Presenting the best offer
One of the most important factors in determining the offer is the type of market we happen to be in at the time of the offer. We’re in a seller’s market if the number of homes for sale is significantly less than the number of buyers looking for a home. This type of market is characterized by multiple offers on a property, homes selling fast and at higher prices than normal, and shorter days on the market for any given home for sale. In this market, sellers have more choice and more buyers/offers to choose from. So, they drive the market.
We’re in a buyer’s market if there are many homes on the market for buyers to choose from, slow sales of the homes on the market, a good economy with many available loan types available to buyers, and lower average sold prices. Here, buyer’s have a wider selection with more room for negotiation.
So, the type of market will determine the offer strategy.
The best offer to a seller will be at the highest price with the least amount of contingencies and the best financing option and earnest money. The seller will look at and compare offers paying particular attention to:
- The highest price offered
- With the least amount of contingencies
- The best financing option and earnest money
- Pre-approval letter
What are contingencies?
- The buyer obtaining specific financing from a lending institution. If the loan can’t be found, the buyer won’t be bound by the contract. There is a short time-frame to fulfill this contingency.
- A satisfactory report by a home inspector (for example) “within 90 days after acceptance of the offer.” The seller must wait l0 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. This should also have short time frames to fulfill this contingency.
- Contract contingent on a buyer selling their current home. This can be a very difficult contingency for a buyer to fulfill in today’s market and therefore,not very popular with sellers.
What does an offer contain?
If the offer says “this offer is contingent upon (or subject to) a certain event,” you’re saying that you will only go through with the purchase if that event occurs. The following are three common contingencies contain in a purchase agreement:
- Personal property, such as appliances, draperies, etc.
- Parties to the contract
- Address and a legal description of the property
- Sales Price, terms (cash or financing), earnest money deposit, down payment
- Seller’s promise to provide clear title (ownership)
- Target date for closing (if you have a mortgage, make certain that your closing occurs BEFORE the expiration date of your loan commitment and interest rate lock-in).
- Method by which real estate taxes, rents, fuel, utility bills are to be adjusted between buyer and seller
- Provisions about who pays closing costs
- Type of deed to be given
- Other requirements, which might include a chance for attorney review of the contract, Disclosure of any now environmental hazards or other specific clauses
- Provision for the buyer to make a last-minute walk-through inspection of the property just before closing
- Time limit after which the offer will expire
- Contingencies
Be sure to consult a real estate professional to guide you in determining the type of market we happen to be in and what type of offer you should make. This will ensure you get the most value out of your purchase. You can reach out to us here, Contact.
