Buying a residential property is an expensive investment and has to be undertaken with a far-sighted approach and judicious use of the finances in hand. It is rare indeed for a buyer and seller to immediately agree on a common price without any negotiations or exchange of offers and counteroffers. The objectives of a homebuyer and seller when transacting on a house are different and that is what leads to complexity in the transaction.
The buyer wants to buy the house at a bargain while the seller wants to sell the house at a substantial gain. The buyer needs to keep this information in mind when dealing with a seller and transact accordingly. His or her offer has to take into account information about the house and its immediate environment. The seller may either accept this offer, outright reject it or counter it with an offer of his/her own. This article seeks to highlight the dynamics between the buyer and seller when it comes to a property transaction and what a buyer needs to consider before making an offer.
[lwptoc numerationSuffix=”dot” title=”Table of Contents” width=”full” titleFontSize=”16px” itemsFontSize=”16px” colorScheme=”light”]
How do I decide what to offer on a house?
A buyer should not simply rush into something as complex as a property transaction without testing the waters first.
- If you come across a residential property you like, first, find out the price the seller has fixed for it.
- If you receive information on the asking price of the property, you can accordingly decide your offer price keeping in mind the funds you have at your disposal and the budget you have in mind for purchasing the property.
- Get information about the value of similar houses in the neighborhood and conduct a home appraisal of the residential property if you want to be certain about the value of the house or assess its real estate value.
- Once you have all this information at your disposal, you can decide your offer price taking all this into account and putting it forth before the seller. After that, the ball is in the seller’s court.
What are the two things you should do before making offers?
It is not Money that is power in a real estate transaction. The real power lies in information. A well-informed buyer is in a better position to protect his or her interests and make an offer price after taking into account all the information about the house and its immediate environment.
- One of the primary things you should do before making an offer price to the seller is to get the condition of the assessment and check the title documents of the house. By undertaking these exercises before making an offer price, you are showing the seller that you are interested in purchasing the house but at the same time also cautious enough not to be taken lightly.
- Another important thing to be done before making an offer is to gather information on real estate values of similar placed properties in the neighborhood for comparative analysis.
What is the correct way to make offers?
Before making offers to a seller, a certain degree of preparation is required to be done by the buyer in terms of documentation and finance. Getting your finances and documentation in order can make things easier when approaching the seller for the house.
- It is best to make offers to a seller in writing or you can send an email to the seller (if you have the email address) making offers to the seller for the house. This is for record purposes.
- If your offers are accepted then the process just becomes a whole simpler for you.
- If your offers were either rejected or met with a counter-offer, it is time to prepare for a round of negotiations.
When making an offer on a house, what is fair?
The offer for a house from a buyer is made keeping in mind his or her interests and objectives. The seller’s asking price reflects the motives for the seller concerning the house.
- As such, only an offer that reflects the middle ground between these motives and objectives can be truly regarded as fair.
- However, these conditions are rare.
- It is for this reason that an offer price needs to be made with care.
- An offer that meets the seller’s approval and is accepted is considered fair and inclusive of all interests.
What is considered a lowball offer?
When a buyer makes offers to a seller, s/he does so after undertaking some preparation for negotiations or a bidding war.
- When you negotiate, you need “space” to negotiate. By space, I mean a range.
- If you know you are going to negotiate with the seller and are apprehensive of your offer price being higher than the price the seller would finally settle for, you need to start with a low price.
- This is so that you raise the price as you negotiate until you either hit the upper limit of your budget or you arrive at a price at which the seller accepts, whichever is lower.
- This gives you room to negotiate on the price.
- An offer price that is significantly lower than the asking price of a seller is known as a lowball offer.
An offer can’t be an arrow shot in the dark. It is a well-informed move to initiate a property transaction. Thus, it should be reflective of that and may compel a seller to give it some thought. If your offer is accepted by the seller, great, the transaction just got a whole lot simpler. However, if your offer is met with a counteroffer or a rejection, it is time to prepare for a second offer or a round of negotiations.
If repeated offers and negotiations fail to get you any closer to the seller’s acceptance, it is time you consider letting go of the goal of purchasing the house. Also, make an offer that is within your means. An outrageous offer beyond your means is compromising on your other financial objectives and priorities towards which you need to dedicate adequate financial resources. An offer is supposed to be made after testing the waters and not by simply diving into silent waters.