Q: What’s the best way to negotiate when a buyer makes an offer?
A: When you receive a signed offer through either your listing agent or a buyer's agent, you discuss the terms and buyer’s qualifications.
Every seller has three basic options when presented with an offer. You can either accept or reject what’s offered, or you can make a written counter offer. Negotiating the sale price and terms sometimes means waling a tightrope between the highest price the buyer is willing to pay and the lowest price you can accept. Rely on your agent.
Q: How do I make an offer on a home and negotiate with the seller?
A: Start the process by putting an offer with price and terms in writing and presenting it to the seller through an agent. Understand the seller has three options: to accept, to counter on specific details, or to reject your offer. You must keep up the dialogue until you arrive at the price you can pay and the price and terms the seller can accept. This is where the agent is invaluable. An agent can suggest strategies that bring about a satisfactory transaction.
Q: Is a low offer a good idea?
A: : In a normal market your offer might be rejected immediately, however, in a buyer's market a motivated seller will either accept or make a counteroffer. Full-price offers are more likely to be accepted.
Q: What contingencies are usually put in an offer?
A: There are two standard contingencies: a financing contingency, making the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.
Q: How are prices arrived at?
A: : Because the real estate market is continually changing, and market fluctuations have an effect on property values, it's imperative to select your list price based on the most recent comparable sales in your neighborhood.
A comparative market analysis provides data on which to base your seller’s -price. Study the comparable sales material presented to you by the different agents you interviewed initially. If the analyses are more than two or three months old, have your agent update the report for you. Watch out for an agent whose opinion of value is considerably higher than the others.
Q: Can you buy a home below market value?
A: A typical buyer may look at 7 to 12 homes before making an offer. Experts agree it takes a lot of determination to find a real "bargain." There are a number of ways to buy a bargain property:
Buy a fixer-upper, improve it and keep it or resell at a higher price;
Buy a foreclosure property;
Buy a partial interest in a piece of real estate, such as part of a tenants-in-common partnership.
Q: Is the price on new homes negotiable?
A: It is difficult to negotiate the sales price with a developer because they may claim their prices are based on fixed construction costs. Builders more likely to be flexible on price at the very beginning and the very end of a development project. Early on, most developers want to move people in quickly so the project picks up momentum. Later, developers may be more inclined to accept lower offers when only a few units remain.
Q: What is the best time to buy?
A: Because many buyers prefer to move in the spring or summer, the market starts to climb as early as February. Families with children are anxious to buy so they can move during summer vacation, before the new school year begins. The market slows down in late summer before picking up again briefly in the fall. November and December have traditionally been slow months, although some buyers look for bargains during this period.
Q: What are some tips on negotiation?
A: The more you know about a seller's motivation, the stronger a negotiating position you are in. A seller who must move quickly due to a job transfer may be amenable to a lower price. Other "motivated sellers" include people going through a divorce or who have already purchased another home.
Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller's asking price stacks up.
Q: What is the difference between list price, sales price and appraised value?
A: The list price is a seller's advertised price, a figure that usually is only a rough estimate of what the seller wants to get. Sellers can price high, low or close to what they hope to get. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area.
The sales price is the amount of money you as a buyer would pay for a property.
The appraisal value is a certified appraiser's estimate of the worth of a property, and is based on comparable sales, the condition of the property and numerous other factors.
Q: Should I include an inspection contingency in my offer?
A: An inspection contingency protects you as a buyer in a purchase offer by allowing you to cancel closing on the deal if an inspector finds problems with the property.
As soon as the seller accepts a written offer, the document becomes a legally binding contract. The purchase contract can be written to include a contingency for any repairs found to be needed or related items the seller must take care of before closing. If these are not dealt with, and you have such a clause in your contract, you can delay or possibly cancel the closing. If it's not stated in the contract, you could face losing your deposit. There also may be costly legal implications stemming from backing out of a contract.
You usually will have the right to choose the inspector. In addition to an overall inspection for structural soundness, you can request a satisfactory pest control inspection report, roof inspection report or contingency for no potential environmental hazards such as asbestos or radon gas.