Making Offer When Buying a Home in Arizona
There are typically 8 steps to successfully buying a house. One of the most important aspects is making an offer. Once you’ve found the perfect house, the next step in the process – making an offer. In order to increase your chances at getting the house, however, your offer needs to be as strong as possible. Here are some things to consider as you work with your real estate agent to write up your contract.
What an Offer Contains
Hopefully you are working with a real estate agent to minimize your liability. After all a buyer’s agent services are free to you. (Sellers in our area customarily pay all of the commissions, including the buyer’s agent fees.) If you are representing yourself you should probably have a lawyer draw up the paperwork for you.
It is important for buyers to understand the terms and contingencies a typical offer contains. In addition to the basics–like the address of the home and legal description of the property, the agreement will lay out the offer price, a closing date, the amount of earnest money, and any other contingencies that you are asking for. Your offer will also give a time frame during which the sellers need to respond.
Choosing the Right Price
What many first time home buyer think is that the most important consideration when making an offer is the sales price. This is NOT always true. First-time buyers often have trouble deciding how much to offer, which is why it’s critically important to work with someone you trust.
Keep in mind that, the housing market determines how much a property is worth. Your agent will look at similar homes that have recently sold and active competitors near the area in order to help you come up with a reasonable offer price. Determine the right price not only involves looking at comparable properties, but an experienced agent will also look at how long the house been on the market, how long it has been since the last price adjustment (if applicable) and talk to the other agent to try to get a sense of the seller’s motivation.
Making an offer for the right price is critical. You should go into the negotiating process expecting to receive at least one counteroffer from the seller. It’s rarely a good idea to offer top-dollar for a home right off the bat. You may also decide to make a low ball offer just to see how flexible the seller might be, but you need to be careful not to offend the seller by making an offer that they feel is way too low.
Other Important Terms and Contingencies
While price is usually the most influential factor when sellers decide whether to accept or reject offers, there are other terms and contingencies that may impact negotiations. Other factors that may affecting your offer are closing date, the need for inspection contingency, whether you’re getting a loan and the type of loan, appraisal contingencies, the amount of your earnest money, and other factors.
As a general rule, you should choose your offer terms carefully based on the specifics of the home you are considering. Make sure to find a balance between making your offer as appealing as possible and protecting yourself against any potential issues such as financing, appraisal or inspection.
Suggested: What is a Contingency When Buying a Home in Arizona?
Negotiations
Once you have come up with an offer you’re happy with, the next step is presenting it to the seller. Negotiations can often feel like a game of telephone as your agent communicates with the listing agent, and then the listing agent communicates with the seller. You will have the right to withdraw your offer for any reason up until it is accepted.
Should the seller come back with a counter offer, you will have the choice to either accept the agreement, write another counteroffer back to the seller, or reject the seller’s counter. Once both parties have finally agreed on an offer, you will both be bound in a contract. At this point, you may not be able to change your mind without losing some or all of your earnest money. The contingencies are often the only legal way out of the contract and get your earnest money back.
Now home will officially be “under contract” and goes into escrow and due diligence process.
Swee Ng, Realtor and Phoenix East Valley resident specializing in win-win real estate transaction through great communication and fighting for his clients’ best interest. After all, this is more than real estates, this is about your life and your dreams.
If you are looking to buy or sell your home in Phoenix AZ area, we hope you will consider us. Contact us today for complimentary consultation.
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