Have you already found the perfect home, but negotiating the price of a house is very difficult for you? These tips will help you make a great proposal to the owner and both win.
Surely you have already decided which house you want to buy and you are in the last step, which is, the negotiation of the home with the owner.
In this process you will need to know how to make a real estate offer, being the decisive moment to negotiate the price, before signing any contract for the sale of the property.
Therefore, we share these useful tips that will help you learn how to negotiate with the real estate.
How to make a real estate offer to buy a house?
- Know your limits
- Familiarize yourself with the laws
- Make sure your credit is approved
- Set the offer
- Make an initial deposit
- Review contingencies
- Read the fine print of the contract
- Set the duration of the offer
- Make an offer letter
- Prepare for a counter offer
Know your limits
Make an appointment with a real estate agent to let them know the limits and the position you will have when negotiating the price of a house.
Trust your agent, he will give you advice and information to carry out the negotiation, the more they work as a team, the greater chance of finding a great offer they will have.
The most important thing is to inform him how much money you have to invest without affecting your lifestyle. We recommend doing the following:
- Keep a limit offer of the house so that you can afford the money for the expenses that are generated when buying a house .
- Know the rules stipulated by the owner.
- Make a monthly budget and evaluate if it will be enough for you to pay the home loan and your personal expenses. You can obtain a credit estimate considering your age and salary.
Familiarize yourself with the laws
Before making an offer for the sale of a property, we recommend that you inform yourself about the clauses in the purchase-sale contract , so that you can understand the entire process. A very useful tip to know how to negotiate with the real estate is to get a template of a contract to analyze it, get it online or in a real estate agency.
We advise you to also visit a trusted lawyer to advise you on any questions.
Make sure your credit is approved
If you applied for a mortgage loan with a financial entity or institution, you will receive a pre-approval with the amount of the loan granted.
You must take into account the 30% rule. This is about calculating the monthly amount of the mortgage loan on the money you have for expenses, not on your salary. For example, if you pay tuition or a car loan.
Bearing this in mind, you should establish your payment days with the value of the real estate offer, the financial institution must deliver an approval letter that you can attach when negotiating the price of a house.
Set the offer
In the property sale offer you will detail how much you will pay for the home and how you will do it, if the payment will be in cash or by mortgage.
Be clear that all homes that are for sale have a price list, as a buyer you can make an offer to the owner based on it.
The real estate agent can help you determine an amount taking the value of the appraisals of homes with similar characteristics and that have been sold in the area of your desired home.
We recommend that you take into account the unique characteristics of the home for which you are going to bid, evaluate if it has already been for sale for a long time. Therefore, you must prove the quality of buyer that you are by offering a great price to the seller.
Make an initial deposit
If you are sure that it is the house of your dreams, you can make a down payment that remains as a guarantee in the real estate agency. By making this payment, the owner will trust your decision to buy the property.
In general, the initial deposit should be a third or a quarter of the value of the property, you must inform yourself how the investment will be returned in case the offer is not accepted.
In case of being accepted the notarial expenses, taxes and the commission of the intermediaries must be covered in the initial deposit.
Housing contingencies are included in most real estate offers, these are your protection and must be carried out legally in the purchase-sale contract.
If the home needs repairs, you can inform the owner what the damages are, you must bear in mind that some of the repairs may be negotiable and others the owner will establish that they must be covered by the buyer.
You can include any of these contingencies:
- Financing contingency: it is the estimated time to apply for a mortgage loan that will be granted by the owner or real estate agency.
- Home inspection: You can take a tour of all areas of the house and you can retract the offer if you find irreparable damage to the property.
- Appraisal contingency: you can withdraw from the offer if an appraisal of the property is carried out and it turns out to have a lower value than that established. It must be done by a real estate appraiser .
- Home sale contingency: during the transaction you must inform the owner that you are selling your old house and attach it as a contingency.
Read the fine print of the contract
It is your time to request that the property have all its documentation in order, establish who will pay for the real estate appraisal, mention the deeds of the house and ask for the utility bills of the previous months.
It is essential that you take a tour of the house to know its conditions before signing any contract, check the real estate taxes and the services that the house includes.
The purchase-sale contract includes information that you should attend more calmly, we recommend that you read it with your lawyer or real estate agent, you will save legal situations that can be found in small print.
Set the duration of the offer
When making a property sale offer, it also establishes how long it will last, consider that they do not last forever and you can choose the duration.
If the housing market is very active, we recommend that your deadline be shorter, in this way, another buyer will not be able to make an offer that competes with yours.
Usually there is a period of 30 to 60 days for the seller to decide and also for you to carry out the process of your mortgage.
However, the time varies, some owners prefer long periods to be able to move into their new home, being flexible with time, may give you advantages at another time during the negotiation.
Once the agreement is signed, a new date convenient for both parties may be established.
Make an offer letter
If a real estate market is very active it is necessary for you to stand out when negotiating the price of a house it is important that you consider making a letter of intent .
A viable option that you can do is to tell your story to the owner through this offer letter, where you describe your family, your job and the reasons why you want to buy your home.
Establish a connection with the seller by searching for their personal information on social media, just be careful not to come across as a stalker.
Prepare for a counter offer
If you are facing many buyers, keep in mind that the seller can make you a counter offer, with new terms and conditions regarding the value of the home and the contingencies previously stipulated.
You will decide if you want to accept the new deal, if not, you can make another counter offer that fits your budget or better find another home.
Do not worry when negotiating the purchase price of a house this process will make you have more agility about obtaining a property sale offer.