Buyer's Guide:
Key Considerations for Buying a House
Once you have viewed a variety of homes in your price range and selected one that meets your needs and your budget, it’s time to make an offer to the sellers. The offer will contain many parts, not just the dollar value that you are willing to spend. An essential part of submitting a successful offer is understanding those parts and how they could potentially affect the seller.
Deciding How Much to Offer
When making an offer on a house, several factors can influence the amount that you will bid for your prospective new home. Your Weichert Sales Associate will perform a Price Trend Analysis* that includes an analysis of the local market trends, absorption rate and comparable properties that have sold recently. Your Sales Associate’s goal is to help you determine the fair market price and negotiate the best terms for you. Understanding the features of the properties – such as size, time on the market, age, property taxes, etc relative to their prices – should help you structure your offer.
Factors to consider when making an offer on a house:
- Although you should always value a home based on its relative value in the market, this price will give you a general idea of how much the seller hopes to receive for the home. It is not, of course, an exact science. Some sellers set the price high because they feel they will need to negotiate, while some set the price low in hopes of starting a bidding war. Still others ask for exactly what they want.
- Most homes with comparable features sell for comparable prices.
- If others are also submitting offers for the same home, you might want to adjust your offer to be competitive.
- If the home needs a lot of repairs compared to other homes on the market, you may be able to offer less.
- The laws of supply and demand prevail in real estate and determine who has more leverage when negotiating the transaction.
- If this house has features that you want and need or if you need to move quickly, you might want to structure your offer to be more appealing to the seller.
- If you know that the seller must move quickly, you might be able to offer less. Your Weichert Sales Associate will guide you and advise you on how to write a strong offer for the property you select.
- If the house is on the market for a long time, the seller might be willing to take a lower offer to sell the home.
What are Contingencies?
Contingencies are terms in the contract that must be met before the transfer of ownership of the home can take place. They can cover aspects like inspections, financing, the sale of another home and more. Both sellers and buyers can place contingencies in the purchase contract.
For information on home warranties, see our Resource Center.
How to Place an Offer on a Home
Most real estate companies have a standard contract for making an offer, which includes an offer price, a closing date, the specifics of any contingencies and the timelines associated with them, as well as the type of financing and downpayment. This will simplify the process of making an offer on a house. Do not add any language of your own without speaking to a lawyer. The contract is a legally binding document and any incorrect wording could cause a delay in closing. Any items included with the home will be listed in the written offer. Your Weichert Sales Associate will present the offer to the seller and the seller’s representative. Ask your agent what the exact process is in your area and at what point your offer becomes a binding contract.
If you’re concerned about multiple offers or are making an offer below the asking price, you may want to include a personal statement to the sellers with your offer explaining how you’ve arrived at that offer and all that you’re willing to do to make the closing process smooth. If there are multiple offers, it might also help to convince them that you’re the best person to take care of their home after they have moved on. Some sellers are sentimental about their home and might want to see it go to someone who will love it as much as they do.
The Importance of Home Appraisals
The mortgage company requires an appraisal of the home as a condition of the mortgage. No lender wants to underwrite a loan for more than the home is worth, because if you default on your mortgage, they will rely on the sale of the home to recoup their investment. They will arrange for an appraisal, although the borrower is responsible for paying the fee.
The appraiser will be certified and familiar with your area. They will take notes, photos and measurements to compare it against other homes in the area to give you a number that they feel your home is worth.
If the appraisal is lower than the contract price, it could delay or prevent the sale. If this happens, it can be a negotiating tool to ask the seller to lower the price of the home. It’s also possible to get an incorrect appraisal, so if you feel yours is wrong, you have the option to get a second opinion.
Appraisers are required by law to send you a copy of their reports promptly after the reports are completed or three days before your loan closes, whichever is earlier.
Read the guide in our Resource Center for more information on home appraisals.
After an Offer Is Submitted
A few things can happen after your Weichert Sales Associate presents your offer to the seller. They can accept it, reject it or, as they do most often, they can counteroffer. Negotiation is part of the home buying process and should not be considered a negative. It may take a few rounds of negotiation to find an agreeable deal. Try to be patient and know your limits. Your Weichert Sales Associate is a highly-trained negotiator who will employ the techniques necessary to arrive at the best deal for everyone involved.
| Tips for successful negotiation |
|---|
Research |
Be realistic |
Set tight deadlines |
Your Sales Associate won’t show emotions |
It’s about more than price |
Know the seller’s needs |
Be responsive |
Expect to compromise |
Be prepared to walk away |
Key Takeaways:
Key Considerations for Buying a House
Consider the Price Trend Analysis*, time on the market, seller's motivation, market conditions and your situation before making an offer on a house.
The home inspection contingency is one of the most important contingencies and should not be waived. Although some state laws require disclosures of known problems, there may be additional problems unknown to the seller as well.
Lenders require appraisals as a condition of the mortgage so that they do not underwrite a loan for more than the home is worth. They will arrange for an appraisal, although you, as the borrower, are responsible for paying the fee.
Do not add any language of your own to an offer contract without speaking to a lawyer, it is a legally binding document and any incorrect wording could cause a delay in closing.