Determining property value is an inexact science. There may be a range of value versus price. Fair market value is what a ready, willing and able Buyer is willing to pay from an arm’s length perspective. Final sales price is ultimately determined by the market – the Seller and the Buyer.
This is the price at which the seller lists the property for sale. It is the responsibility of the seller to determine the listing price of their property based upon sound advice from a real estate licensee.
The most probable price a property should bring if exposed for sale in an open and competitive market, allowing a reasonable time frame to find a buyer. Both parties are fully informed; neither is under distress.
Also known as “Market Price,” this is the price at which the property ultimately sells as determined by the cooperative efforts of the buyer and seller.
I will conduct a thorough competitive market analysis of the property you want to purchase as well as any comparable listings – ideally, within the last six months. I also analyze market conditions and trends to help you select a target price to offer for the home.
NEGOTIATING PHILOSOPHY & STRATEGY
Take a look at your bargaining position. You are a strong contender if you don’t have another house to sell and if you are already fully approved for a mortgage (pre-approval letter in hand) or if you are a cash purchaser. A strong, clean contract is the indicator of a qualified Buyer who is prepared and ready to perform. This will impress the seller and improve the likelihood of your offer being accepted.
If this is the case, you may be able to negotiate downward, from list price. However, in a fast-paced competitive real estate market, you may want to offer the list price or better, to beat out any other early offers. It may be very helpful to find out as much as we can about the Seller’s situation in order to address their needs if possible in your offer.
It is our goal to develop a negotiating strategy that suits your needs and gives YOUR offer the highest probability of acceptance.
Determining your primary objectives is critical to successful negotiating. Which of the following aspects of the property is most important to you?
- The Property Itself
- Closing Date
- Other Terms
Additional Contract Strategies:
- Significant earnest money deposit
- Fast or reasonable settlement time
- Loan approved (pre-approval attached with contract)
- Disclosure of financial information
- Quick completion of contingencies
- Professional contract preparation and presentation
PREPARING YOUR OFFER TO PURCHASE
Your main objective in constructing your offer to purchase is to purchase the home you want at the most favorable terms possible. The strategy is to make your offer as attractive to the Seller as possible while retaining key items for yourself.
Give the Sellers what is important to them in return for terms that are important to you. I will try to find out from the Listing Agent what the Seller’s critical needs are. If you can meet these, it gives the Seller a reason to accept reasonable requests from you. There are seven areas of negotiation in your offer:
- Offer Price: The most important issue for most Sellers is the amount they will be receiving for the home. I will assist you in identifying the most appropriate offering price for your offer.
- Subsidies: Are you going to be asking the Seller to pay expenses, such as closing costs, on your behalf? If you are, remember you are reducing the net proceeds to the Seller thereby reducing your ability to negotiate the price as well. Consult your lender for details.
- Deposits: Your deposit amount signifies your commitment to the transaction. Low deposits reduce the desire of the Seller to accept your offer. Again, I will help you determine the amount you need to give the Seller with your offer, to increase the likelihood of success.
- Closing and Occupancy: The contract calls for you to receive the keys at closing. If you can close when the Seller wishes to move, your offer will be positively viewed by the Seller. If occupancy will not concur with closing, this should be noted in your offer and the corresponding agreements executed.
- Property Condition: If you want the Seller to make repairs beyond the parameters of section J1 of the Purchase Contract, then they will need to be included in your initial offer. If your contract includes a contingency for a satisfactory Home Inspection report, then requests for repairs will normally be made after receiving the report.
- Inclusions & Exclusions: The Seller is offering to include certain items with the sale. Sometimes Sellers offer to replace an item they wish to retain when they move. Please be sure that your offer accurately reflects both of these.
- Contingencies: A contingency is a clause which states that the Buyer will perform only if something else happens. Normal contingencies include Purchasers financing, home inspection, lead inspections, or the sale of the Purchaser’s current home. The fewer contingencies your offer contains the more desirable your offer will be to the Seller. I will help you with guidance in this area.
Demonstrate your ability to purchase by delivering one or more of the following:
- Lender Pre-Approval or Commitment Letter: This is the letter required to remove the financing contingency in the Purchase Contract.
- Redacted Bank Statements: To show the existence of sufficient cash to perform, especially when the contract is an ‘all cash’ offer.
- Financing Statement: May be presented to the Seller when submitting an offer prior to obtaining a Commitment Letter.
Write a clear, concise offer.
The more difficult your offer is to understand, the more difficult it will be for the seller to accept. The local custom is to use the Purchase Contract and amendments which are clear, concise, and well-recognized. I will be able to provide all of these when I write your offer.
Giving the seller everything, and more!
When competing against other offers, your only option may be to give the Seller everything and be willing to pay more than the asking price. We can also explain the use of escalation clauses in competitive situations.