How Much Should I Offer?
When deciding on what to offer, you are the only one who can determine how much. Certainly you should ask for advice from your realtor, but ultimately you decide how much to offer.
The more you know about the seller’s motivation, the better. A seller who must move quickly because of a job transfer may be open to a lower price. Other people who are more motivated to sell include people going through a divorce or who have already purchased another home.
The listing price is just a guide. It is what the seller would like to receive, but sellers often accept a lower price. Look at the neighborhood and the comparable homes that your realtor provides to see how the seller’s home compares. However, you probably don’t want to make too low of an offer. This can discourage the seller from negotiating with you at all. Also, during a strong market, a low-ball offer will not stack up if there are other offers.
In some circumstances you may even want to offer more than the listing price. This is often true in a very strong market, when a home is newly listed, and there are multiple people interested in making an offer.
How Much Earnest Money Should We Offer?
Earnest money or a good faith deposit, is money that you provide to the seller’s real estate company in an escrow account. The primary purpose of earnest money is to show a seller that you are serious about purchasing their home. Earnest money is subtracted from the final figure that you pay at closing. The higher the amount, the stronger a purchase offer will look to a seller.
How Long Does the Seller Have to Respond to My Offer?
Your realtor will know how long of a “life” or how many days to give your offer before the seller has to respond. The life of an offer can be anywhere from 12 hours to three or four days. Many different circumstances affect how long the length should be.
A shorter life is recommended if you’re making an offer on a home that is newly listed or if there is a possibility of multiple offers. A longer life may be recommended if the home you are looking to purchase has been on the market for several months and the seller is located out of town.
What Are the Next Steps after Making a Purchase Offer?
Generally there are four possible responses from a seller after they receive an offer:
1. They accept your offer
2. They make a counter offer
3. Your offer is rejected
4. Your offer is not responded to
It’s not very common for a seller to reject or not respond to an offer. This usually only happens with very low-ball offers. Normally, if your offer is low, a seller will make a counter offer.
What is the Process for Negotiating Counter Offers?
Most counter offers include changes to one or more of the following:
1. Sale price
2. Closing date
3. Contributions toward closing costs
4. Contingencies requested by the buyer
5. Earnest money deposit
How you negotiate with the seller on their counter offer depends on current market conditions. In a buyer’s market, you have more leverage to stick to your initial offer.
In a sellers market or especially when a seller has received multiple offers, you have to be careful with what you come back with. Your realtor can help advise you if the market is favorable to negotiating a seller’s counter offer.
The GU Crew are expert negotiators and would like to help you through the home buying process. For more information about buying a home, or working with one of us, please contact us today!