While your low offer in a normal market
might be rejected immediately, in a buyer's
market a motivated seller will either accept
or make a counteroffer.
Full-price
offers or above are more likely to be
accepted by the seller. But there are
other considerations involved:
* Is the offer contingent upon anything,
such as the sale of the buyer's current
house? If so, a low offer, even at full
price, may not be as attractive as an
offer without that condition.
* Is the offer made on the house as is,
or does the buyer want the seller to make
some repairs or lower the price instead?
* Is the offer all cash, meaning the buyer
has waived the financing contingency?
If so, then an offer at less than the
asking price may be more attractive to
the seller than a full-price offer with
a financing contingency.
Q:
What
contingencies should be put in an offer?
A:
Most offers include two standard contingencies:
a financing contingency, which makes the
sale dependent on the buyers' ability to
obtain a loan commitment from a lender,
and an inspection contingency, which allows
buyers to have professionals inspect the
property to their satisfaction.
A
buyer could forfeit his or her deposit
under certain circumstances, such as backing
out of the deal for a reason not stipulated
in the contract.
The
purchase contract must include the seller's
responsibilities, such things as passing
clear title, maintaining the property
in its present condition until closing
and making any agreed-upon repairs to
the property.
Q:
Whose
obligation is it to disclose pertinent information
about a property?
A:
In most states, it is the seller,
but obligations to disclose information
about a property vary.
Under
the strictest laws, you and your agent,
if you have one, are required to disclose
all facts materially affecting the value
or desirability of the property which
are known or accessible only to you. This
might include: homeowners association
dues; whether or not work done on the
house meets local building codes and permits
requirements; the presence of any neighborhood
nuisances or noises which a prospective
buyer might not notice, such as a dog
that barks every night or poor TV reception;
any death within three years on the property
and any restrictions on the use of the
property, such as zoning ordinances or
association rules.
It
is wise to check your state's disclosure
rules prior to a home purchase.
Q:
How
do you determine the value of a troubled
property?
A:
Buyers considering a foreclosure property
should obtain as much information as possible
from the lender, including the range of
bids being sought.
It
also is important to examine the property.
If you are unable to get into a foreclosure
property, check with surrounding neighbors
about the property's condition.
It
also is possible to do your own cost comparison
through researching comparable properties
recorded at local county recorder's and
assessor's offices, or through Internet
sites specializing in property records.
Q:
Are
low-ball offers advisable?
A:
A low-ball offer is a term used to describe
an offer on a house that is substantially
less than the asking price.
While
any offer can be presented, a low-ball
offer can sour a prospective sale and
discourage the seller from negotiating
at all. Unless the house is very overpriced,
the offer will probably be rejected.
You
should always do your homework about comparable
prices in the neighborhood before making
any offer. It also pays to know something
about the seller's motivation. A lower
price with a speedy escrow, for example,
may motivate a seller who must move, has
another house under contract or must sell
quickly for other reasons.
Q:
What
is the difference between list and sales
prices?
A:
The list price is how much a house
is advertised for and is usually only an
estimate of what a seller would like to
get for the property. The sales price is
the amount a property actually sells for.
It may be the same as the listing price,
or higher or lower, depending on how accurately
the property was originally priced and on
market conditions.
If
you are a seller, you may need to adjust
the listing price if there have been no
offers within the first few months of
the property's listing period.
Q:
Can
you buy homes below market?
A:
While a typical buyer may look at five
to 10 homes before making an offer, an investor
who make bargain buys usually go through
many more. Most experts agree it takes a
lot of determination to find a real "bargain."
There are a number of ways to buy a bargain
property:
* Buy a fixer-upper in a transitional neighborhood,
improve it and keep it or resell at a higher
price.
* Buy a foreclosure property (after doing
your research carefully).
* Buy a house due to be torn down and move
it to a new lot.
* Buy a partial interest in a piece of real
estate, such as part of a tenants-in-common
partnership.
* Buy a leftover house in a new-home development.
Q:
Who
gets the furnishings when a home is sold?
A:
It depends. Fixtures, any kind of personal
property that is permanently attached to
a house (such as drapery rods, built-in
bookcases, tacked-down carpeting or a furnace),
automatically stay with the house unless
specified otherwise in the sales contract.
But anything that is not nailed down is
negotiable. This most often involves appliances
that are not built in (washer, dryer, refrigerator,
for example), although some sellers will
be interested in negotiating for other items,
such as a piano.
Q:
What
are some tips on negotiation?
A:
The more you know about a seller's motivation,
the stronger a negotiating position you
are in. For example, seller who must move
quickly due to a job transfer may be amenable
to a lower price with a speedy escrow. Other
so-called "motivated sellers"
include people going through a divorce or
who have already purchased another home.
Remember,
that the listing price is what the seller
would like to receive but is not necessarily
what they will settle for. Before making
an offer, check the recent sales prices
of comparable homes in the neighborhood
to see how the seller's asking price stacks
up.
Some
experts discourage making deliberate low-ball
offers. While such an offer can be presented,
it can also sour the sale and discourage
the seller from negotiating at all.
Q:
What are the standard contingencies?
A:
Most offers include two standard contingencies:
a financing contingency, which makes the
sale dependent on the buyers' ability to
obtain a loan commitment from a lender,
and an inspection contingency, which allows
buyers to have professionals inspect the
property to their satisfaction.
As
a buyer, you could forfeit your deposit
under certain circumstances, such as backing
out of the deal for a reason not stipulated
in the contract.
The
purchase contract must include the seller's
responsibilities, such things as passing
clear title, maintaining the property
in its present condition until closing
and making any agreed-upon repairs to
the property.
Q:
What
is the difference between list price, sales
price and appraised value?
A:
The list price is a seller's advertised
price, a figure that usually is only a rough
estimate of what the seller wants to get.
Sellers can price high, low or close to
what they hope to get. To judge whether
the list price is a fair one, be sure to
consult comparable sales prices in the area.
The
sales price is the amount of money you
as a buyer would pay for a property.
The
appraisal value is a certified appraiser's
estimate of the worth of a property, and
is based on comparable sales, the condition
of the property and numerous other factors.
Q:
Do
I need an attorney when I buy a house?
A:
In some states, you do need an
attorney to complete a real estate transaction,
but in others you do not. (Florida does
not require one.) Most home buyers are
capable of handling routine real estate
purchase contracts as long as they make
certain they read the fine print and understand
all the terms of the contract. In particular,
you should be clear on the terms of any
contingency clauses that will allow them
to back out of the contract.
If you have any questions at all, it may
be advisable to consult an attorney to
avoid future legal hassles. In looking
for an attorney, ask friends for recommendations
or ask your HomeJoy Real Estate agent
to recommend several. Call to inquire
about fees and to check on their experience.
In general, more experienced attorneys
will cost more, but real estate fees as
a rule are small relative to the cost
of the property you are buying.
