Before making an offer on a home you are interested in purchasing, there are some important things to consider. Here are some important steps to consider before making a winning offer:
- Get pre-approved: before writing an offer—and before you begin your search—meet with your bank or other financial advisor; the one who will be giving you a mortgage if required, and get pre-qualified or pre-approved. When it’s time to put forth an offer, the seller will know it’s serious.
- Understand the local context: list prices are subjective. It’s important to know the real estate market for yourself in order to determine if the property is fairly priced, based on comparable, recently sold properties. There’s no specific rule of thumb that says going in under the asking price is expected. Market conditions will dictate the selling price. Keep in mind that homes will also occasionally be underpriced to attract multiple offers. This circumstance may call for a bid over the initial asking price.
- Understand and adjust to the seller’s interests: asking the right questions prior to writing an offer can often make the difference between an accepted offer and a stalled negotiation. Some contract terms may be of great significance to the seller, whereas only a slight inconvenience for you. Should the seller want to rent the place back, for example for a few days or weeks after escrow, your written flexibility on the move out/in date could close the deal in your favour.
- Make a strong deposit part of your offer: you’ll want to submit an earnest money deposit when writing an offer, payable to a reputable escrow company, to be delivered by your agent no more than three business days after the acceptance of the offer. Even when delivering an offer below asking price, offer a large deposit if possible, and it will pay dividends in the end. Down payment strategies however may vary. A higher deposit will most likely strengthen your negotiating power.
- Provide an appropriate time for the seller’s response: time is of the essence once you decide to take the plunge and put in an offer, especially regarding a newer listing in which the risk is high that other buyers will potentially submit offers. Typically, the seller is given until 5pm on the third day from receipt of the offer to respond, unless you write in a different date and time. If the offer is strong, speed up the response time.
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