Things Not to Do When Making an Offer On a House
After you have waded through all the "think about it " houses and finally decided upon the home you want to buy, your next step is to make an offer on the house. Making an offer on a house is a crucial step in the home buying process and should be considered carefully. Although making an offer on a house seems like a straight forward process, it is often done incorrectly. To help you avoid making some of the most common mistakes when making an offer on a home here is a list of things not to do when making an offer on a house.
Deciding not use an agent and a lawyer: If you decide to purchase a home through a seller's real estate agent, be aware that agent represents the seller. This means that he/she will most often be acting in the seller's best interest, not yours. It will likely serve you better to use a buyer's agent to prepare your offer. This not only puts an experienced negotiator on your side, but it costs you nothing extra. How is that possible you ask? It's simple, your agent ends up splitting the commission with the seller's agent. You may also want to consider using a real estate lawyer to review your offer, even if your state does not require you to do so. Using a real estate lawyer will help ensure that you haven't left anything out of the offer that you may regret later.
Do not neglect to price shop: In order to test the market some home sellers intentionally overprice their home. So before making an offer on a house, be sure you compare the house to recent sales in the area. Your agent, or even the seller's agent, should have this information readily available.
Do not accept verbal agreements: Verbal agreements are not legally enforceable when it comes to the sale of a house. Therefore, you need to put everything in writing. For example, if the seller has agreed to include appliances in the deal be sure you put it in the offer.
If the agreement isn't in writing, you will have no recourse for collecting the appliances later if you discover that they are gone when you move in.
Do not make an unconditional offer: Always make your offer conditional upon a professional home inspection. By doing so, it ensures that you have a way out of the deal if the home inspector finds a major problem, such as a structural defect. It is also wise to make your offer conditional upon an independent appraisal. This will protect you incase the home turns out to be worth less than what you have offered to pay for it.
Do not include too many non-essential conditions: It should make sense that sellers do not like to deal with buyers who make too many requests or contingencies. Therefore, you will specifically want to avoid making your offer contingent upon some event that the seller cannot control. You will look much more attractive to a seller if you are already pre-approved for a mortgage (so your offer is not conditional upon obtaining financing) or if you don't have to sell your own home before you can afford to buy. This is especially relevant in hot markets where sellers may be receiving multiple bids. You do not want to lose out on a home because you haven't got your financing arranged or your assets in order.
Do not neglect to ask for extras: If you are in a buyer's market and you are an all-cash buyer, or if you are already pre-approved for a mortgage, or if you are not dependent upon selling your own home before you can afford to buy, you will look very appealing to a seller. This places you in a strong bargaining position where you have much more negotiating power. When making an offer on a house use your strong bargaining position and negotiating power to your advantage. If the seller is motivated, try and get them to include items such as that pool table in the gameroom or the washer and dryer in the deal. It may also be possible to even get them to pay the closing costs or for minor repairs.
Do not lowball: Although you should generally not offer the full asking price for a house in a cooling market, you also do not want to offer too little. For one thing, insulting the seller may put a strain on further negotiations, even if the seller has not received any other offers. Secondly, your offer will be one of the first to be disregarded if there are other buyers considering the home. The only time you may want to consider submitting a lowball offer is if the seller is extremely motivated. For instance, if the property has been listed on the market for several months a lowball offer just might have a chance of succeeding.
Do not get caught in a bidding war: When making an offer on a house you must commit to a reasonable upper limit that you would be willing to pay for the home and not go over it. Do not become so enchanted with a home that you lose your sense of perspective as to its true worth and do not get caught up in a competitive bidding war just to beat out other bidders. Doing so could leave you with a serious case of buyer's remorse.
Do not allow your agent or the seller's agent to pressure you: Although a buyer's agent is supposed to act in your best interest, be aware that your agent does not make any money unless you buy a house. As a result, your agent has a financial stake in your purchasing a home. With this in mind, do not let your agent or the seller's agent persuade you into accepting a seller's counter offer that you do not approve of, or into offering more for the home than you are comfortable with.
Do not get cold feet: Dwelling on the fact that you are about to make a purchase of several hundred thousand dollars can be overwhelming to anyone. Since no house is perfect, you should not let yourself get hung up on minor details. As long as you have done your research and thoroughly checked out the house, you should make your offer with confidence.
Hopefully, this article, Things Not to do When Making an Offer On a House, will help you avoid making some of the most common mistakes when you make an offer on a home.
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