Imagine sitting in the front of a classroom, raising your hand high in the air and, like Arnold Horshack from "Welcome Back Kotter," you're loudly and proudly yelling "Ooo ooh, pick me, pick ME!" Now, you might have a pretty good idea of a buyer's experience with submitting an offer on a house especially in a seller's market like we're currently in (when the number of prospective buyers outweigh the amount of available inventory of homes on the market.) Of course, dozens of reading propaganda exist to educate buyers on the basics on submitting a compelling offer package: a strong starting offer with preapproval (if acquiring a mortgage) relative to recent comp activity in the area, a suitable down payment (or earnest deposit,) an pre-contract home inspection, and often a flexible closing date appealing to the seller's own time frame. For a buyer, just getting to the point of accepted offer can be as dizzying as stepping onto solid ground after riding Space Mountain a few dozen times. But in a realm where knowledge is always power, it's important to understand what matters, what might not, and how you as a buyer can assemble the strongest offer possible.
1) Ever wonder what happens when an unstoppable force meets and immovable object? Before you try and answer, it's a trick question...because they can't both exist at the same time. The same thing goes for the notion that a seller can get the highest and best price while the buyer can pay the lowest and best price. It's the listing agent's fiduciary responsibility to get his/her seller the offer with the highest price and the best terms. On the flip side, it's the buyer's agent's responsibility to get his/her buyer the house at a reasonable price given all factors at play. Period. A house is worth what a buyer is willing to pay for it. A buyer shouldn't live in fear of overpaying for their dream home as the bank appraisal will determine the home's fair market value, thus opening up the door for renegotiation on price. I tell my buyer clients that a house is theirs to lose if they choose to nickel and dime on the offer amount and simply hope for the best.
2) Understand what's truly negotiable. A buyer may see the porcelain floors in the living area as pale in comparison to the hardwood floors they've always wanted, or the lime-green bedroom walls as a ghastly Crayola color that didn't make the final cut. However, to the seller, those porcelain floors were laid down by their favorite uncle as a homecoming gift; the lime-green paint being little Billy's perfect color he selected for his very first room. Although much of negotiation comes down to how much the seller wants to sell and how much the buyer wants it, a seller will rarely account for such cosmetic changes and give the buyer the house they envision at the seller's expense. Hopefully, the seller will heed the expert advice from his/her listing agent and price the house according to any work needed.
3) When considering how much to offer, the amount a seller owes on the mortgage is no indication of the market value of a home or what it should sell at. I've been asked by several buyers to find out this information, and I tell them that, as much as I'm here to provide any information beneficial to them, this negotiation strategy is a moot point. The main determining factor of what a house should sell at is its market value in relation to other similar houses in that specific area. Just as the amount that a buyer is preapproved for shouldn't determine, for a seller, what the buyer should pay for the house. A buyer should always ensure that the preapproval letter submitted with an offer only covers the purchase amount of the offer. This preapproval can be adjusted accordingly if the amount agreed to between seller and buyer is higher than the starting offer.
4)Guard your reputation as a buyer....because this does matter. This means knowing that you will truly move forward on a house if the seller accepts your offer. I've known buyers to peruse dozens of homes, wanting to submit multiple offers just to secure the property for themselves in case they decide to move forward on the house. A good buyer agent will advise his/her buyers against this type of behavior reason being that, if you're concentrated on one or two specific areas, you may end up dealing with the same one or two listing agents who tend to dominate the area. Once you get a reputation as a in-credible or flippant buyer, this can seriously affect how the listing agent presents your offer to the seller. Remember that you want to try to be the most compelling offer on the house.
5)Remember how homes on the market are priced when working with a For Sale By Owner. Many sellers who try to market their own property simply review the local comps to their homes and price accordingly. However, some sellers aren't taking into account that most comps were listed and sold by a licensed realtor, with the listing commission built into the sold price. A buyer won't pay the same commission that the seller is wanting to avoid. Your buyer agent should be able to handle this issue for you, of course. And this can be a good negotiating point when you offer less of the house based on this one issue alone. This is why research shows that most home sold directly by owners often sell for less than homes listed and sold with realtors.
At the end of the day, a successful home purchase should have the buyer and seller leaving the closing, both feeling that their individual needs have been met and excited about what the future holds. Be sure to work with the right buyer agent for you, one who understands your needs, will negotiate based on you and your family's best interests, and will always tell you what you need to hear at each step of the way.
Be informed, be motivated....and BE MOVED!
Until next time.....Happy house-hunting, and Happy Thanksgiving!!!
No comments:
Post a Comment