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So you love the house. Well,
that's all well and good, but as your father may have said
of your prospective spouse, "How much should you really
be paying?"
Here's where your buyer broker is really going to come in
handy.(Don't have a buyer broker yet? Here's help.) She should
be able to guide you through the process of making an offer
that both is within your range and not likely to offend the
sellers. (Yes, they're thin-skinned, sensitive types just
like you and me.)
To help you navigate between the Scylla of offense and the
Charybdis of keeping within your budget, we offer the following
currents of Foolishness:
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Check
out Home Price Check. There you'll find a database
of over 20 million U.S. home purchase prices. You
can search by location -- just type in the address
of that house you're interested in, and it will pull
the price history of that house (or co-op or condo)
since 1990. You can also find out the selling price
for all homes that sold on a specific street. In addition,
you can search for all the homes that sold within
a price range in a given city. This will help give
you a good idea of recent housing prices in your area.
(Then, too, you can snoop around and find out how
much your friends paid for their homes. This will
give you fodder for foisting the dinner bill onto
them the next time you dine together.) |
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Your offer
price should be based on local market conditions as
well as on how well the house is priced. Find out
how fast homes are selling, and whether they are selling
for close to the asking prices. In hot markets, well-priced
homes sell for very close to the list price -- usually
within five percent. In fact, they may sell at a premium
to the asking price. People do this if they believe
they'll be competing with other buyers. In slower-paced
markets, where prices are soft, the gap between the
list and sale price may be considerably more than
five percent. |
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Your agent
should provide you with comparable sales information
and should show you comparable listings. If you skip
this crucial step, and blindly make an uneducated
offer, you could overpay for a property that is priced
too high for the market. |
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Be careful about
making a ridiculously low offer. It's true that you
may get the house at a great price, but you also might
offend the sellers, who then become tough negotiators.
A bigger risk in making an inappropriately low offer
is that you could lose the house to another buyer
who is better informed, and who makes a more reasonable
offer. |
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Know how much
you can pay. By the time you make an offer to buy
a house, you should be lender-prequalified. If you
are not, talk to a loan agent or mortgage broker before
you make an offer to make sure that you can qualify
for the financing you need to complete the purchase. |
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Find out as
much as you can about the condition of the house before
you make an offer. Ask if there are any existing reports
available, such as termite, house, or roof inspections.
Check on radon levels in the basement. Find out if
the sellers plan to complete any work as a part of
a sale agreement. Make sure to budget for major repairs
that the sellers are unwilling to complete. |
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Find
out as much as you can about the sellers. Why is the
house being sold? Are the sellers transferring, divorcing,
or selling to settle an estate? Have they bought another
house, or do they need to sell before they can buy?
If the sellers have already bought another home, they
may be willing to accept a lower price if the buyer
can close quickly. |
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Regarding
the market history of the house, find out how long
it has been on the market. Is the current list price
the original list price? Have there been price reductions?
How long ago was the last price reduction made? If
the price was reduced some time ago, and the house
still is not selling, the sellers may be considering
another price reduction. If so, they may be receptive
to a lower offer. |
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Have
there been any offers on the house? If so, why were
they rejected? Are the buyers who made the offer still
interested in the house, or did they purchase another
house? |
Once you make your offer, one of three things will happen:
1) It will be accepted, 2) it will be rejected, or 3) you
will receive a counteroffer. If it's accepted, you might want
to check out our article on The Home Inspection. If it's rejected,
you can still come back with a higher offer if you're really
interested in the house. And if there's a counteroffer, you're
now negotiating! |
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