Home Buyers Guide

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Step 6: Making the Offer

The negotiation process can be the most stressful time for a homebuyer. There's the excitement of finding the house that could be your new home, as well as probably the largest single investment you have. Now is the time when most buyers say they are glad to have expertise of a Realtor to help them through the process.

The key to a successful offer can rely on your knowledge of market trends and conditions. The amount of your offer can be as critical as the terms you present with it. Here are some tips and terms you'll need to know:

How much should I offer?

Offering the right price is critical. Offer too little, and you may lose the sale to another interested buyer. Bid too high, and you might find yourself paying more than you should. Many of today's sellers are taking care in pricing their home properly. With fewer properties currently for sale, the current climate favors the seller. So if you want the house, you've got to make a good offer.

So what do you do? To do the job the right way, you'll need to locate "comparables." "Comps" are homes that have recently sold that "compare" to the home you're looking at, the "subject" home, in features like style, location, condition, rooms, and other amenities. Find out what comparable homes sold for, and then factor in for the differences. Is the "subject home" (the one you're looking to buy) bigger, smaller, in better or worse condition, and what unique features does it offer? Take these into consideration.

If the home is a "development house," where there are others exactly like it? It may be easier to find other comparable sales. If it is more unique, or is "spot built," custom, historical, or distinctly different in some way, locating comparables will be much more difficult.

Do your homework.

First, start by keeping an eye open in the neighborhood. Ask friends and neighbors if they know of any recent sales. Get the addresses, and then follow up to find out the particulars. Your local municipal offices may have information about the sales price if you come in with the full address and are willing to look it up. You'll also need to follow your local newspapers' real estate sections. Often they print recent sales in your area that are reported by the Multiple Listing Service. It will take some time. If you are engaging the service of a Realtor, they can help by giving you valuable information about recent sales that can save you weeks of work on your own.

If you are working with a Realtor, you can more quickly understand what homes are selling for and arrive at the right offer before another buyer who is more seasoned to today's market conditions moves in ahead of you. Realtors can explain today's trends because selling homes is their profession. By comparing what is currently for sale today, you can better identify the right house when it comes along.

If you engage the services of a "Buyers Broker," your Realtor can be of even greater assistance in helping you determine what fair market value is for any home you are interested in purchasing. Be sure to ask your Realtor about the services they can provide.

The Binder

The Binder is a form used as an outline for the contract of sale. The binder contains all of the elements of a contract, including: price and terms, including when you will go to contract, the estimated date when you want to close, what items are to be included in the sale; the down-payment, and what kind of financing you will seek. It also calls for the name of the attorney who will be representing you. Once the binder is completed you will be required to sign it, before your offer can be presented to the seller. You should have the binder reviewed by your attorney before signing it. As a measure of "good faith, " you will be asked to give a deposit check, this can be in the amount of $100.00 to several hundred dollars. This is usually made payable to the seller, and is deducted from the total purchase price, and is also reflected in the binder. If you change your mind, you may be able to get your deposit money back, but you're not entitled to it.

Negotiation

The Realtor will make arrangements to present your offer to the owner, in coordination with the listing Realtor. This is done as soon as possible. The Realtor will contact you with the seller's answer. Several responses are possible: the owner may accept, reject. or make a counter offer. In the event that a counter-offer is made, you can agree to pay the revised price the seller has offered, or you can make another offer.

Keep in mind, your first offer may have to be your best offer! With many homes having multiple offers, your first chance may be your only one. As these offers are presented to the owners, the particulars of each are considered, including: the total purchase price, the downpayment, type of financing, estimated closing and possession dates and items included in the sale. Consider all of these so that you'll be able to make your offer as appealing as possible. You may be competing on many fronts in addition to price.

If further negotiation is needed, your Realtor can handle it for you until terms agreeable to both have been reached. Once an offer is accepted, the seller should sign the binder. The next step involves the attorneys for both parties.

From The Homebuyers' Guide, by Laurie J. Bloom,
© 1999 The Multiple Listing Service of Long Island, Inc. All rights reserved.