In real estate one would think that if a Buyer likes a property that a Seller is selling, then executing a sales contract is secondary. This, as many of you homeowners know, is almost never the case. Even the most calm and reasonable Buyers and Sellers seem to tense up and get ready for an adversarial jousting match when it comes time to negotiate a sales price.
So, it is crucial to get the Initial Offer correct the first time. Placing an offer too high can hurt the Buyer's ability to negotiate a fair price and ultimately overpay. Placing an offer too low, can signal to the Seller that the Buyer is unreasonable, resulting in a flat out rejection. Both scenarios can be catastrophic for the Buyer, who must restart the process of searching for properties, which takes more time and energy.
That is why your Buyer's Agent must do their home work up front and manage expectations on both sides. As an agent for my buyers I like to do a lot of good research and provide 100% transparency to the Buyer. Things to consider include but are not limited to the following:
- What similar properties have sold in the past 3 months?
- What is the price per square footage of these homes?
- What are the differences and similarities?
- Are there any sufficient upgrades to the property?
- Where is the home located?
- Sun exposure?
- Corner unit (if condo or townhome)?
- What is the inventory (homes for sale currently) in the neighborhood?
- What does the Seller's Disclosure say about the property? Any deficiencies?
- How old is the roof, AC, water heater?
- Is the market a Buyer's or Seller's Market?
- Any outstanding permits?
- How many days on the market?
- Has the Seller received a written offer?
- If received an initial offer and canceled, why?
Getting these questions answered, can really help the Buyer understand valuation. And when it comes time to present the Initial Offer to the Seller, it becomes very easy for the Buyer's Agent to explain the math to the Listing Agent. Again, doing this manages expectations on both sides, which facilitates a "meeting of the minds."
So if you are a Buyer who has fallen in love with a property, make sure you don't blindly defer to the agent to submit an offer. Request that the agent answers the questions above and walk you through their valuation of the property as well as their strategy in submitting the Initial Offer. Doing so will increase your chances of the Seller eventually accepting and you saving thousands.
Happy house hunting!!!