Writing and Negotiating the Offer

10 Easy Steps to Home Ownership

Step #5
How much should you offer on a home? Several factors can come into play with this decision:

  • How long has the home been on the market?
  • What is the condition of the property?
  • What have similar homes sold for?

Your Realtor should compile a Buyers comparative market analysis on the home youve selected. This analysis is similar to a CMA for Sellers in that it contains different properties which have recently sold in the same geographical area as the home youve selected. The analysis will contain the property address, selling price, general amenities of the home and the closing date. The analysis will better enable you to determine a fair market value for your selected home.

After the fair market value has been established, you and your Realtor will complete the Purchase and Sale Agreement which will establish not only the purchase price of the home, but also the terms of the sale including possession date, closing costs, items included and excluded in the sale, home inspection contingencies, and the closing agency. The Agreement has a time specified in which the Sellers must respond to your offer, usually 24 hours. At this point, your Realtor collects “Earnest Money” – a down payment and show of good faith in the purchase of the home. This money is applied to the purchase price of the home if the offer is acceptable OR returned to the Buyer if the offer is rejected.

After your Realtor has completed the Purchase and Sale Agreement and you have signed and dated each page, your Realtor will present the offer to the Listing Agent or, in some cases, directly to the Seller. The Listing Agent presents the offer to the Seller identifying the purchase price, terms of sale and possession date.

The Seller may accept your offer, as is, or may present a counteroffer. If the Seller presents a counteroffer, the contract will have changed from its original terms. Sometimes its the price – other times its the other terms such as possession date, payment of closing costs, etc. At this point, you can:

  1. agree to the change of terms and sign the counteroffer;
  2. continue to counteroffer until an agreement is reached; or
  3. refuse the counteroffer and begin a new search.

Upon acceptance by all parties to the Agreement, your Realtor will provide your lender with a copy of the contract. The lender will proceed to finalize your approval and prepare the paperwork required to close the sale. A copy of the paperwork is also supplied to the closing agency to open a file and begin the Title Commitment search.

Step #6: Getting a Home Inspection…