You’ve been running around town looking at properties or you were browsing online and saw “the one!” Your loan preapproval or prequalification is in hand and your funds are in the bank. “Let’s make an offer!” you might say. There is an art to crafting and presenting offers and I am here to help.
Ready? Great! Let’s do it!
As members of the California Association of REALTORS® we are provided with many forms to conduct business in a professional and concise manner. References made to contracts in this website are contracts provided by CAR, unless otherwise stated. CAR Forms are updated regularly to reflect the times and have been put together by the legal team at CAR.
Items to consider when presenting offers
This may seem like a shameless self promotion, but it cannot be understated that the REALTOR® you choose will have a material effect on the success of your offer. Think of your REALTOR® as your “offer ambassador.” Whether they intend to or not, your REALTOR® communicates more than just your written offer. While all agreements are written in real estate, there are professional conversations that shape those agreements. Make sure your REALTOR® communicates well.
How do you arrive at the right price for your offer? This can be as simple as saying what you are willing to pay/afford. But you are a sophisticated buyer working with REALTOR® Erick Salgado. You want to know what the market conditions are and you want to make good faith offer that is competitive. A good analysis of the comparable properties in the area will be among the most essential pieces of information for determining you offer purchase price.
Initial Deposit or Earnest Money Deposit
An initial deposit (a.k.a. Earnest Money Deposit, EMD) is the initial amount that is deposited to escrow typically within 72 hours of acceptance. Generally speaking, this amount of money is customarily between 1-3% of the purchase price and represents your “skin in the game” to the Seller. Most Sellers sometimes like to think of your initial deposit as a barometer of interest. This money is generally applied to your down payment if the transaction is completed. However, your REALTOR® will need to actively help you protect this money and avoid putting your funds in unnecessary or undesired risk.
Depending on your loan product, this amount can be anywhere from 3.5% (FHA) to 20% (Conventional). Your down payment will ultimately determine the amount you are financing and could potentially affect your terms with your lender. Make sure you understand your loan product to determine your down payment. Contact REALTOR® Erick for a list of preferred lenders, including those that are approved for down payment assistance programs.
Unless otherwise stated, anything attached to the home is included in the sale of real property. What about the floor lamp you saw that was just to die for? Or what about the state of the art refrigerator with touch screen ice cube temperature control? Make sure you ask for it in your offer to avoid any misunderstandings at the close of escrow. Occasionally the for sale listing will say something is excluded, but if your written offer includes it and they accept your offer, it’s contractually yours. Contact REALTOR® Erick and understand what you are bargaining for.
Closing costs are part of every transaction. Various fixed and variable costs are associated with every transaction. These are important to understand prior to an offer being made so that you don’t commit to a transaction that is financially unfeasible. As a rule of thumb, 2.5% should be anticipated for financed transactions. What if you are needing assistance with closing costs? Depending on market conditions, it might be possible to negotiate a credit to help. Ask REALTOR® Erick about closing costs.
Typically, a seller will respond to your offer in one a few ways.
- Accept your offer
- Reject your offer
- Counter Offer
Many factors are considered by Sellers and their professional representatives. It is beneficial to understand the Sellers goals and analyze what is observable to negotiate effectively.
Have more questions about making an offer? Contact REALTOR® Erick