Home Selection, Research & Offer
Don't rely only on the seller's
description - do your research
After all that work of touring homes, you have finally found
what you were looking for. At least so it seems. To be sure, some
research is in order. This is where your buyer's agent needs to lead
you through the discovery process. Who owns the properties abutting
your selection? How are their properties zoned? Is that forest that
is so serene truly conservation land? Is that open land next door
likely to become a 100 unit sub-division? Were the proper permits
obtained for that finished basement you plan to put the pool table
in? The listing says that the home is 4 bedroom, but the Board of
Health says that the septic permit is for 3 bedrooms! Don't rely on
your agent to look these up. Go with your agent and listen to what
is said. Ask your own questions. The Town Planner, Assessor and
Board of Health can be very informative.
You need to have a market
assessment of the home as a basis for your offer
Everything met your
expectations? Good. Time to make your initial offer. What should
that be? Why not start low to be sure you don't leave any money on
the "table"? I don't recommend this approach. It is a shot in the
dark. If you succeed, you will never know for sure if you couldn't
have gotten it for even less. It is also likely that you could be so
low that you offend the sellers who may then dig in their heels. If that
happens, you are now negotiating on their terms. They are
more than likely ready to let you walk. But why shoot in the dark
when your buyer's agent can provide you with a market appraisal
establishing fair market value!
The Internet has already had an incredible effect on real estate
pricing. People are much better informed. Homes that are only a few
percentage points over priced sit on the market. Even in a buyer's
market, homes priced fairly, sell quickly. In the last year most
agencies moved to offering only buyer agency. This means most buyers
have agents providing them with market assessments on the properties
they are considering. So rather than shooting in the dark, get an
accurate idea of the home's worth. and offer a fair price. For where
we have records (about 80% of sales), the ratio of sales price to
the asking price at time of offer is about 98%. This means that for
homes that are selling, the asking price is close to fair market
value.
What else is important in
your offer?
Consider the seller for a moment. Besides the
dollar amount of your offer, they will be concerned with the two
aspects of the deal they can not control: your commitment to the
deal and your ability to get financing. Should the deal fall through
for either of these reasons, they will have lost precious marketing
time and potentially gained a stigma on their home: "Why didn't it
sell?" The more you can offer as a binder with the offer and later
with the purchase and sale contract (P&S), the more you will assure
the seller that you are serious in your offer and intend to complete
the sale excepting any issues with the inspections and your
financing. I do not recommend offering more than 5% as a binder.
This is plenty of money to show your commitment.
The less you
intend to finance of the sale price will also indicate your strength
as a buyer. Finally, write the sellers a letter describing your
appreciation for their home, how it meets your needs and how you see
yourself enjoying it. Remember, they are more than likely still
attached to it, particularly if they have been in it a long time or
raised their family there. I have seen a number of sales hinge on
these letters.
Now stay close to
the phone so your agent can reach you!
Copyright©
2006 - Chris Kellogg
All Rights
Reserved
Last Modified
05/16/2007 |
