of the problems that surfaced during inspection, getting ownership of the house by a certain date,etc. At the time of making an offer, it could be an added advantage if the seller is aware that you have been pre-qualified by a lender (which you should have been long before making an offer). This may be especially useful if the seller has multiple offers.
An offer is generally not open-ended. It is valid for a certain duration of time and expires at a documented date and time (as set forth in the written offer). This usually protects all the parties involved. Once the offer has been presented to the sellers, they should get back to you within the specified time. Generally this phase may be associated with some negotiations between the buyers and the sellers. Eventually, the deal either gets negotiated or not.
If the deal has been negotiated and all the parties agree to the terms and conditions, then you have purchased a house (subject to the conditions stated in the contract). If the deal could not be negotiated then you may either continue to look at more houses or consider making an offer on your next choice. |
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© 2010 Chuck Gulyas - RE/MAX real estate - Lethbridge - 517 6 Street South - Lethbridge, AB T1J 2E1 |
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