By the time a home buyer gets to the table to write an offer on their first home they have already done a lot of research. The buyer should have been pre-approved for a first time home buyer loan, made a list of what he is looking for in a home and done some research on what is available on the market. Once having found that perfect property, it is time to make an offer.
Making an Initial Offer on a Home
The initial offer on a home should be made based on the current market. If the market is hot, with homes selling fast and above asking price, it may be prudent to offer at or above asking price in order to have the best odds of winning the home. If the market is slow, with houses sitting for a long time and selling for less than asking price, it is prudent to make an initial offer lower than the asking price. According to RealestateABC [accessed on April 12, 2008], "If it is a buyer's market where you live and you're looking to buy a home, you are in a strong position to negotiate for lower prices and incentives." The buyers agent will be able to advise a home buyer as to what a reasonable initial offer would be.
If offering significantly less than the asking price, it may be a good idea to write a letter to the seller to accompany the offer. This letter is a method of introduction and explanation of the low offer. The buyer should use facts and statistics in the letter to prove that he has done his research and that there are legitimate reasons for a lower offer.
Expect a Counter Offer
After putting in an offer, a buyer should expect a counter offer unless the original offer was at or above the seller's asking price. Bank owned homes (REO) will also counter an offer, as they are hoping to receive the best return for their loss. Buyers should have an idea already in mind as to what they are willing to accept so that if the counter offer is close to that number, negotiations can end right there with a signed contract. If the counter offer is not where they want it to be, the buyers can counter the counter offer.
While this can become a bit confusing, it is important to know that there is nothing set in stone when it comes to counter offers. Buyers can continue to counter until the seller either says no or agrees on a contract. The danger with this process is that there is no rule that the seller has to look at one offer by itself.If a better offer comes in during negotiations, the seller may decide to accept it and end negotiations with the first buyer.
Once both the seller and buyer agree on a price for the home, the offer is accepted and signed into contract. Now the process begins for both the buyer and seller to go to closing and transfer the house title and deed to the new owner, making the first time home buyer a proud first time home owner.
Find more information on first time home buyer loans and the.first time home buyer process.
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