How To Make A Bid On A Balanced Real Estate Market In 8 Steps
In a balanced real estate market, here are eight steps you can take to begin the process of preparation for mediation.
Decide on a price
Once you find a home that you love, you and your real estate agent need to determine how much to offer. In less competitive markets, buyers can rely on a comparative market analysis to determine the right bid amount.
You will use many different criteria to determine how much you will offer. For example, you want to see how long the house has been on the market and if the seller has dropped the price. You also want to consider the local market and how quickly homes are sold in this area.
But you should always consider your budget above all else. You know how much home you can afford and it is not worth extending yourself to accept an offer.
Consider the unpredictable
Next, you want to consider whether you should include any contingencies in your offer. For example, you may have a contingency that states that if a home inspection reveals problems with the home, you can walk away from the sale without losing serious money.
Unpredictability protects the home buyer, but it can be problematic in buying a seller. If you include too many surprises in your offer, the seller may end up choosing another offer.
Write a check
Before submitting your offer, you will write a check for your serious deposit. Profitable money is a deposit that protects the seller if the contract is canceled and is usually 1% – 3% of the house price. If you want your offer to stand out from the seller, you can offer a higher than average deposit.
Write a quote letter
Your real estate agent will then write a letter of offer to submit to the seller’s broker. The offer letter is your chance to stand out from the seller, so you want to make sure you do it right.
What to include
Here’s the elements a good real estate offer letter should include:
- The name of the seller
- The address of the property
- How much do you offer to pay for the house
- How much are you willing to pay with serious money?
- Any contingencies you want to include
- When you want to book at home
- Deadline for when the seller must respond to the offer
What to attach
When evaluating bids, a seller’s highest priority is to select a buyer who can pay for the home. Therefore, if you are planning to make a mortgage, you will need to attach a pre-approval letter to your offer letter.
This shows the seller that you have already processed the financing and can pay for the house. If you plan to make a cash bid exclusively, you will need to include a letter of receipt.
Get an Answer: Accept, reject or make a counter offer
When the seller responds, there are three different answers you could receive: acceptance, rejection, or counter-offer. Obviously, acceptance is the best possible scenario because it means that your offer has been approved.
If you are rejected for the house, it means that the seller probably preferred another offer than yours. If you receive an offer, you should talk to your dealer about whether you should increase your offer or leave the sale altogether.
Trading of pending terms
All parties involved in the sale will continue to negotiate the terms of the contract until the purchase agreement is finalized.
Sign a Purchase Agreement
Once the seller accepts your offer, you will sign a real estate purchase agreement. This is a binding contract between the buyer and the seller that describes the terms of the real estate transaction.
A purchase agreement usually includes the following information:
- Buyer information
- Seller information
- Details of the property
- The agreed price
- How the buyer finances the sale
- Any accessories and devices included in the sale
- The total practical deposit of money
- Closing costs and who pays them
- Any contingencies that need to be covered in order for the sale to proceed