making an offer :: SoundBiteBlog.com

In our last episode, Bill and Betty Buyer were sitting down with their trusty Agent, Realtor Ron, to draft an offer on their dream home. They had spent the past 3 weekends touring dozens of potential properties, when they finally found just the perfect place!.

When it came time to discuss the offer price, Bill proudly asserted, “We’re going to offer them $50K below the Listing price, and ask them to pay closing costs too!”

Pulling his jaw off the floor, Realtor Ron looked down on the MLS data-sheet for the subject property.

“Their home has only been on the market for less than two weeks,” Realtor Ron stated.

Pulling up statistics for  several comparable properties in the same neighborhood that had sold in the past month, Realtor Ron showed the Buyers how the property was actually priced very aggressively, below many of the most recent sales. In addition, a quick check on the County Website revealed that the home was priced just below the property tax assessed valuation as well.

“But it’s a ‘Buyer’s Market,” responded Betty Buyer, “Aren’t all  Sellers desperate?”

~     o     ~     o     ~     o     ~     o     ~     o     ~

There is this tendency when the market softens and slows down for Buyers to expect greater bargaining leverage when it comes to home sales prices.

In the event that you, as a Buyer, decide to offer less than the asking price, there are definitely some strategies you can employ that will help to improve your chances for success.

Just understand that each property and Seller presents a unique set of circumstances, and each needs to be considered separately.

The offer price is just one element to a contract offer, albeit the most predominant. The key to being successful in offering less than asking price is to strengthen all of the other elements of the offer. Here are some suggestions:

1.   Cash Buyer:   Obviously, the old adage ‘Money Talks’ still bears true today. Cash Buyers will almost always have the greatest degree of negotiating power in a real estate transaction. But let’s face it, the overwhelming majority of Buyers today require some amount of financing.

2.   Letter of Loan Pre-Approval:    Okay, so if you’re in the clear majority, and plan on using a mortgage loan to purchase the house, then you need to effectively convey/communicate your financial solvency and ability to satisfy the contract. One way this is accomplished is through an official Letter of Loan Pre-Approval furnished by your mortgage lender (always make them ‘address specific’ and not ‘dollar amount’ specific).

3.   Letter of Buyer Introduction:   Another method I have found to be effective is to draft a Letter of Introduction about my Buyers that serves to put ‘flesh’ on the offer. It helps to divert the attention away from ‘dollars & cents’ and puts the focus on real people trying to achieve their dreams. I know, it sounds corny, but trust me, it works.

3.   Earnest Money:   One of the purposes behind offering earnest money is to demonstrate the seriousness of your intent to purchase. It makes a statement to the Seller about how much you want their home. If you’re going to be skimpy on the offer price, then soothe the wound with a hefty earnest money deposit.

4.   Make it a ‘Clean’ offer:   Make your offer as straight-forward and with the least amount of ‘hoop-jumping’ as possible. This means eliminating or reducing any redundant contingencies or addendum.

5.   Other Seller Considerations:   One of the things I always ask the Listing Agent before drafting an offer is “Are there any other considerations besides price that are important to the Sellers?” You’d be amazed at what is important to some Sellers other than the sales price. Some want an accelerated closing. Others a delayed or extended closing. Sometimes accommodation to these other considerations can make a huge difference.

This is, by no means, an exhaustive list of elements you can vary or strengthen to better position yourself when submitting a low offer. In the next installment, we’ll talk about the risks associated with submitting a low offer.

~     o     ~     o     ~     o     ~     o     ~     o     ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood.

Share on Facebook

Posted in Buyers, Real Estate Bites | 2 Comments »

Tags: Buyers, Kitsap County WA real estate, making a low offer, making an offer, seabeck wa real estate, Silverdale WA Real Estate

Just about everyone enjoys finding a bargain. My kids love shopping at the local Value Village over in East Bremerton WA. The last time I was there with my son, Luke, I found a really nice leather dress belt in mint condition for only $2.99 that normally retails for around $50!

There is this tendency when the market softens and slows down for Buyers to expect greater bargaining leverage when it comes to home sales prices.

Typically, when a market shift takes place that favors the Buyer (commonly referred to as a ‘Buyer’s Market), there is high level of inventory of homes available for purchase. At the same time, as ‘Days on Market’ increase (the number of days on average that it takes for a house to sell/close), Sellers begin to reduce or discount their listing price. Add to that the number of recent short sales and foreclosures that have occurred due to our current economic conditions, and you have the potential for finding  some really excellent bargains for today’s Buyers.

However, regardless of how current market dynamics favor Buyers, one should never assume that every Seller is equally desperate to make pricing concessions. Each property must be evaluated on its own unique merits. The basic questions Buyers need to ask are:

1.   How long has the home been on the market?

2.   Is the house priced aggressively, according to current market value?

3.   What have comparable homes in the immediate area sold for in the past 1 to 3 months?

The answers to these questions can help to dictate whether or not a lower price offer is reasonable or realistic. If the home has been on the market for any length of time without a price reduction or without much showing activity, chances are the Sellers might be more motivated in making a concession. If the home wasn’t priced right at the start, accordingly market value, then the Sellers might be coming to the point where they realize an adjustment might be necessary. A brief market analysis should be able to determine if the home is priced correctly.

In the event that a Buyer decides to offer less than the asking price, there are definitely some strategies you can employ that will help to improve your chances for success.

