Ready To Make An Offer? Read This!

The “Offer” stage in the buying process is the beginning of a negotiation phase between the buyer (you)  and the seller, whereby both parties are being advised by their realtors.

Here are some helpful tips that can enable you to make a successful offer:

1. Do not make an offer beyond your limits. The key is to know your budget and keep some room to negotiate but ultimately do not go over your upper limit. Always have a good understanding and open lines of communication with your realtor. Properties always have a “listing” price i.e. the seller’s desired price. Your agent will run the “comparables” on the home, a process that will compare the property to all the similar homes that were sold in the area. Your agent should also be able to advise you on some other factors that will help bring the offer price down; for eg: the length of time the property has been sitting on the market, how many offers the seller has received etc. Your offer will include the “offer” price i.e. the maximum price at which you are willing to buy based on the variables discussed. Trust your realtor and know that he/she has a very good idea about the price. 
2. Show you are serious by making a deposit between 1-5% of the agreed upon price post all the negotiations. This deposit counts towards the down payment if the deal progresses. The title company will hold this amount in an escrow account and if the deal does not move to the next stage the company will then distribute the money according to the terms listed in the offer.
3. Always try and make a conditional offer based upon 2-3 conditions such as financing, home inspection and status certificate. This gives you a set number of days by when you must fulfill the specified conditions; i.e. secure a mortgage approval, get the home inspected and have a lawyer look over the status certificate to make sure everything is in order. This ensures that if any of these conditions are not met, you have a way out and your deposit will not be forfeited.
4. Read and understand ALL the terms of the offer including the fine print. The offer is essentially a contract between the buyer and the seller. Your agent will be with you every step of the way and if you have any doubts, questions or concerns, always ask him/her to clarify.
5. Know how much you will be putting down. It is extremely important to understand how much down payment you will be able to afford. A 20% down payment grants borrowers an exemption from Private Mortgage Insurance (PMI),a monthly payment that protects the mortgage company in case borrowers default on the loan. 20% may not always be possible and your mortgage broker can help you determine what amount would be best for you. Additionally, you may qualify for over 2,400 down payment assistance programs available all over the country.
6. Decide on a closing date. Once you pick this date you have to stick to it and make sure you are able to make the payment by this date or else there may be penalties and interest charged on the number of days you are late. Being flexible here can give you some more room to negotiate on other areas of the offer. Usually this period is between 30-60 days but it can vary depending on the seller’s situation.
7. Be prepared for a back and forth. It is not uncommon to receive a counter offer. This is where you need to understand that you cannot go beyond your upper limit, and walk away once that is reached. 

At Your Mortgage Your Way we can help answer all your questions and concerns regarding this process. It is less intimidating when you have experts by your side, guiding you along the way. If you’d like to learn more, make an appointment today.