How to put in an offer on a property that guarantees results
Monday, March 16, 2020
Step 2 – Putting in the offer
You have found a house/condo that meets your needs and you have decided to put in an offer.
The list price may have nothing to do with the value in today’s market, so make sure that your agent does an analysis and gives you a range of value for the house. The range should be as tight as possible – ex. $840,000 – 860,000.
At this time – your agent should contact the selling agent to see if there are any other offers, and if not – ask if there is likely to be any. The offer strategy is different for when you are the only offer, vs when there are others. For this blog – I will talk about the situation where you are the only offer. Contrary to popular belief – not every house or condo gets multiple offers, although most houses are being listed low to stimulate multiple offers. I will discuss putting in an offer in a multiple offer situation in a future blog.
You see a house that meets your needs, should sell in your affordability range according to your buyer agent and you decide to put in an offer.
You want to make the offer as attractive to the seller as possible, while ensuring it is good for you too. Your agent should have a discussion with the seller’s agent to find out – what is most important to the seller – price? Closing date? Making sure it won’t be torn down by a builder? Or some other motivation?
Where possible – you want to structure your offer to meet the seller’s objectives as much as possible in order to get what is important to you. An example would be, to go with the Seller’s closing date, if it works for you, but put in your price. You may want to go lower than asking price – but be careful not to go so low that you insult the seller and they won’t deal with you again, even if you come in at full price. Yes… it happens!
I always recommend having a home inspection. If you want a clean offer (no conditions) do it ahead of putting in the offer. The risk with this is that if you don’t get the offer – you are out of pocket for $500 +/- dollars. The benefit is that you know what to budget for repairs once you own the house. Otherwise make the offer conditional on a home inspection.
Even though you are pre-approved for financing – send the listing to your finance person – and ask them if you need to put in a condition for financing. Be very careful to listen only to your banker/mortgage broker on this matter and don’t let your excitement for getting the house cloud your judgement.
You put in your offer – conditional for 3 days on financing and home inspection, with a bank draft for 5% of the purchase price and anxiously await the Seller’s decision. They agree with all of it, but they want $22,000 more and have signed it back to you.
It is now the Seller’s offer to you. You can decide to take it as is or make a change to it. You feel that it is a little high and reduce the price by $10,000 and sign it back to them. It is your offer to them.
The Seller reviews it and decides that he can live with that price and accepts the offer. You now have an accepted offer – although it is still conditional on a home inspection and financing. The first big hurdle is out of the way. Congratulations!
In Step 3, we will deal with what happens next, after the offer is accepted.