1.Obtaining essential data before making an offer ? it might come in hand to find out why the home owner is selling the house but finding this out might be a difficult thing to do because the real estate agent might refuse to tell you this aspect. However, you can obtain this information without relying on the cooperation of the real estate agent. You should realize that none alone of the following is enough, but each of them used in conjunction with the others will help buyers to make the decision on which price is best to offer.
2.Determine the market ? if you plan on making an offer in a buyer's market, you will have less competition for the home. In such a market, a home seller is very receptive regarding any offers; this would be the ideal market for a person that wants to purchase a home. On the contrary, if you are buying in a seller's market, there is a high probability that the sellers won't accept a lower price. As a matter of fact, not only that the price won't be lower than the one listed but it could actually go up.
3.Find out how much the seller paid ? although the price paid by the seller won't be very different from the actual price of the home, if he purchased the home in a depressed market, the price of the home today might be a little bit higher today. Although you won't be able to find out the condition of the home when the seller bought it, you can adjust the value taking into consideration appreciation and remodeling improvements.
4.Examine comparable sales ? when you are looking at comparable sales it is advisable to look only at the homes that have a similar configuration, location and age to the home you plan on purchasing. You should use the data from the most recent sold sales (within 6 months).
5.Determine the seller's mortgage balance ? unless the seller of the home is in default and he is willing to participate in a short sale, the seller is highly unlikely to accept an offer for less than the mortgage plus the closing costs.
6.Check square-foot cost averages ? you should know that the smaller homes are actually priced higher per square foot and on the contrary, the larger homes are priced lower per square foot. It is important to know that you can't just simply take the average square-foot cost and multiple it by the square footage of the home you want to buy in order to come up with a reasonable price to offer. However you can check the trends in order to determine if the square-foot cost averages are on the rise/declining and use the information to your advantage.
All things considered, in order to make an offer there are a couple of things that you should take into consideration. Gather as much information as you can and you will have the possibility to make a fair offer.
Your home auction has finished and the buyer has made an offer for your home and has written an 'offer to purchase' agreement. If you have not seen a real estate contract, it might be a good idea for you to look at one. By studying a blank real estate contract it will give you some knowledge of its workings and this will make the buyer's offer easier to understand. You will be able to recognize terms being used by the buyer, which may not be standard or may be unusual in some way. Understanding makes the whole process easier for you.
If the buyer of your home auction has added to the "special clause" box, placed above the signature, you will want to read and understand these special demands. For example the buyer may ask you to cover some of the closing costs, which the seller is not usually responsible for, or the buyer may want you move by a particular date specified in the box. Whatever you do check for this- you don't want to be out on the streets if your new home is not ready. And whatever you do check the special clause box as well!
There are some things you might want to look out for: whether the sale depends on the sale of the buyer's home; whether the buyer wants a ridiculous amount of time to obtain money to purchase your home auction selling success; if the earnest money is unusually small, say less than $500. If it is less than this and your home is popular you may want to look elsewhere.( 'Earnest money' is the term given to the deposit which shows your buyer is in earnest and can be as high as 2% of the cost of your home. A normal amount is from $500-$2000.) ; if a penalty is enforced if you cannot move by the buyer's specified date; if the buyer requires the seller to pay the buyer's mortgage costs. All these things could cause problems such as a delay in the sale of your home and additional costs to you.
Ensure your buyer has been pre-approved or pre-qualified for a mortgage large enough to buy your home. If the buyer is making the offer prior to obtaining either one of these, do not sign the offer.
After you have considered very carefully the buyer's offer, you have a number of alternatives. You can accept the offer. Just sign the offer agreement making it a contract. Additionally some states require you sign a separate agreement, which is called a "binder".
if you wish you can make a counter offer. Make notes on the sales agreement and delete anything unacceptable to you. You could just fill out your own sales agreement enabling you to state the conditions you want in place.
The last option is to reject the offer all together.
You will want to keep in mind if the offered price is lower than you had in mind, look closely at the offer. Are there conditions, which will compensate for the lower price?
Some home auction sellers will not sign an offer agreement until they have received a minimum of $500 earnest money, however if you have judged the buyer to be a serious buyer, you can do without the earnest money. but make sure you judge accurately or you'll be left high and dry. The earnest money check should be made out to you, but held by a third party such as your real estate attorney or the buyer's real estate agent). This check is non-refundable should the buyer default on the contract.
Even though you have signed an offer, you can accept a backup offer. The buyer with the backup offer must know about the current pending contract on the house with the first buyer.
So after you've completed selling your home by auction, found your buyer and followed these steps all should end happily! Good luck!!
Both Nigel A. & Paul Costello are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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