Making an Offer - Q & A
Q: In a normal market, is a low offer a good idea?
A: Your low offer might be rejected immediately in a normal market, however, in a buyer's market your low offer may be accepted by a motivated seller or a counteroffer may be made.
Sellers are more likely to be accept full-price offers or above, however, there are other considerations involved:
*Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even a full price offer, may not be as attractive as an offer without that condition.
* Is the offer made on the house as is, or does the buyer want the seller to make some repairs or lower the price instead?
* Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
Q: In a purchase contract how many contingencies can be found?
A: Two standard contingencies are usually found in most offers. First, is the financing contingency which makes the sale rely upon the buyer's ability to obtain a loan commitment from a lender. Next, is the inspection contingency which grants buyers the option of having professionals thoroughly inspect the property to their satisfaction and needs. Reasons that are not stipulated within the contract could lead to the buyer backing out of the deal and forfeiting his or hers deposit.
The seller's responsibilities, such as, passing a clear title, maintaining the property to keep it in its present condition until the closing date and making any repairs to the property that were agreed upon all need to be placed into the purchase contract.
Q: When it comes to disclosing pertinent information about a property, whose obligation is it?
A: Disclosing pertinent information relating to properties varies from state to state. Under the strictest laws, it is the seller's obligation as well as the seller's broker, if there is one, to disclose all facts materially which may affect the value of and/or the desirability of the property that are known or accessible only to the seller.
Items that sellers often disclose within the purchase contract are: homeowners association dues, whether or not renovations done to the house have met the local building codes and permit requirements, any presence of nuisances in the neighborhood which a prospective buyer may not notice (dogs barking every night or poor TV reception), any death on the property within the last three years and lastly any property restrictions such as, zoning ordinances or association rules.
Checking you state's disclosure rules prior to your home purchase is indeed considered a wise decision.
Q: Is there a way to find out the value of a troubled property?
A: For buyers who are considering a foreclosure property you should obtain as much information as feasibly possible from the lender pertaining to the bids being sought.
Examining the property itself is also very important. If however, you are not able to get into the foreclosure property, converse with the surrounding neighbors to find out about the condition of the property.
Another alternative is to do your own cost comparison by researching comparable properties that have been recorded at your local county recorder's and assessor's office or through Internet sites who specialize in property records.
Q: When making an offer, are low-ball offers advisable?
A: Offers on houses which are substantially less than the asking price are known as low-ball offers.
Any offers can be presented mind you, however, a low-ball offer may sour a prospective sale and the seller may become discouraged and choose to not negotiate. The offer will more than likely be rejected, unless the house is overpriced.
Before making an offer, it's wise to do your homework and research comparable prices within the neighborhood. It also pays to know all there is to know about the motivation of the seller. For example, a lower price with a speedy escrow would motivate the seller who must relocate, has another property under contract or must sell quickly for various other reasons.
Q: List and sales prices, what's the difference between the two?
A: The price tag put upon the house in a real estate listing is the list price, which is an estimated amount that the seller wishes to receive for the property. What the property actually sells for is the sale price. At times, the sales price lower, higher, or the same as the listing price it all depends on market conditions and just how accurately the property was originally priced.
If there are no offers made within the first few months of the property's listing period, sellers may need to adjust the listing price.
Q: Can I buy homes below market?
A: Typical buyers often look at five to ten homes before they decide to make an offer, investors who make bargain buys usually go through many more. Experts agree, to find a real “bargain” its going to take a lot of determination on your part. Below is a list of ways in order for you to find/buy a bargain property:
* Buy a fixer-upper in a transitional neighborhood, improve it and keep it or resell at a higher price.
* Buy a foreclosure property (after doing your research carefully).
* Buy a house due to be torn down and move it to a new lot.
* Buy a partial interest in a piece of real estate, such as part of a tenants-in-common partnership.
* Buy a leftover house in a new-home development.
Q: When a home is sold who gets the furnishings?
A: Any personal property which is permanently attached to the house (such as fixtures, built-in bookcases, drapery rods, tacked down carpeting, or a furnace), automatically stays with the house, unless it states otherwise within the sales contract. Anything that isn't nailed down is negotiable (such as appliances which aren't built in – washers, driers, refrigerators). Some sellers are willing to negotiate when it comes to more personal items, a piano for example.
Q: Are there any tips on negotiation?
A: You will find yourself at a stronger negotiating point, the more information you know about the seller's motivation. A seller who has to relocate due to a job transfer, for example, may be amenable to a lower price equipped with a speedy escrow. People who are undergoing a divorce or who have purchased another property are also considered “motivated sellers.”
One thing to remember is that the listing price is not necessarily what the seller will settle for, it's merely what they would like to receive. Before you make your offer, be certain to check the prices of comparable homes in the neighborhood and see how well the seller's asking price stacks up.
Experts discourage making deliberate low-ball offers. An offer such as this can be presented, however, it can sour the sale and discourage the seller from negotiating at all.
Q: What are the standard contingencies?
A: Two standard contingencies are usually found in most offers. First, is the financing contingency which makes the sale rely upon the buyer's ability to obtain a loan commitment from a lender. Next, is the inspection contingency which grants buyers the option of having professionals thoroughly inspect the property to their satisfaction and needs. Reasons that are not stipulated within the contract could lead to the buyer backing out of the deal and forfeiting his or hers deposit.
The seller's responsibilities, such as, passing a clear title, maintaining the property to keep it in its present condition until the closing date and making any repairs to the property that were agreed upon all need to be placed into the purchase contract.
Q: What are the differences between sales price, list price and appraised value?
A: The seller's advertised price is the list price, which is basically a rough estimate of what the seller wishes to receive. Some of the prices listed by the seller can be high, low or close to the figure they want. Consult comparable prices in the area in order to determine whether or not the list price is indeed a fair one.
The sales price is the amount of money, you the buyer, are willing to pay for the property which you are interested in.
The appraisal value is determined by a certified appraiser and is the appraiser's estimate on what the property itself is worth. An estimate which is based on the condition of the property, the comparable sales and a vast majority of other factors.
