When purchasing a home, making the right offer is crucial. The offer you put forward can significantly impact whether you secure your dream home and how smoothly the process goes. Understanding the balance between safety and strength in your offer is essential. Your real estate agent will help you navigate this process but it is also helpful to know your own comfort level and financial boundaries.
Offer Strengtheners
Purchase Price: Offering above the listing price or over market value is appealing to a seller.
Financing Contingency: Offer to purchase the property in cash.
Closing Timeline: Closing and possession refers to when the property changes ownership. Giving into the seller's timeline is most advantageous when crafting a strong offer. This could mean a faster closing, a delayed closing or even a rent back option.
Inspections: Waiving inspections and warranties altogether is one way to make your offer stand out.
Earnest Money: The more money you put down as non refundable, the more the seller knows how serious you are about purchasing the home.
Strong-ish
Purchase Price: Determine a purchase price and include an escalation clause up to a certain dollar amount. Should the seller have multiple offers to choose from, your purchase price will increase up to the threshold you specified.
Financing Contingency: Obtain financing but make your offer not contingent upon this. Discuss this option with your agent and your lender because this still prohibits you from walking away from the property.
Appraisal: Securing gap funding means that you are willing to pay cash to the seller if the house doesn't appraise for the purchase price. This situation is more likely to occur if you are offering above market value.
Inspections: Conduct the inspections but state that you are purchasing the property as is and you will not ask the seller to repair any findings. Alternatively, you could note that you will not ask for individual item repairs under a certain dollar amount ($2,000 for example).
Earnest Money: Offer a percentage of earnest money that is refundable within a certain timeframe.
Playing It Safe
Purchase Price: Offer the seller at or below market value.
Financing Contingency: Leave this in your contract so that the sale only goes through if your financing is secured.
Closing and Possession: Use flexible language or pick a date based on your specific timeframe (such as by school enrollment).
Appraisal: Leave the appraisal section intact.
Inspections: Keep this section as is, which might mean you can walk away after inspection with earnest money or you can ask the seller to repair any inspection item that you see fit.
Earnest Money: Lower percentage of purchase price such as 1% or less and state that it is refundable.
Crafting the right offer when purchasing a home requires a balance of market knowledge, financial readiness, and strategic thinking. By understanding the local market, preparing financially, and working with experienced professionals, you can make an offer that is both attractive to the seller and protective of your interests. Remember, every real estate transaction is unique, so tailor your approach to your specific situation and the home you're dreaming of.
