How to negociate an offer on a home

from The PIN Magazine June 2020

Realtor selling tips. Selling a home safely

Jenny Gonzalez HOW TO NEGOTIATE AN OFFER ON A HOME

Buying a house is all about knowing and understanding the art of give and take. In most cases and with the buyers I have worked with over the years, they think that the purchase price is the main negotiating point, and while there is some truth to that, that’s only a minor cog in real estate transactions.

Therefore, it is important that you learn what your major negotiation points are, and how you can use them to your advantage. This will undoubtedly give you an advantage of being able to craft up an offer that will work in your favor, and ultimately please the seller. So, what are the areas you should be focusing on?

OFFER PRICE

Well, this is the most obvious factor. In most cases, buyers seem to understand that the listing price of a home is the price that the seller is hoping to make on a sale of a home, and it is often negotiable. But, like in most cases, pricing is where people often lose and deals fall apart. The primary reason for this is that buyers want to score a deal when buying a home. On the other hand, for the seller, the goal is the exact opposite. The seller is hoping for a profit on their home, and possibly, with a larger margin, especially if it was financed and isn’t paid in full. Anything less than their balance means that they’ll be required to pay the difference out of pocket at the time they sell their homes.

This means that as a buyer, you’ll have to be flexible. An increase in the sales price can be distributed over the length of the mortgage, which lowers the financial burden at the time of sale. Given this, buyers will have more flexibility on price.

GET PROOF

Yes, you can submit an offer without the proof that you can afford the home, however, to win the heart of the seller you need to show them that you can afford it.

If you are a cash buyer, a statement from your bank or your brokerage that shows the balance equal to or even greater than the offer price should suffice. You can create a separate bank account and transfer the exact amount you want to spend, or equal to the offer.

If on the other hand, you want to buy the home using a mortgage, it is advisable to get a preapproval letter that you will submit with your offer. You should note that preapproval is a step above pre-qualification, and these are two different concepts.

The preapproval process involves going through with the application process, which includes a credit check and employment, income and asset verifications. Preapproval represents a commitment from the bank to lend to you.

Get the preapproval letter with the exact amount of your offer, even if the lender is willing to approve you for more. If you do these things, just wait for the magic to play itself out.

HAVE A CONTINGENCY

It is common that the fewer the contingencies in your offer, the more likely it will be for you to close the deal. Fewer contingencies mean fewer chances of the deal going south. For you to successfully close a deal, each of the outlined contingency must be satisfied in a way that both the parties are comfortable with. If you fail to reach an agreement with the seller, you have

the option to dissolve the contract and walk away, this is a concern for most sellers, and therefore, your willingness to be flexible with your seller’s contingencies will give you more power in the negotiating table.

Remember, as a buyer, the main roles of contingencies is to protect you. For instance, waiving an appraisal contingency simply means that the seller doesn’t have to negotiate the sales price with the buyer if a home is appraised below the offer price. The appraisals are used by the lenders to determine the buyer’s loan amount; this could leave the buyer on the hook for a larger down payment to offset the difference or even force them to break the contract and forfeit their earnest money deposit.

Always try to find the middle ground. For example, you may consider shortening the contingency period, rather than waiving the inspection contingency altogether. A decrease in the contingency period means a quicker close of escrow for the seller.

DETERMINE YOUR CLOSING SCHEDULE

This will depend on where you live. In some areas, it is possible to close on a home in as little as 10 to 15 days. It is also possible to write a much longer close to the offer. Typically, the contract period is 30-45 days, but it is also possible to find contracts with 60 days or more to close.

The seller wants to close as soon as possible, but it is imperative not to commit to unrealistic short periods. It is common to find lenders advising you to allow a bare minimum of 30 days, but, I’d suggest no more than 45 days. It is also essential to make a consideration of the closing costs. Here, the buyer might request the seller to cover their half-closing costs, or some transfer taxes or fees, by subtracting that costs from the sales prices. Whatever you choose, make sure it is something you are comfortable with.

Suppose you want to see some great properties in Corona, be it for residential or commercial purposes, get in touch with one of our VIP agents, Jenny Gonzalez in Corona CA. to learn more about the program, click here.

Jenny has been in the real estate business since 1998, climbing the ranks to become one of the most respected, and renown real estate agents in Corona. To learn more about Jenny, click here.

Jenny Gonzalez Realtor Keller Williams Realty

Sources

https://www.opendoor.com/w/blog/4- considerations-negotiating-house-price https://www.fool.com/millionacres/realestate-market/homebuying/making-offerhome-how-negotiate-your-purchase/ https://www.houselogic.com/buy/how-to-buystep-by-step/how-to-negotiate-an-offer/

With only eight hours in a day, every second counts. Let’s save you time.

What makes our mortgage program so unique?

We know you’re a busy professional. Because of your respected occupation, we’re able to offer you this exclusive benefit. With First Bank’s Professionals Mortgage Program, we’re able to offer you this convenient, no-hassle mortgage loan product.

Why did we choose to start this program?

First Bank has recognized the need for a program that allows CPAs, PhDs and professionals in the legal and medical fields the opportunity to close loans based on current and/ or contracted guaranteed employment and income levels. We realize your desire to secure a home for you and your family prior to a career change, move or re-location. What would be better than having your home established prior to starting new employment? Talk about taking the stress out of your move!

Why Choose First Bank?

Peace-of-Mind! With First Bank’s Professionals Program, you’re able to secure a home for you and your family – without the worry of providing past earnings history*.

Personal Touch! One point of contact. You’ll never wonder who you should call with questions. Great Rates! It’s not too late to get a great rate on your mortgage. Contact a local First Bank Mortgage Loan Consultant today for our current low rates.

Let the highly-trained professionals at First Bank walk you through the process, so you can focus on what you do best.

Business Banking Mortgage Wealth Management Mobile Solutions

* Program Guidelines:

• Bank Portfolio, ARM and fixed loans • Attached/Detached SFR’s and PUD’s. • Low down payments available. No Private

Mortgage Insurance. • 700 minimum FICO score. No derogatory credit in the prior 12 months. • Available in footprint states only. • Owner-occupied residence only. No second homes are eligible. • Borrowers must establish First Bank Checking account as well as set up automatic payment withdrawal prior to closing. • Borrower must start employment within 30 days of closing. • Employment must be verified with fully executed, accepted, non-revocable contract. • Two-year history in line of work must be verified and documented. Education in field of employment for prior two years acceptable provided it was in the field of employment.