Ten Things Not to Do
A lot of things can go wrong when you’re putting in an offer on a home. Learn how to avoid them with the following list of common purchase-offer mistakes. House hunting can be exciting and fun, but once you’ve found the home you want to buy, your next step should be all business. Making a purchase offer is a crucial part of buying a home, and one of the easiest to do incorrectly. Here are 10 of the most common mistakes you should avoid.
Not Using an Agent And a Lawyer
You can purchase a home through a seller’s real estate agent, but remember that person represents the seller, which means he or she may not always be acting in your best interest. Using a buyer’s agent to prepare your offer will put an experienced negotiator on your side, and it doesn’t cost you any extra. Your agent splits the commission (that comes out of the sale price of the home) with the seller’s agent. Also, even if your state does not require one, using a real estate lawyer to review your offer will help make sure you haven’t left anything out that you may come to regret.
Making an Unconditional Offer
It’s always wise to make your offer conditional upon a professional home inspection. This will ensure you have a way out of the deal if the inspector finds a structural defect or other major problem.
You should also make your offer conditional upon an independent appraisal to protect yourself if the home is worth less than what you’ve offered to pay. Finally, if your new home is in an area where insurance is hard to obtain, it’s a good idea to make your offer conditional upon getting coverage.
Including Too Many Non-Essential Conditions
Sellers prefer not to deal with buyers who make too many requests. That’s why it’s a good idea to get pre-approved for a mortgage so you don’t have to make your offer conditional upon obtaining financing. This is especially true in a hot market where a seller may be receiving multiple bids and you may lose out to someone who already has their financing arranged. Your offer will also be less attractive if you make it conditional upon selling your own home, or on some other event the seller can’t control.
In a cooling market, your offer usually shouldn’t be for the full asking price, but you also don’t want to offer too little. If other buyers are considering the home, your offer will be quickly tossed aside. Even if there are no other offers on the table, insulting the seller may sour further negotiations. However, if the seller is highly motivated — for example, if the house has been on the market for many months – a lowball offer just may succeed.
Neglecting to Price Shop
Some sellers intentionally overprice their home to test the market. Before you make an offer, obtain a list of what other homes in the same neighborhood have recently sold for. Your real estate agent, or even the seller’s agent, can provide one.
Getting Caught In a Bidding War
Don’t fall so in love with a home that you lose your sense of perspective regarding its true value. Set a reasonable upper limit that you’re willing to pay and don’t sign back an offer for a higher amount just to beat out other bidders. If you do, you could end up with the home, and a serious case of buyer’s remorse.
Allowing Your Agent to Pressure You
While a buyer’s agent should always act in your best interest, it’s important to remember that he or she doesn’t make any money until you buy. Your agent therefore has a vested interest in closing the deal. Be careful not to get persuaded into offering more than you’re comfortable with, or into accepting a seller’s counter offer that you don’t like.
Getting Cold Feet
Making a purchase of several hundred thousand dollars can overwhelm if you dwell on it. But if you’ve done your homework and have checked out the house thoroughly, you should present your offer with confidence. Don’t get hung up on tiny details. No house is perfect.
Not Asking For Extras
In a buyer’s market, you have more negotiating power, so use it to your advantage. If you sense that the seller is motivated, see if you can get them to include such things as appliances in the deal. You may also be able to get them to pay for minor repairs or agree to pay the closing costs.
Accepting Verbal Agreements
If the seller has agreed to include certain items in the deal, such as a particular piece of furniture, put it in the offer. If the agreement isn’t in writing, you will have no recourse if you show up on moving day and discover the item is gone.