Making an Offer

How to determine the offer price
When you've found the house that meets your needs, you'll want to make an offer on it. You certainly don't want to pay more than is necessary, nor do you want to present the seller with an unrealistically low offer. To determine a good offer, consider these factors:

Consistency - How does the house compare in price to the others that you've seen in the area?

Comparable sales - Comparing sales is one of the best ways to determine market value. You can find out about comparable sales from your real estate brokers or local town hall/courthouse. When looking at comparable sales, make sure you consider only similar properties and the most recent transactions. Also try to determine if any special circumstances affected the selling price.

Time on Market - A seller might be eager to sell and, therefore, be willing to negotiate on our terms if the house has been on the market for a long time.

Pre-qualification for a mortgage - You have a good negotiating tool if you've been pre-qualified for a mortgage amount. A seller might be willing to meet your terms if he or she knows that you have a high probability of obtaining the necessary mortgage.

Condition - Consider the cost of what you'll want to do to the house to suit your needs and tastes.

New home - Is the building cost per square foot reasonable?  When figuring this, you can determine the local costs per square foot by consulting other builders in the area. Remember, the price of the lot (location) will also contribute to the final selling price.

How to make the offer
Now you've found a suitable house and have decided how much you want to offer the seller. Before you make an offer, be sure you're serious about the house. You will have to put some "earnest money" down, and under certain circumstances, it may not be refundable.

At this point, you should review local real estate practices with your broker. Be specific - Leave no doubt as to the terms and conditions of the offer.
Make sure you specify:

1. The amount of the offer.
2. The proposed closing date.
3. Contingencies that must be met, such as receiving a mortgage commitment within a specific period of time or satisfactory inspection results.
4. Items to be included in the sale. Only items physically attached to or built into the house are considered part of the property (such as wall-to-wall carpeting, or light fixtures). When in doubt, specify all extras in writing.

Check local custom about leaving kitchen appliances, since it varies in different parts of the country.

Put down a deposit - A typical deposit is one percent of the offer you're making. Deposits may be called "earnest money" or "good faith money" to show the seller that this is a bona fide offer. In some parts of the country, the amount of the deposit must be increased to five or 10 percent of the sale price when the seller accepts the offer. Be sure you're serious since the deposit may not be refundable if you withdraw the offer.

Deal through your broker - It's part of his or her responsibility to negotiate the sale. Your broker should:

1. Present your offer to the seller and conduct the negotiations, if any.
2. Remain unemotional throughout the negotiating.
3. Follow your instructions and remain in close contact with you.