We've come pretty far. You've gotten background information on choosing geographical areas, different types of properties, and financing. You know how much you can afford to buy. You've developed your Wants and Needs Checklist and you know how to select your broker to help you with your search. What will happen after you finally find the property you've been searching for?
Offer and Acceptance
Unless you've fallen in love with the first or second property you've been shown, you have a pretty fair idea of what you can get for what price in the neighborhood you've been looking in. If that's not the case, ask the agent to show you comparables, sometimes called "comps." These are sales in the area, within the last six months, of properties comparable to the one you're interested in purchasing. This will give you a fair idea of what a similar property actually sold for. Based on this information, you can make a decision as to how reasonable the asking price is on the property you like.
Based on your decision, you must decide whether your opening bid will be your highest, or whether you will send up a trial bid, on the low side, to see where the seller really stands. In either case, as we talked about earlier, never tip your hand to the seller's agent, since the agent is paid by the seller and has a responsibility to disclose to the seller any available information regarding your intentions.
Asking prices quite often have a fair amount of give and take built into them. This is your starting guideline. Offer what you think the home is worth, based on what you've seen and the "comps." If that figure is far below asking, and you insult the seller, then so be it. As long as your offer is reasonable, stick with it.
IMPORTANT NOTE: The mistake that many buyers make at this point is becoming emotionally attached to the property they have just toured. Once you fall in love with the property, and make that obvious to the agent and seller, your negotiating skill and bargaining position become compromised. Sure you love the home, but don't let that force you into overpaying or cutting a bad deal.
Negotiating your deal amounts to more than just setting the price. You will be agreeing on what personal property is included with the sale, conditions of sale, time of possession, closing date and other variable items. Look at it as a package deal: one property might have a lower price, but the terms of sale aren't agreeable to you. Another may cost a bit more, but the terms are to your liking. Don't just look at the dollars—look at the whole picture.
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