The following is an example of a hypothetical situation. All home purchases are unique. This is shared to expose there is much more to representing buyers than offering a tour of homes.
This is your goal
Well, you have finally decided on a home. You have visited several homes over the past month or so. I have been by your side, watching you, listening to you and helping you narrow your search until you found “the one”. Sure, there has been lots of frustration. You remember the homes we visited. We went over the listings together. I tried to tell you that “needing tlc” probably meant more than a paint job. You discovered that people do strip homes. You followed me over hill and dale viewing homes. You probably think I was earning my money then. Not really.
Time for the offer.
Now, the house is listed at $250,00. Homes in the area that are comparable size are selling for $250,000 to $260,000. The home seems to be priced correctly. It has been on the market for about two months. You mentioned that you felt pretty comfortable with the home except the carpet was old and one bedroom is painted lipstick pink.
What sort of offer would you like to make?
Well, in this market we can probably offer a lot less can’t we? I mean were going to have to spruce it up when we move in. How about we offer $225,000 and ask the owner to give us an allowance for re-carpeting the home?
They want to sell you the house…(now I earn my money).
As I showed you, the home is priced fairly for this market. The seller has apparently done his homework and priced the house accordingly. I don’t think offering less is the best idea in this situation.
Oh please, we know the home is worth $250,000 but everyone knows that they aren’t going to get full price today. What about the nasty carpet and god awful pink room. They must know that they won’t get what they are asking.
I hear what you are saying. Can we step back for a moment and look at the sale from their perspective? When they first decided to sell, I have no doubt they thought they could get more than they are asking for the home. They live in the house and have accepted that the most they might get is $250,000. They probably don’t see a nasty carpet, it did not get that way overnight. They have lived with it that way gradually. That pink bedroom is pink because they most likely think it looks good. You don’t think for one minute that they said to each other, “let’s paint the room pepto bismal pink. No one will like that color”. Let’s keep in mind your goal is to buy the home at the best net price.
Well, then what would you suggest?
Well, what if you offer $245,000 and ask for $7,500 in closing help. The seller will be getting pretty close to his asking price and closing help is much easier to accept than asking for money to replace carpet and paint a room. Your goal is to have the offer accepted. My goal is to assist you in preparing an offer that does not insult the seller and also gives the seller some wiggle room. We have agreed that the home is worth $250,000. An offer of $245,000 may be acceptable. The seller may even accept the price and give the closing help. If the owner says no to the price and yes to the closing help, your net cost is now $242,500. Regardless, your offer allows the seller to feel good in accepting it.
Well, if we go that route, what protection’s will we have in the offer? What if something is wrong that we did not see when we visited the home? What if our loan falls through? Are you suggesting that we just blindly make an offer and give them an earnest money check and hope for the best?
You will be protected. You see the offer will include several contingencies ( check points if you will that must be satisfied before you close the transaction). If any one of the contingencies is not met, you can void the contract and receive your earnest money back. Your offer will include a financing contingency that clearly states you must get the loan in order to close, an appraisal contingency that protects you should the home not appraise for the sales price, a home inspection contingency that will afford you the opportunity to have the home inspected by a licensed inspector and if you do not like the results you can void the contract. I will be with you throughout the process and I will explain your options as every contingency is dealt with.
Well, I guess you have done this a lot more times than we have. Let’s go over the paperwork and get everything signed. How soon will we know?
The offer will be made with the stipulation that we need a reply with in 48 hours. I will deliver the offer and stay in contact with the listing agent to make sure you receive an answer in that time frame.
Remember, they want to sell you the house…(now I earn my money)