Tips for Writing a Better Home Purchase Offer
A good home purchase offer can be an excellent way to secure the Rolling Hills home or property a buyer wants under terms they can live with. However, the offer can also alienate sellers and compromise the purchase before it even has a chance to progress past the first round. Because each home sale is different, buyers need to learn the underlying principles of a purchase offer before they begin to structure the right offer for each one.
The stronger the offer, the more likely it is the seller will take the buyer seriously. This doesn't mean that buyers have to offer the listed price, but it shouldn't be a low-ball offer that offends the seller either. This tactic does not discount the art of negotiating because starting low can be a helpful strategy in many cases. However, unless the buyer is in a clear buyer's market, it's also a dangerous move to shoot too low.
Sellers don't just want to see a number on a piece of paper—even if it's a price they're satisfied with. If a buyer can't secure the funding, the offer is going to be useless. Sellers are always going to favor buyers who show up with cash, but the next best thing is going to be an official letter from a lender. This letter will need to prove that the buyer has gone through the underwriting process and has been pre-approved for a certain level of funding. Sellers also may prefer conventional loans over government-backed loans because they may take less time to process.
Earnest Money and Down Payments
The amount of the deposit and down payment is a strong sign of the level of interest a buyer has in the property, which can influence a seller's likelihood of acceptance. If the buyer can only put down a small deposit and a minimum down payment, it could be a sign that their finances are not as strong as the seller was led to believe. Loans can fall through for any number of reasons and the last thing a seller is going to want to do is start all over again.
Estimating the Closing Costs
Buyers can get so caught up in the deposit, down payment, and interest rates that they forget that the closing costs can add on up to 5% of the total cost of the home. If buyers have to pay for the closing costs out of pocket, this could cause them to have to increase the amount of their loan and potentially knock them into the next lender bracket. Buyers can negotiate closing costs with the seller, but there are limits to just how much sellers can give to the buyer.
Contingencies are a smart way for buyers to safeguard themselves from unknown issues regarding the home. However, while home inspection and repair contingencies are common, buyers should be careful not to go overboard. The more requests they fold into their purchase offer, the more likely it is a seller will become frustrated by the demands and reject the offer.
Talking to the right real estate agent can be a good start for buyers who aren't quite sure how to begin their offer. There are a number of standard pieces of advice that buyers can find, but the right moves will differ for every sale and buyers need personalized advice to get it right.