Buying real estate at the best possible price can get cumbersome and tricky, especially if you have little to no experience of dealing in properties.
Responding to sellers’ offers and throwing counteroffers is a game in itself. Bidding is a proper art that must be mastered before putting up offers against a property.
Found your dream house but not quite sure how to proceed? Here are the 10 most powerful tips to make the best offers.
1. Get a Pre-approval Letter
A Pre-approval letter is an official document from your lender which states how much you will be able to borrow from them based on your creditworthiness, income, and assets.
This document single handedly adds more value to your offer and gives you an edge over other competitors.
Sellers prefer pre-approval letters as it assures them that they will have the money at the deal close.
2. Research the Seller and Identify the Market
When buying property, it is vital to find out whatever you can about the seller and the property. You can even search for public records which might help you unearth valuable information about why the property is being sold.
This information will help you draft a winning offer even for less than the market price.
Learning about the market is also essential before structuring your offer. Try to do a comparative analysis of the market to identify the fair value of properties in the area. This will enable you to have a decent idea of what to offer in your proposal.
3. Write the Best Offer
In the sellers’ market, lowball offers without any data or justifications are bound to be rejected. Haggling is not the ideal way of dealing with real estate. For example, if a property is worth $200,000 and you offer $75,000, there is a high chance the seller will throw the offer away in an instant.
Think from the perspective of the seller, how many years of care did they put into the property, how much money did they spend on its structure and wellbeing.
Making a very lowball offer also disregards the emotional aspect of the property for the seller. Therefore, it is recommended to put your best foot forward and offer what you think is a suitable value for the property.
That being said, this doesn’t mean that you should refrain from offering lower values. Richard Branson famously bought Necker Island for a modest $180,000 against a bid price of $6 million!
4. Leave Some Room for Breathing
If your capital budget is $100,000, you shouldn’t offer the entire budget on the offer. If the seller offers $110,000, you won’t have any room for negotiation, and it would leave a bad impression of you.
It is therefore recommended to leave some room in your offer for future negotiations and counteroffers. Also, leave some room for closing costs which is a small percentage of the total amount that must be paid. It usually ranges from 3%-5%.
5. Cash Holds Value
Although paying in cash and paying via loans has the same value for the seller, cash payments generally attract their attention as it goes on to show that you don’t require a loan to buy their property and are serious for business.
This adds prestige to your offer and the seller might opt for you if they are short of cash and require it on an urgent basis.
6. Waive Some Contingencies
Contingencies are steps or points to be considered before a successful sale. There are some standard contingencies that are vital for the closing and there are some which can be ignored.
Always include the contingency of home inspection in your offer. It is vital to inspect the property yourself in case of a future discovery of major defects.
Contingencies like non-essential repairs can be removed as it boosts your offer in the eyes of the seller and increases your chance of a successful sale.
7. Hire a Good Real Estate Agent
Even though the seller might have an agent, it is better to hire your real estate agent to expedite the process. Hiring an assertive agent will push your offer forward and will allow you to get the most out of your budget.
8. Don’t Get Overly Excited
Buying a new property can be an exciting process, however, try to avoid getting too attached to the features of the real estate. Unfortunately, new and inexperienced buyers get excited about certain aspects such as polished wooden floors, infinity pools, and other seemingly luxurious stuff. Avoid getting attached to stuff and try to think rationally.
9. Reduce Your Inspection Time
Offer a reduced inspection time for your contract. This will expedite the process and will put your offer favorably in front of the seller. If the standard inspection period is 17 days, try reducing that to 12 days or less.
10. Offer to Close the Deal Fast
Many sellers prefer closing the deal faster compared to making a few more bucks. If the industry standard for closing is 30 days, an offer of closing in 20 days will give you an edge over your competition and help you get the deal done faster.
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