||Is a low offer a good idea?
||While your low offer in a
normal market might be rejected immediately, in a buyer's market a
motivated seller will either accept or make a counteroffer.
Full-price offers or above are more likely to be
accepted by the seller. But there are other considerations involved:
* Is the offer contingent upon anything, such as the sale of the buyer's
current house? If so, a low offer, even at full price, may not be as
attractive as an offer without that condition.
* Is the offer made on the house as is, or does the buyer want the
seller to make some repairs or lower the price instead?
* Is the offer all cash, meaning the buyer has waived the financing
contingency? If so, then an offer at less than the asking price may be
more attractive to the seller than a full-price offer with a financing
||What contingencies should be put in an
||Most offers include two
standard contingencies: a financing contingency, which makes the sale
dependent on the buyers' ability to obtain a loan commitment from a
lender, and an inspection contingency, which allows buyers to have
professionals inspect the property to their satisfaction.
A buyer could forfeit his or her deposit under certain
circumstances, such as backing out of the deal for a reason not
stipulated in the contract.
The purchase contract must include the seller's
responsibilities, such things as passing clear title, maintaining the
property in its present condition until closing and making any
agreed-upon repairs to the property.
||How is the price set?
||It's very important to
price your home appropriately relative to current market conditions.
Because the real estate market is continually changing, and market
fluctuations have an effect on property values, it's imperative to
select your list price based on the most recent comparable sales in your
A comparative market analysis provides the background
data on which to base your list-price decision. Study the comparable
sales material presented to you by the different agents you interviewed
initially. If the analyses are more than two or three months old, have
your agent update the report for you.
If all agents agreed on a price range for your home,
go with the consensus. Watch out for an agent whose opinion of value is
considerably higher than the others.
||Are low-ball offers advisable?
||A low-ball offer is a term
used to describe an offer on a house that is substantially less than the
While any offer can be presented, a low-ball offer can
sour a prospective sale and discourage the seller from negotiating at
all. Unless the house is very overpriced, the offer will probably be
You should always do your homework about comparable
prices in the neighborhood before making an y offer. It also pays to
know something about the seller's motivation. A lower price with a
speedy escrow, for example, may motivate a seller who must move, has
another house under contract or must sell quickly for other reasons.
||Are interest rates negotiable?
||Some lenders are willing
to negotiate on both the loan rate and the number of points but this
isn't typical among established lenders who set their rates like large
corporations set the prices on their goods. Nevertheless, it pays to
shop around for loan rates and know the market before you go in to talk
to a lender. You should always look at the combination of interest rate
and points and get the best deal possible.
The interest rate is much more open to negotiation on
purchases that involve seller financing. These usually are based on
market rates but some flexibility exists when negotiating such a deal.
When shopping for rates, look for published rates in
local newspapers or check the growing number of Internet sites that
publish such information.
||Can you buy homes below market?
||While a typical buyer may
look at five to 10 homes before making an offer, an investor who make
bargain buys usually go through many more. Most experts agree it takes a
lot of determination to find a real "bargain." There are a
number of ways to buy a bargain property:
*Buy a fixer-upper in a transitional neighborhood, improve it and keep
it or resell at a higher price.
* Buy a foreclosure property (after doing your research carefully).
* Buy a house due to be torn down and move it to a new lot.
* Buy a partial interest in a piece of real estate, such as part of a
* Buy a leftover house in a new-home development.
||Can you negotiate the price on new
||It can be difficult to
negotiate the sales price with a developer because they may claim their
prices are based on fixed construction costs. But it doesn't hurt to
Experts say builders more likely to be flexible on
price at the very beginning and the very end of a development project.
Early on, most developers want to move people in quickly so the project
picks up momentum. Later, developers may be more inclined to accept
lower offers when only a few units remain.
