Whether it has taken years, months, or only days, today is an exciting day! You have found the perfect home, so now what? When it comes to writing an offer, do you know what you need? Here are a few simple things you will need to have to write a successful offer.
Firstly you need to have a preapproval. A preapproval is a letter from a mortgage broker that promises you will be able to receive a loan from them for the amount of the home. No matter how certain you are that you will be able to afford something, or get a loan, most sellers will not take an offer seriously without a preapproval. Your real estate agent can refer you to a couple of mortgage brokers and the preapproval can often be done in less than a day. To be honest, this should be done before you are out looking at homes so you don’t fall in love with something you can’t afford.
Secondly, you need to know what you want to pay for the property. Your realtor should have a pretty good idea of what things are selling for in the neighborhood, and I would start there. If the home is priced lower than the average for the neighborhood, it will probably receive multiple offers, in this case you want to make sure that you write the highest and best offer that you can. If the home is priced above average, you may want to offer something a little lower than the listing price. It really comes down to what you think the home is worth. If you want a break down of numbers, ask your realtor for a comparative market analysis (CMA) this will tell you the average price per square foot, how many have recently sold, how many homes are listed, and how long homes are staying on the market. All of these figures will help to determine a fair price.
Along with the price you are offering, you need to determine whether you are asking for closing costs and how much of a down-payment you are offering. Closing costs are things like title fees and loan origination fees, small numbers that add up quickly. You are allowed to ask the seller to pay for up to 3% of the offer price towards your closing costs. But remember the more you ask of the seller, the less desirable your offer looks. Again, it all depends on how the home is originally priced and if there are multiple offers. For example, lets say Buyer A offers $195,000 with no closing costs, and Buyer B offers $198,000 with 3% closing costs on a home originally listed at $200,000. At first glance Buyer B looks better but when you look at the net offer, (offer price-closing costs) Buyer B is actually only offering just over $192,000.
With the down-payment you have some flexibility depending on the type of loan you get. If you are getting a government loan you can pay as little as 3.5% down, with a traditional loan you can have as little as 5% down. The more you have to put down the better the terms of your loan will be, but this really comes down to what money you have.
Lastly you need to know what things in the house you are going to ask for. Everything that is not attached to the house (appliances and furniture) can be negotiated in the contract. Typically some appliances stay in the home and some will go but it is your decision what you want to ask for. If you want everything, washer/dryer, refrigerator, stove, and dishwasher, you need to write it out. Furniture doesn’t usually stay but if you absolutely love something, ask for it. The worst that will happen is the seller says no.
Other than that, you just need to read through the contract and make sure you understand everything. Your realtor can walk you through it all but if you want legal advise you should hire a real estate attorney. After you write the offer all that is left to do is negotiate! but we will leave that for another day. In the mean time, Happy Hunting!