Category — Making an offer

Buying a home is a delicate balance between offer and counter-offer, revising the contract and negotiating terms until you find a magic combination that works for both buyer and seller. During this process, it can be easy to forget that you’re not the only person working with the seller, and yours might not be the winning bid. Don’t assume that just because you’re negotiating a contract, you’ll be able to buy the house. An offer is just an offer until you get the signatures on the contract.

When you’re moving from a higher-priced area to a lower-priced locale, it becomes difficult to objectively judge home values. It’s human nature to judge values and prices based on what you know. Unfortunately, if what you know is significantly higher-priced than the area where you’re moving, you run the danger of overpaying. Everything looks like a great deal, and you may jump too quickly at a deal that isn’t as good as it seems. Recalibrate your sights based on the area where you’re looking; don’t bring your old property value guidelines along for the ride.  

Thinking that $200,000 home is a great deal because it’s better than the home that sold for $198,000 a month ago? Think again. Comparable home sales only tell a part of the story. That home that sold for $198,000 may have had $18,000 in seller’s concessions, making the real value of the property around $180,000. At that price, the $200,000 home doesn’t seem like such a great deal. Don’t be misled into paying too much for a home based on comparable sales data.

Generally, making low offers on a home is a bad idea. Making a low offer can backfire, and get your offer rejected out of hand or get you a worse deal than you could negotiate otherwise. Under some circumstances, though, making a low offer is justified. When might you make a low offer on a home?  

If you’re buying in a buyer’s market, you might be able to negotiate escrow credits with the seller. If buyers have the advantage in the market, some sellers might be willing to offer escrow credits to ensure that a home sale goes through. One useful credit that sellers sometimes offer is to negotiate nonrecurring closing costs in escrow.  

If your dream home is new on the market, attractive and reasonably priced, you might face competition for the property. What can you do to avoid entering into a bidding war and losing your dream home to buyers with deeper pocketbooks?  

Some sellers begin the process of selling a home with the best intentions, but position themselves or their home unrealistically. When the market doesn’t provide what they ask, they don’t adjust to the marketplace; they try to force the market to adjust to them. These sellers aren’t serious enough about selling their home, and can become a big waste of your time and money if you go through the process of making an offer.