How to Make the Best Offer On a House
Jim Nemetz of Hammond Residential offers advice on making an offer in the current housing market.
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In this special section to Boston.com, we consulted a wide array of experts from various sectors of the real estate market for their advice on making the homebuying and selling process go as smoothly as possible. In this edition, Jim Nemetz, a senior vice president of Hammond Residential, shares his advice for making an offer on a house in the current housing market.
1. Pair up with an expert: Find a buyer broker who is truly an expert in both the area and the price range of the property that you are interested. A good buyer’s agent will advise you on the reasonable value range of that property and will guide you in putting together an offer with terms that both protect you and are attractive to the seller. They will also likely be familiar with the house itself and the history of it. And they will prevent you from overpaying for a house unless you are doing so knowingly.
2. Get a pre-approval letter: Make sure you get a proper pre-approval letter from a mortgage originator who has a recognized track record with the local agents. The listing agent will be more likely to advocate for your offer if he or she knows the originator.
3. Listen to a financial advisor: If, in a multiple bid situation, you are considering removing your mortgage contingency, do so only on the advice of your financial advisor or mortgage originator unless you can truly write a check for the purchase price if need be.
4. Reshuffle the money: There may be opportunities to make your offer more attractive without costing you more money….like putting down $10,000 instead of the usual $1,000 with the offer, and putting 10 percent instead of the more common 5 percent with the purchase and sale agreement. This makes the offer look more substantial as compared to the other but ultimately don’t cost you a thing, provided that you actually close on the house. Be aware, though, that it is riskier for you in that you potentially lose much more money if something unforeseen happened like a job loss, which wouldn’t extricate you from the transaction after the financing contingency expired, and you would have to forfeit the deposit.
5. Get an inspection: If it is a house that needs extensive work, and it is going to be a multiple bid situation, see if the seller will allow you to do an inspection prior to making your offer. This will make your offer more desirable as there will be no inspection contingency.
6. Pledge your love: Always write a “love letter’’ to the owners letting them know how much you love the house. Buyers sometimes make the mistake of telling the seller everything that’s wrong with the house (to demonstrate that it’s not worth the price) and it often just makes the seller not want to sell to that person.
7. Step back and assess the value: When you are in a multiple bid situation, you are often in a vacuum: You have a range that you know that the property is worth, but you don’t know what the other offers are going to be, and no one will be able to tell you what the number is that will ultimately take it. In that case you need to make an offer that, if accepted, you will be thrilled to have the house. But, if it isn’t, you’re happy to have someone else have it for more than that. Remember, there’s a value range that’s proven by comparable properties that have sold, but in a multiple bid situation, there’s an emotional component. Some will pay over current market value for emotional reasons. The buyer agent can advise you on the value range proven by comparable properties, but only you can judge how much over that it may be worth to you.
8. Look at other fish in the pond: Make sure, if you’re still in the shopping stage, that you haven’t overlooked houses that have been on the market for a long time. Buyers (and agents) often skip over houses that have logged many days on the market, but those houses may have had their prices lowered and the owners may be much more flexible than those with newly listed homes.
More in this series:
–So You Want to Sell Your House…
–Making the Most of an Open House
–10 Tips On Attending Open Houses From Two Guys Who Just Bought Their First Homes
–How to Get the Best Possible Credit Score
Read more on the fall house hunt.
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