Once you find a home you want to bid on, don’t delay.
Did you walk into an open house and got goosebumps? Have you finally found the house that has everything you are looking for? Have you and your partner sat down to weigh the pros and cons of three houses and finally came to an agreement? Regardless of how you’ve made a decision on the home you want to buy, the next steps you take are critical.
1. Analyze your market
Look for similar sized homes of similar size recently sold nearby to determine a fair offer. A good real estate agent will make these “trade-offs” for you, talk about pricing and market dynamics, and work with you to come up with a trading margin bid strategy.
If the house you fall in love with is listed by your real estate agent, he or she may offer to cut the commission and represent both parties. While these dual agency arrangements can work well, there is a potential for a conflict of interest. Negotiation involves a lot of give and take and this can be difficult if your agent is also representing the seller. For your peace of mind, that’s fine. to find another agent to represent you.
2. Be willing to negotiate
Understand that bidding on a house is sometimes the start of a psychological game. You will probably want to have as little home as possible without losing it altogether. The seller wants to maximize the house’s selling price without frightening you. Where should you start with your first offer? Conventional wisdom says you should start 5 percent below the asking price, but market conditions will largely determine how much leeway you have. In a weak market, where the quotes have not been sold, you will have more negotiating power. In a growing market, favorite lists will have full selling price or more. Either way, keep your budget in mind when making your first offer and set a limit on how high you’re actually willing to go.
3. Prepare for a bidding war
In a highly competitive market, where tempting offers are rare, you can forget about making a bargain. While the highest bid often wins, being the first to place a solid bid can give you an edge in a bidding war.
Things that can help you stand out from a seller in the midst of a bidding war:
Try writing a personal letter about why the house is perfect for your family.
Increase your deposit.
Be flexible on the closing date.
4. make a formal offer
Once you and the seller agree on a price, your agent will write a formal offer for review and send it to the seller’s agent for review. If the offer is accepted, a cash deposit, also known as a “guarantee”, is often required to show good faith. (This money will be kept in an escrow account until closing and will eventually go to your deposit.)
Although the specific process and legal requirements vary in different parts of the country, the formal offer should detail the terms and conditions of the purchase, including how you plan to pay for the venue along with contingencies, which give you a way out. exit in case something unexpected happens. rises. It is typical to include a home inspection contingency, which authorizes you to conduct a professional inspection within a certain time frame and to withdraw from the agreement or renegotiate if the relationship is not satisfactory. A mortgage contingency gives buyers the option to withdraw from the deal if they cannot obtain financing within a reasonable time frame. And if you need to sell your current home to pay for the new one, you need to make your offer conditional on the sale of your home.
In a tight market, where multiple shoppers compete for a shortage of listings, shoppers may feel pressured to forgo the unexpected. But unless you have the money to cover your losses, that’s not a good idea. Without a mortgage contingency, for example, you will lose your deposit if the estimate is low and you can’t make up the difference, or if the bank finds something wrong with the condominium and doesn’t lend the money.