You have found the home you like. You have heard that it’s a ‘buyers market’, so you’re thinking of making an offer.
The most important message you can convey when you are making an offer is that you are serious and that you can be trusted. Agents do not like buyers who say, “Give them an offer and if they accept let me know.” This does not make the agent or the seller feel confident. Picture it from the sellers point. What would make you take notice of an offer on your home? The answer is a serious buyer. Become a buyer that the seller wants. Become serious. Show them your money. Money is a powerful negotiating tool. If you pay a ten percent deposit to the agent you will have a much better chance of your offer being accepted than if you pay a hundred dollars.
Imagine you want to offer $520,000 for a home priced at $530,000. A cheque for $50,000 – made payable to the agents trust account is a powerful persuader. Offers in writing a far more powerful than verbal offers. A home cannot be sold verbally, so don’t make your offer verbally. You can sign a Contract of Sale or you can write out your offer. Always seek legal advice BEFORE you sign anything – or, at the very least, make any written offer subject to you receiving independent legal advice.
Find out if there is anything you can do to assist the seller. For instance, if the seller wants to stay in the home for a few weeks, you could allow them to ‘rent’ back from you. Look for anything that could be used as an incentive to accept your offer. Be careful with the amount of your offer. Some people think that offers involve a series of trips ‘back and forth’ – the buyer makes an offer, the seller reduces a bit, the buyer makes another offer and so on, until both sides agree. This does happen, but it is fraught with danger. You can lose the home or you can lose trust. Or both.
If you make an offer and you say ‘This is the most I will pay’ and the agent presents your offer to the sellers who say ‘no’, what do you do then? If you increase your offer – the agent who told the sellers “they won’t pay more” looks incompetent. This upsets agents and makes the sellers suspicious. After all, you said you would not pay more and then you did pay more. You have lost the advantage of being seen as trustworthy. If you intend to increase your offer later, never say “This is my best offer”. Just say “This is my offer” and then put it in writing and leave a cheque as a deposit.
Be sure to include a reasonable time limit by which you require a decision. This will prevent the negotiation dragging on too long. Three working days is ample time for an offer to be considered. Some buyers say to agents, “We will pay $510,000 but we want you to offer $500,000 to start with”. Agents have an ethical duty to the owners and although some agents submit offers which are lower than they actually receive, this is highly unethical, even illegal.
There are only two reasons you should make an offer. First, if you cannot afford the asking price. In which case, the question the seller may ask is, “Why did you look at our home if you can’t afford to buy it?” Second, if you feel the home is too highly priced and you are prepared to risk losing it by making a lower offer. This is quite common and quite reasonable.
If you have done your research, you will know the value of homes in the area. When you see the home you want, you have to decide how much you want it. The more you like it, the more you will have to be prepared to pay. The less you like it, the more you can risk losing it. If you really want to buy the home, but you are not prepared to pay the asking price then consider making your best offer in the beginning; and say that it is your final offer. Be sure you mean it.
And, here’s a tip that can help make your offer more believable – make sure the amount of your offer does not end in a ‘thousand figure’, have it end in a ‘hundred figure’. It increases the chance of acceptance if you offer $502,500 instead of $500,000. It sends the message, “This really is our maximum”.
So there you have it – some simple ways to make an offer. Be serious, be fair, show your money, put your offer in writing, see if there is anything you can do to assist the sellers, don’t play games and if you say that you are offering your maximum make sure it’s the truth.