This post focuses on six things to remember when you’re making an offer for your new house.
1. Don’t Always Make It About Price
This is probably the biggest thing, is that it’s more than just price. A lot of buyers will think that “okay if I just offer them the highest price they’re gonna take it – that’s all they’re gonna look at.” Well, in reality, that’s not always the case because the seller may have other motivations like a closing date – are you offering a more favorable closing date, or are you offering more earnest money or are you asking for a home warranty? That’s because a home warranty is something that the seller will pay for. Are you paying all cash, or are you paying with a mortgage, and if you’re paying with a mortgage, what’s the strength of your financing? So these are all things that the seller will consider when they receive your offer package. You can offer a little bit lower price, but have stronger financing. Or if your financing is not quite as strong, well then you might have to give a little bit more money.
2. Everything is Negotiable
The second thing to remember about making an offer on a new house is that everything is negotiable. Literally, every word in this contract is negotiable. So don’t be afraid to negotiate beyond just the purchase price and just the closing date. You can negotiate on earnest money on tax proration, you can even offer to buy the home as-is for a lower purchase price.
3. Ask For a Home Warranty
The third thing to remember when you’re making an offer on a new home is to ask for a home warranty. A home warranty is just a simple insurance plan that will cover various parts of your home for the period of 1 year. It could cover anything from your appliances, if the fridge breaks or if the stove doesn’t work or it could cover the HVAC. So what typically happens is the seller pays for this home warranty for you. As far as cost, it varies widely depending upon the size and the price of the home that you’re looking to buy, but anywhere between maybe 350 for a small townhome or small condo usually up to about 600 dollars, maybe 700 for a period of one year.
4. Use a Buyer Letter
The fourth thing to remember when you’re writing an offer on a home is to use a buyer letter. It’s just a letter that you write – a short couple of paragraphs – that tells your story, and tells the seller why you love their home, and why you’re making an offer on their home. The idea is that sellers want to sell to somebody that they like. And sellers want to sell to somebody that’s going to take the same care and put the same amount of love into their home that they did. And people feel good knowing that they’re selling their family home to somebody that’s going to take care of it.
5. Find Out What The Seller Really Wants
What is most important to the seller? If you think that it’s always the highest price you would be wrong. Most sellers are looking for the highest net price. That means sales price minus any seller contribution closing cost. That means a lower offer with less closing cost could actually beat out a higher offer with more closing costs. For some sellers, the closing date can be a hot button. Maybe they already have a house under contract and they need to move fast. Or maybe they are building a house and the house is not going to be ready for a couple of months. That means that they may want to move the closing date out a couple of months. Or maybe they want a couple of days to move out after closing. You really do not know what’s important to the seller until you ask
6. Always Include A Due Diligence Period
The Due Diligence period is a period of time where you can inspect the house and discover any problems that may exist with the property. Do not EVER waive the inspection! No matter how much competition there is, you should always do an inspection on a house. Yes, that means new construction as well. Inspectors will see things that you or your cousin or other family members might miss. They’ll find safety issues and large ticket items that need to be repaired or replaced before you move in. You can ask the seller to repair those items that are important to you or you can even walk away from the transaction and get your earnest money back. The due diligence period is for your protection and it can save you from a lot of headaches.
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We hope you found this blog post on Top 6 Suggestions Before You Make An Offer On A House useful. Be sure to check out our post on 10 Things to Look Out For When Buying a New Home for more great tips!
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