Thursday, August 7, 2014

5 things a buyer needs to know before (and after) making an offer

There are some buyers that feel they have the advantage when making an offer on a home because they are the one spending the money, they are the customer. In a way they are right but there are big problems ahead if the buyer begins to expect too much from the seller. While it’s generally true that sellers are willing to compromise and make concessions to get the deal done it is also true that no one wants to be taken advantage of and there is a point where they will simply say “No”.

This is the worst thing that can happen for everyone involved because when a deal falls through everybody loses. The seller doesn’t sell their home, the buyer misses out on their chance to get the home they really wanted and nobody gets paid. It’s a huge waste of time and no one is happy. There are some things that we as agents can do to prevent this situation from happening and as always it involves educating the buyer as to what to expect after making an offer. Remember, you are the professional here and have a responsibility to help your client make it to the closing table.

Having a low offer accepted usually means no more concessions
It is natural for buyers to make an offer lower than the asking price. Everyone wants to get a “good deal” but buyers should be aware that if the seller accepts a “low” offer for their homes it’s best not to expect any other concessions at a later time. Asking the buyer to pay for any repairs or to correct any inspection problems that might arise could definitely cause them to refuse and could threaten the entire process. The buyer may well feel that they have already conceded to a lower sale price and that they are not willing to give up anything else. Be sure that your buyer is aware of this possibility if they intend to make a low offer.

Making an offer that is too low can work against you
It’s fairly common for buyers to make an offer that is well below the asking price and for the seller to suggest a counter offer. It is possible however to insult the homeowner with a ridiculous offer and this could cause them to not consider any future offers by the same party. Losing one’s dream home is not the desired result and I suggest that buyers be encouraged to make a reasonable offer from the very beginning. 

Buying that new furniture can wait!
If there’s one common mistake that buyers sometimes make it is making a major purchase after being approved for a home loan and before closing on the property. A final check by the lender could reveal any major new purchases made by the buyer and this could make the difference between final approval and rejection. A new car just isn’t worth losing the opportunity to buy your new home and it is vital that home buyers be made aware of this possibility.

Making the right offer can make the difference between success and failure
As the buyer’s agent you are expected to guide them along the path to finding the perfect home. One question that you hear a lot is "What price should I offer for this home?" I strongly advise not answering that question with a number! If the seller refuses the offer as too low or accepts the offer and the buyer later decides that they have paid too much than you will be the one held accountable by your client. That’s no way to build a reputation. I suggest providing your client with an up to date market analysis of the area and allowing them to decide what their first offer should be. Be sure to provide them with as much information as possible so that they can make an offer that is reasonable.

Being prepared for a delayed closing is the best approach
A closing involves many different parties and delays are quite common. Normally this is no big deal but it is when the buyer shows up with a truck load of furniture and nowhere to put it! Advise your client that the closing date could be later than first anticipated and to plan accordingly. Being homeless for 3 days before moving into your dream home is no way to celebrate!

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