The offer price is just one element to a contract offer, albeit the most predominant. The key to being successful in offering less than asking price is to strengthen all of the other elements of the offer.

We’ll cover those other elements in the next installment, so stay tuned!

~     o     ~     o     ~     o     ~     o     ~     o     ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood.

Share on Facebook

Posted in Buyers, Real Estate Bites | 10 Comments »

Tags: Buyers, hood canal wa real estate, making an offer, seabeck wa real estate, Silverdale WA Real Estate

This is the seventh installment in an on-going series of posts dedicated to helping 1st Time Home Buyers successfully achieve their home purchasing goals. We have been identifying and discussing, in chronological order, key events in the home buying process.

In our last discussion, we offered some practical advice on what to do when going out to look at potential homes in a post entitled, Tips for Home Tourists.

This time we’ll talk about the key ingredients to a well-drafted offer in a article entitled, “Make Them an Offer They Can’t Refuse!”

Okay, so you’ve found just the right home that is perfect for your needs. Now, you’re heading back to your Agent’s office to write up an offer. Drafting a good, reasonable offer is crucial to achieving your home-buying success. Since there are so many variables, rely heavily upon your Agent’s knowledge and expertise to best counsel you during this stage of the process.

Here are a few basic points when putting together your offer

Current market conditions. In most areas, the market has recently slowed significantly. For several years, it has been a Seller’s market. Properties have been selling relatively quick and usually for full price. In many instances, there were multiple bids. In a slowing market, there are more homes available, prices start to drop slightly, and Sellers become more motivated and willing to negotiate. Your Agent will know the dynamics of your particular market intimately, and will be able to explain the best strategies.

Days on market. How long has the house been on the market? Was it just recently listed? Again, your Agent will know the average “Days-On-Market” (the average amount of days a home is on the market until it goes under contract) for a specific area. Obviously, if a house has been on the market for an excessive amount of time, the Sellers might be more willing to negotiate.

Fair market value. Is the house worth what they are asking? Is the house priced according to current market value? Your Agent can do a quick analysis of recent sales in the immediate area to determine if the asking price is reasonable and warranted.

Low price offers. The first thing you need to ask yourself is, “Why do we want to offer less?” Is it because you don’t think the house is worth what the Sellers are asking? (refer to your Agent’s price analysis). Perhaps you simply want to save money. The key to writing a lower offer is to do so without greatly insulting the Seller. Remember, in most instances, this has been their home and they may have some very strong attachments to it. At the very least, your offer should be enough to attract their attention, encourage reasonable consideration, and evoke a counter. Before submitting your offer, find out if there are any additional considerations that are important to the Sellers – when would they prefer to close? Where should you direct title and escrow? Try to accommodate the Sellers preferences in other areas.

Multiple bid situations. In some instances, you may find yourself competing with other parties for the same house. This is especially true in a fast, Seller’s market. Some Buyer’s do not want to get caught up in a bidding war, and will simply bow out. Others may really like the house and are motivated to jump into the fray. Once again, rely on your Agent’s knowledge and expertise. In some cases, you may want to include an Escalation Clause or Addendum along with your offer. Think bidding on eBay. You determine your ‘ceiling’ high dollar offer, and specify an incremental bid amount. Your incremental bid amount keeps going up until you pass your closest bidder by that amount, or you reach your ceiling. The key in this process is to simply identify the maximum amount you’re willing to pay for the house. If you’re the successful bidder, the Listing Agent is normally required to provide a copy of the competing offer. Added concern may be warranted for the subsequent appraisal coming in at value when sales prices are exceeded.

Strengthening your position. Do everything you can to convey yourself as a strong, viable Buyer. Have a loan pre-approval letter from your lender that is specific to the property address. If you know that this is the house for you, put down as much earnest money as you can. Remember, earnest money is one of those elements that you can control and it communicates the seriousness of your intent to purchase. The more money, the more solid your offer. Your Agent can also draft an effective cover letter to accompany your offer that introduces you to the Sellers. It helps to make things more personal, and puts “flesh” on your offer.

Keeping it clean. Try to make your offer as neat, simple, and straightforward as possible. Avoid using too many contingencies, handwritten changes or modifications to the standard forms.

Accomodating the Sellers. This is especially important in multiple bid situations. Prior to drafting an offer, a good agent will ask the Listing Agent if there are any aspects to the offer that might be in the Seller’s best interests. Some Sellers may want a quick closing, or an extended closing with a rent back. Drafting an offer that takes into account the Sellers needs and wishes will have a better chance of acceptance.

Items conveyed with the property. Your Agent should have an MLS printout of the home that states which items (washer, dryer, refrigerator, etc.) are being conveyed along with the property. Make sure these items are included and specified in your offer.

Legal description. Ensure that a full, complete legal description is included as part of your offer (attached as an “exhibit”) and that it requires both Buyer’s and Seller’s signatures. The address is simply a means of identifying where the Post Office delivers your mail. A title company or county records should be able to provide you with the full legal description.

Equipped with this information, and the expert counsel of a professional real estate agent, you’ll be better positioned to successfully achieve “Your 1st Time Home Buying Adventure!”

For the next installment, go to Home Inspection or Home Alone?

Share on Facebook

Posted in Adventures in 1st Time Home Buying | 2 Comments »

Tags: Kitsap County WA real estate, making an offer, Poulsbo Real Estate, purchase and sales agreement, real estate contracts, Silverdale WA Real Estate