Pearland Real Estate Expert

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What makes a good offer?

You found a home you'd like to buy. Now how do you put together an offer the owners will accept?

Start with a number

Obviously, the amount you initially write into the contract has much to do with whether the seller looks favorably on your offer. How do you come up with that figure? There are several factors to consider.

You will want to determine how the home compares to similar properties in the area. The most reliable way to make this evaluation is to look at homes that sold recently in the same neighborhood. Market conditions and property values can change rapidly, and what a home across town fetched has little to do with what this property may be worth.

You would expect to pay less for a home that's smaller than the neighborhood average, but there may be other variables to take into account. A smaller property with desirable upgrades can be worth more than a larger house that needs significant updating.

What type of market you're in also plays a part. If you've lost out on three bidding wars because of a strong seller's market, you will be more likely to make an offer at or above the asking price. A buyer's market gives you a little more leeway. Keep in mind, though, that it only takes one other offer to knock you out of contention.

The amount is just the starting point

Hitting the seller's "magic number"-the amount at which he or she is willing to sell-does not guarantee he or she will accept your offer. Several other aspects of your offer can improve or sink your chances.

For starters, the homeowner will look at the amount of earnest money in the proposed contract. A higher number shows your seriousness about this purchase and may place your offer above other similar offers.

Some sellers may have a strong preference for when they close on the sale. If you can meet their timeline, your offer gains strength.

When you can help it, stay away from contingencies. When you can't help it, make those contingencies as moderate as you can. Why? Put yourself in the seller's shoes. Even a slightly lower offer may be more attractive than a higher offer that's contingent on the buyer first selling his or her own home.

The more you ask for from the seller, the weaker your offer. That's not to say that you shouldn't make a purchase contingent on selling your home first, or that you shouldn't ask for the patio furniture to convey if that's important to you. Just know that each request may take a bit of luster out of your offer.

Give yourself options

There's a provision in the standard residential contract that enables you to pay an amount for an option period. This period gives you the ability to conduct inspections and otherwise evaluate whether you want to proceed with the transaction. If you choose, you can terminate the contract for any reason during the option period. The amount of the fee and the length of the option period are negotiable.

While you don't want to propose an option period that's so long the seller will turn down your offer, be sure to give yourself enough time to schedule inspections and weigh your decision before moving forward.

Many factors combine to make an attractive offer. Your Realtor can help you determine how to put together an offer that gives you the best chance of buying the home you want at terms that are favorable to you.

Whether you're interested in buying your first home, your next home, or just want to know more about homeownership in general, I encourage you to check out a couple of great online resources: http://www.texasrealestate.com/ or http://www.har.com/ and for all of your Pearland TX and Northern Brazoria and Galveston County real estate needs, please visit my site at http://www.danfrankrealty.com.  All of these sites offer tons of useful, real estate-related information geared specifically for Texans.

Danny Frank is a local Pearland TX Real Estate expert.

This column was published in the 27July08 edition of the Galveston County Daily News

 
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Comment balloon 7 commentsDanny Frank • July 28 2008 10:30AM

Comments

There are other options and factors beside price. You post points them out. We often forget them. Great post thanks for sharing

Posted by Charlie Ragonesi, Homes - Big Canoe, Jasper, North Georgia Pros (AllMountainRealty.com) about 10 years ago

Danny-

Hey, great post!

We try to base an offer on REALITY - not the ULTRA-LOW price the buyer wants, or the TOO-HIGH price the seller is asking - but what the house should LOGICALLY sell for in today's market.

Of course, we leave a little bit of a contingency when working with a buyer, but we also tell the buyer to be prepared to buy the home at a fair price if neccessary.  We will do our best to get him the best deal, but that original offer price is not guaranteed.

We never make an offer to be countered - we write STRONG to gain quick acceptance - and we tell the Listing Agents that - "It's not a decision as to whether our buyer will offer $xxx or $xxx + yyy.  It's whether they will offer on YOUR home, or another one that is close on their list of properties under consideration."

We also stress other elements of the offer in addition to price - lack of a contingency, strong down payment, understanding that the inspection period is not a renegotiation period, etc.

Here in Illinois, there is no "option" period - but we have a 5 business day out for Attorney Review, and, of course, the right of inspection.

Again, great post, and great thoughts!

Call or check in anytime!

DEAN & DEAN'S TEAM CHICAGO

Posted by Dean Moss, Dean's Team Chicago IL Real Estate Team (Dean's Team - Keller Williams Realty Partners Chicago IL) about 10 years ago

Thank for your post.

A few items to consider is DOM, doing a buyers cma and working from there. I try never to make just the price the issue.

It is also our job to educate the buyers that putting in a very low offer is not the best ides, some sellers won't even counter.

Thanks

Rich

Posted by Rich Ferretti, ABR QSC Realtor/Broker, Charlotte NC Real Estate a (Rich Ferretti Real Estate) about 10 years ago

Great post as well as comments following it.

I'd like to add that a great offer is all relative...the same home 4 blocks away could be a huge price difference...Even though they may appraise for the same value.

Posted by Travis Newton, FHA, USDA, VA, LOAN EXPERT - Salem OR Homes For Heroes SALEM OREGON (Salem and Bend Oregon FHA, VA & USDA 503.931.4490) about 10 years ago

All good "advice" -- thanks for sharing.    You're a good writer, by the way!

 

Li

Posted by Li Read, Caring expertise...knowledge for you! (Sea to Sky Premier Properties (Salt Spring)) about 10 years ago

Really good advice for a newer agent. Many times i find i have to remind myself and my clients its not always about the price. Especially in a military community, people need to move quick and that can make or brake the whole transaction.

Posted by Marie LaVoise, CENTURY 21 Platinum Properties (CENTURY 21 Platinum Properties) about 10 years ago

Buyers are fully aware of the incentives they should be given and are quick to remind you if YOU forget.  They are much more knowledgeable and they want the most for the least.  Don't we all???

Posted by Latonia Parks, Certified Military Relocation Expert (Top Bragg Realty, Fayetteville NC, Home of the 82d ABN DIV) about 10 years ago

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