How Do You Create a Good First Offer?

Right At Home Daily: Finding It: House-Hunting
How Do You Create a Good First Offer?
By Margaret Crane for Right at Home Daily

You've found the house you want. The market value is reasonable, given the condition of the home. And, you have some idea of what it will cost to fix it up.

Now it's time to create an offer that will really grab the seller's attention.

The key, when making the biggest purchase of your life, is to think with your head and pocketbook, not your heart.

First, determine how hot the market in that area has been. The number you're looking for is the average number of days on the market. Ask your broker to get this number for you. If the average days on the market is less than 45, you've got a hot market.

Next, find out how long the house has been on the market, and why the seller is selling. If the reason for the sale is a divorce, job loss or the seller has already bought another home, he or she might be anxious to sell and agree to a lower price, or pay for some of your closing costs or other items, like a homeowner's warranty.

Work with your agent to come up with a price that won't offend the seller but isn't too high, given the strength of the local market. A properly prepared offer will include the purchase price, size of the down payment and how the rest will be financed, items you would like to have included, contingencies, clear title, closing and occupancy dates and how long the offer is valid.

Your bid can be firm -- you buy as is -- or conditional -- you buy the property if it appraises out in value, if you can get your financing, or if it passes inspection.

Before you sign, check with your lawyer to ensure your legal interests are protected.

Now put your money where your mouth is. You'll need to attach a check for the earnest money, anywhere from $1,000 to 5 percent of the purchase price will do. Usually, these funds will be placed into an escrow account, where it collects interest while the deal is being negotiated.

TAKE IT AND RUN
Do your due diligence before you submit a good first offer. This will avoid problems later and speed up the process.

1. While living next to the train tracks or a busy street may not bother you, it may bother the person who will buy the house from you. Before you buy, consider how difficult it may be to sell this home in five or 10 years.

2. Remember, money isn't always the most important thing to the sellers. Surely they'll want a fair price (or more, depending on how hot the market it), but giving the sellers the right to choose the closing date may make your offer the one they accept.

3. If you want to make your offer as good as a "cash" offer, you can eliminate the financing contingency. However, add a contingency that allows you to back out of the deal should the house not appraise out in value.

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