Be it the real estate market in 2008 or any other real estate market for that matter, the structure of a contract offer can be the difference in it being accepted or rejected. No, the offering price is not the only factor in negotiating a contract to purchase a home in real estate.
Regardless of the number of pages in the sales contract, a contract offer can be broker down into 3 separate parts which can be important to the seller: price, terms and conditions. Each has to be satisfactory in order to obtain seller acceptance. In some situations, full price offers are not acceptable due to the buyer’s terms and conditions in the contract offer. In other instances, I’ve seen contracts accepted which were much lower in price than other competing offers, but were more favorable in terms and conditions to the seller, and were accepted. What then is the secret in preparing and submitting a contract offer to buy real estate? This is where the value of an experienced Buyer’s Agent is with providing assistance in preparing the contract offer and structuring it in a manner that does not create questions or concerns for the seller and their listing agent.
Some Preliminary Information
There is more to purchasing a home than just looking at houses.
The first step toward purchasing a home is obtaining Mortgage Pre-Approval from a reputable Mortgage Lender(
Read Mortgage Pre-Approval versus Mortgage Pre-Qualification), and be sure a copy is included with the contract offer. Why? The first question to be asked by the seller and listing agent at a contract presentation will be “Does the buyer have Mortgage Pre-Approval?
Secondly, there is no cardinal rule that there must be some fixed amount that a seller will negotiate from their asking price. Home buyers need to obtain factual sales information about the market area, and section of Town, they are considering buying in before submitting an offer. While it is very likely that sale prices have declined in the past two years, they have not dropped equally in all Towns and in all neighborhood locations. Remember Economics 101 from Grammar School: “What’s true of the whole may not be true of the parts”. That is what I am referring to here. Real estate values are local, and various factors influence market value such as buyer demand, amount of homes for sale, mortgage rates, local economic conditions and so on and so on.
In preparing a contract offer, it is important that a buyer obtain a Market Analysis for the property being considered. A report like this can be prepared by the buyer’s agent and should contain information comparing similar properties which are active on the market for sale, listings which expired and did not sell in the past six months, under contract sales and closed sales in the past six months which should also provide the asking price history and days on market before sold. With a report like this, a buyer can then have a better understanding of the real estate market and be better prepared in submitting a contract offer.
It is highly recommended that buyers obtain a blank contract of sale and addendums early in the home searching process. Contracts can be intimidating to many buyers. It would be much better to review the contract documents in advance of making a contract offer. Making a contract offer is a big step. Being properly prepared is the first step toward making a successful contract offer.
Thirdly, buyers should be completely aware of their personal finances and the total costs of purchasing a home. Buying a home involves down payment, expenses occurred during the purchase such, as mortgage application fee, home inspection and termite inspection and then there are the closing costs. It is important to obtain the estimates related to transaction expenses as these costs could have an affect on the amount of the available down payment which then could affect the amount of the mortgage needed to complete the purchase.
The three additional topics related to preparing a contract of will be later.
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