If negotiating the price doesn't work, buyers commonly
negotiate for better amenities (upgrade carpet, light fixtures, etc.) or
lot location. Experts say a developer will rarely pass up a deal over a
couple hundred dollars' worth of carpeting, for example.
||Who gets the furnishings when a home is
||Fixtures, any kind of
personal property that is permanently attached to a house (such as
drapery rods, built-in bookcases, tacked-down carpeting or a furnace),
automatically stay with the house unless specified otherwise in the
sales contract. But you can consider anything that is not nailed down
negotiable. This most often involves appliances that are not built in
(washer, dryer, refrigerator, for example), although some sellers will
be interested in negotiating for other items, such as a piano.
||What do you think of get-rich-quick
real estate schemes?
||Most real estate experts
say there is no such thing as getting rich quick in real estate. But
there are no end of get-rich-quick programs presented to the public as
alternative methods of buying real estate.
Some are reputable while others depend on your
financial circumstances to work. A handful are simply scams.
Many get-rich-on-real-estate programs offer advice on
how to buy government foreclosure properties and participate in other
government programs. Most of this information can be obtained by calling
the government offices involved directly.
Anyone interested in real estate investments would be
wise to explore a variety of sources. Most investors view real estate as
a long-term investment. Deals that sound too good to be true often are.
||What is the best time to buy?
||Because many buyers prefer
to move in the spring or summer, the market starts to heat up as early
as February. Families with children are anxious to buy so they can move
during summer vacation, before the new school year begins.
The market slows down in late summer before picking up
again briefly in the fall. November and December have traditionally been
slow months, although some astute buyers look for bargains during this
||What are some tips on negotiation?
||The more you know about a
seller's motivation, the stronger a negotiating position you are in. For
example, seller who must move quickly due to a job transfer may be
amenable to a lower price with a speedy escrow. Other so-called
"motivated sellers" include people going through a divorce or
who have already purchased another home.
Remember, that the listing price is what the seller
would like to receive but is not necessarily what they will settle for.
Before making an offer, check the recent sales prices of comparable
homes in the neighborhood to see how the seller's asking price stacks
Some experts discourage making deliberate low-ball
offers. While such an offer can be presented, it can also sour the sale
and discourage the seller from negotiating at all.
||What repairs should the seller make?
||Most sellers like to make
all minor repairs before going on the market in order to seek a higher
sales price. In addition, nearly all purchase contracts include a buyer
contingency "inspection clause," which allows a buyer to back
out if numerous defects are found. Once the problems are noted, buyers
can attempt to negotiate repairs or a lower price.
||What is the difference between list
price, sales price and appraised value?
||The list price is a
seller's advertised price, a figure that usually is only a rough
estimate of what the seller wants to get. Sellers can price high, low or
close to what they hope to get. To judge whether the list price is a
fair one, be sure to consult comparable sales prices in the area.
The sales price is the amount of money you as a buyer
would pay for a property.
The appraisal value is a certified appraiser's
estimate of the worth of a property, and is based on comparable sales,
the condition of the property and numerous other factors.
||What is the first step to buying a
||Finding out what you can
afford is one of the fist steps, which can be done by pre-qualifying for
a home loan. This step will help you narrow your search for both a
neighborhood and particular houses. A pre-qualification is a simple
calculation that considers several factors, but primarily your income.
There are no guarantees with a prequalificaiton, but it will be expected
of you when you make an offer on a home.
||Should I include an inspection
contingency in my offer?
contingency" protects you as a buyer in a purchase offer by
allowing you to cancel closing on the deal if an inspector finds
problems with the property.
As soon as the seller accepts a written offer, the
document becomes a legally binding contract. The purchase contract can
be written to include a contingency for any repairs found to be needed
or related items the seller must take care of before closing. If these
are not dealt with, and you have such a clause in your contract, you can
delay or possibly cancel the closing. If it's not stated in the
contract, you could face losing your deposit. There also may be costly
legal implications stemming from backing out of a contract.
You usually will have the right to choose the
inspector (and be responsible for paying for the inspections). In
addition to an overall inspection for structural soundness, you can
request a satisfactory pest control inspection report, roof inspection
report or contingency for no potential environmental hazards such as
asbestos or radon gas.
Contingency clauses should satisfy the concerns of
both the buyer and seller. Buyers also can protect themselves by
inserting additional necessary contingencies. Indicate which items like
curtains and appliances are to remain with the house. Then stipulate you
have the right to personally inspect the home 24 hours before closing to
make sure all is in order.