When you find a home that you can afford and one that you can see yourself living in, the next step in the process is to make an offer. For first time home owners, this can be quite a daunting and nerve-wracking experience, but with some advance preparation this part of the home buying process can go smoothly. Here are some tips on when you should consider making an offer on a home.
First thing to know is that making an offer on a house does not automatically guarantee you will get the deal. There are many factors into play here. Most agents will suggest that you offer slightly below the asking price, especially if you are able to provide a significant down payment and can pay certain seller costs, like escrow or closing.
Another scenario involves the counter-offer, where the seller rejects your initial offer and counters with a higher price. In some cases, not all, the counter could come back as the listing price. If the seller does not wish to budge and you can’t buy at the listing price, then you’ll probably want to pass on the house.
If your offer is accepted by the seller, there is still a possibility that you may not end up with the house because of a routine house inspection. House inspections are quite common in this process and give you, the buyer, one last chance to inspect the property to insure what you are buying is not riddled with massive problems. Deal-breaker problems often include structural damage to the foundation or major areas of the house, and even plumping or electrical issues. If massive problems are found, then you have the right to rescind your offer or ask that the seller of the house fix the issues before you purchase.
It's always good to try and find out as much as you can about the home you are interested in buying like why the owner is selling. The listing agent of the home may not divulge why; but try and ask the owner directly if possible. If not, you can still gather some kind of information about the home you are interested in buying without the cooperation of a listing agent.
Keep in mind that the climate of the real estate market can actually help you with the offer you make. You want to first see if the market is hot, cold or neutral when it comes to buyers. It is ideal for a person looking for a home to buy in a buyer's market. When the real estate market is cold, you will find the sellers more willing to negotiate because it is harder to sell a house at that time. Sometimes in a cold realty market the seller may even pay a portion or all of the closing costs in an effort to sell the house.
A buyers market is one in which there are ample homes for sale and not that many buyers purchasing homes.
Typically when a home is on the market listings for sale for six months that constitutes a buyer's market. When this happens there is more inventory for buyers to choose from. Prices tend to drop as well to meet the demands of the buyers. Thus you have a buyer's market. On the other hand a seller's market is ideal for those selling homes. This is when more buyers are looking for home and the buyers are competitive for the same homes. When this happens the seller takes the best offer to sell. Also when it's a seller's market the seller tends to pressure the buyers. The do have to keep within a 10 day minimum which is the law because that's the time frame they have to check for lead paint before a closing.
A neutral market is just that. Usually there is a balance between the buyers and sellers, the prices and market rates.
Keep in mind when you make an offer for a home, you want to compare prices of other like homes in the same area. It good to know how much the seller paid in order to come up with a feasible price to ask the seller to give the house to you for. You want to only compare those properties with similar configurations, age and location to the one you want to buy. This way the asking price is realistic based on the type of house you are asking to purchase.
If you want more information on homes and real estate in the Memphis, Tennessee area, contact me here.