The home buying offer process – whether it be in Weston, MA or Timbukto – brings with it a multitude of questions. I’d like to say some questions are simple and others are complex, but truthfully, they are almost all complex. There are so many variables and potential scenarios that can happen when making an offer, and there isn’t anyone who can forecast what will happen and what the cause and effect will be – unless there are any crystal ball readers out there 😉. After reflecting on this high degree of uncertainty and complexity that defines the home buying process. I’ve come to realize two things. First, acting – instead of not acting or waiting – is almost* always best when trying to buy a house. It puts you in control of your destiny – at least as much as is possible during this process. And second, you can only control what you do – not what the seller does and not what other buyers do. If you go back to these two principles during the home buying process, the right answer for you should quickly follow (fingers crossed)….
And now down to the nitty gritty of the most frequently asked offer questions:
Specific offer questions (about the details of the offer):
How high should my initial offering price be? As strong as you can make it. The stronger the price, the better. For example, if you’re making an offer on a house that is priced at $1,275,000 that’s been on the market for 10 days, and you’re deciding whether your initial bid should be $1,175,000 or $1,200,000, go for the latter. And then you can go up more slowly from that initial, slightly higher number. A higher-priced initial offer will always be better received by the seller, and it will set a more positive tone for the rest of the negotiation. That being said, you don’t want to overpay for the house, and so you’ll want to thoroughly evaluate the comps (sold properties that are comparable to the property).
What is the optimal offer deadline? It depends. You want to give the seller time to respond, and you don’t want to make the deadline unreasonable. BUT you also want to make it tight enough so that other buyers have less time to get their acts together and put in competitive offers. So if you think there will be a multiple bid situation, make the offer deadline tight – 5’ish hours. But if you don’t think it will be tight, 12 hours (give or take) is more reasonable. And I never tend to go any longer than 24 hours – except in very special situations, like an estate when multiple family members and attorneys are involved. Also keep in mind the sleep factor when determining your offer deadline strategy. Negotiations tend to cease at bedtime (10’ish p.m.) and then start back up the next morning (8:30/9 a.m.).
Does putting down more money at the P&S entice the seller to take my offer? It depends. The truth is that the Purchase and Sale Agreement (P&S) money is held by the listing firm or the seller’s attorney until the closing so the seller doesn’t have access to the funds. That being said, the increased downpayment can give the seller more peace of mind that the deal will stay together. Putting down 10% of the purchase price at the P&S means that you have “more skin in the game,” and it’s much harder to walk away from the purchase and your 10%. Just for your reference, more times than not in our neck of the woods, buyers put down 5% – and not 10% – of the purchase price at the P&S .
Does asking for additional inclusions weaken my offer? It depends. If you’ve made a full-price offer, the seller probably won’t be upset if you also ask for a few window treatments and lighting fixtures to be included instead of excluded. But if that’s not the case, and you make a long list of items you would like to be included when the offer has a sub-par price, it definitely will weaken the offer plus it risks upsetting the seller. 😡
How much more attractive is my offer without a mortgage contingency? In one word – VERY! This means that the seller has basically sold his house as soon as the inspection has been negotiated and the P&S has been signed – a time frame of about two weeks.
General offer questions (about the offer process):
Should I put in my offer prior to the open house? – My blog post, Making an Offer Before or After the Open House, goes into this question in extensive detail, but if you’re looking for the Cliff Notes, the answer is to act as soon as possible. That old adage, “Nothing ventured, nothing gained!” is in full force here. In the best case scenario, you would put in your extremely strong offer and have it accepted prior to the open house. Buyer beware – this approach won’t likely play out this way if your offer is not strong….
Should I put in my offer or wait to see if other offers come in? Assuming you would be making a strong, competitive offer, the answer to this question is always to put in the offer ASAP. It’s that old adage again, “Nothing ventured, nothing gained!” In this scenario, it’s 100% true. While making an offer puts you on the pathway to buying the house, waiting does not. You can’t purchase the house, if you don’t try. And more and more these days, I see listing agents “taking offers as they come” rather than setting an offer deadline. The next question that follows is, “Will my offer stimulate others to make offers?” And the answer to that question is unknown – maybe yes or maybe no. More importantly, though, it’s completely out of your control. The only part of the offer process that you can control is what you do – and not what others do. And so if you want the house, go for it!
What should I do if this home is higher than my preferred price range? There are two ways to proceed in this situation:
ACT – Make the most compelling offer that you can and see how the seller responds….. Although extremely unlikely, there is a slight chance that the offer might appeal to the seller in some way and he might decide to accept it. Remember that same old adage I keep mentioning – “Nothing ventured, nothing gained.”
OR
WAIT – I generally advocate acting over waiting, but in this case, time is your friend and waiting* could very well be the better path to follow. The more time that passes, the more negotiable the seller will become on price. But you run the risk of losing the property to another buyer who can readily afford the house. This is a tough one….
What are your thoughts on the subject? Have you had these or similar questions when you were buying a home? If so, how did you decide to proceed? And were you successful at purchasing the house? I can’t wait to hear….
For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.
* One of the times in which it very well could behoove you to wait rather than to act is when you can’t quite afford the property.