Top 5 strategies to help home buyers make their best deal
- Know the market! Knowledge is power.
The way to negotiate your best deal when buying a home begins with knowing the market well enough to understand what the value of the home is. Knowledge is power! When I work with my buyer clients, every home we tour and don’t offer on moves them closer to understanding what’s desirable, what’s not, and where the value is.
- Hire an experienced Realtor who is working in your best interest.
Don’t work with a Realtor who is trying to sell you something. Work with one who is helping you buy the home that is right for you and your budget.
- Price & TERMS matter.
Once you’ve found the right home for you, it’s time to make an offer.
As a listing agent I see many offers from buyers who were poorly advised by their Realtor or real estate agent.
Let’s face it, the very most important attribute to any offer for both the buyer and seller is the price, though it’s not the only thing! Understanding that there are other valuable components to the offer, can greatly assist the knowledgeable buyer in getting a great deal, even in a hot seller’s market!
- Don’t make a low ball offer.
The seller wants to get the most amount of money for their home as is possible. The buyer wants to pay the least amount of money for the home as is possible. How do I advise my buyers to win this struggle? We structure their initial offer to include terms that the seller will find favorable. In addition, unless you are a hit and run buyer, I advise my buyers to offer a reasonable amount of money for the purchase. Not one that we think the seller will accept, but one that has the seller thinking, “Damn, I don’t want to lose this buyer”. In fact, when advising my buyers who have done a ton of work in seeing dozens of homes before finding the right one for them, I recommend we offer a purchase price high enough where including the favorable terms has the seller actually wanting to execute the contract without delay. Sometimes they will, and you’ll have grabbed a fantastic deal. Most often though the seller will try to squeeze the buyer up just a little, making a fair deal for all.
I see hundreds of offers from buyers and their agent, where even though they wish to buy the home, their offer is weak on all fronts. Their chances of getting a good or great deal are severely diminished as upon first look the seller doesn’t even consider their offer a serious one. We’ve all heard of first impressions, or best foot forward!
Here’s an example of a typical offer I see from other (mostly inexperienced) agents.
- List price $259,900 (comparable sales show the home’s current market value at between $240,000 & $250,000)
- Offer price $219,900
- Earnest money deposit $1,000, due 5 or even 10 days after contract execution.
- Inspection period, 15 days
- Closing 7-8 weeks
- Contingent on financing.
What apparently most buyers and their agents don’t know it that the seller scoffs at the offer deeming them not a serious buyer.
Understand here that the SW Florida, Cape Coral, Fort Myers and Lee County in general is a huge real estate market with thousands of listings and hundreds upon hundreds of closed sales every month. Buyers in this market come from all over the world, with large numbers of buyers being from New York, NJ, New England, the Mid Atlantic as well as Ohio, Michigan, Minnesota and Wisconsin. Buyers are in competition with other buyers! In fact it’s not just the seller who won’t let you steal their home for grossly under market value, it’s the other buyers in the marketplace who will pay more than you for it, and the seller knows it. This is why I advise my buyers to make strong offers. Not high offers, but not weak offers. Unless of course they don’t care if they get the house. Most buyers however feel an emotional connection to the home they offer on. Typically it wasn’t easy to discover, and once they found it they would like to actually own it. Here is where structuring a strong offer makes all the difference.
Same home scenario, but offering using my Top 5 Home Buying Deal Maker strategy
- Don’t skimp on your GOOD FAITH earnest money deposit.
- List price $259,900 (comparable sales show the home’s value between $240,000 & $250,000)
- Offer price $235,000
- Earnest money deposit $10,000 or $2,000 within 1-2 days and $8,000 after 10 days depending on buyers liquidity
- Inspection period 7-10 days max
- Closing 6 weeks if financing, 2-3 weeks if cash.
- Contingent on financing as the case may be.
Now put yourself in the sellers shoes! You know your home is worth between $240k & $250k. You love everything in the offer, except the price. Though you think wow this buyer really wants to buy my house! Depending on your motivation, you are tempted to sign the contract as is to not let this rock solid buyer get away. If you do propose a counter offer, the only thing you will address is the actual sales price. Though again, you will do so with caution as you don’t want to lose this buyer.
I never asked you to put yourself in the shoes of the seller on the first offer of $219,900 with low money down, but trust me, the seller no longer thinks that they might be selling their home to you after receiving your weak offer. That being said, if you as the buyer really did want this home, you’ve now got your work cut out for you. Hopefully the seller will counter offer! Many will not! If they do it’s certain that they will counter all of your terms and maybe reduce the sale price from their list price by a thousand or two. This is how the seller will begin to know whether or not you really do want the house. But now it’s game on and you’ll need to step up. Once you start to step up, the seller knows they’ve got you. With me as their agent we’re going to drag you up to the upper end of the value range.
The rock solid $235k offer without a doubt will negotiate the better deal.
I don’t work with many hit and run buyers, although I have helped a few. One in particular made several low unattractive offers, one at a time with no counter offers from sellers until he had exhausted every home that he found appealing. He then had to double back and engage in negotiations with the very first home he offered on as it was his favorite. You guessed it! The seller ate him for lunch! He ended up paying top dollar as he was now getting very close to moving with no place for his family to go.
Cash is king! Though using my strategies can help you negotiate a great deal even when your offer is contingent upon financing.
As a Southwest Florida Real Estate Agent it’s my job to educate my clients and help them get exactly what they want and make sure their best interest are being considered in every detail of the purchase. This blog is all about educating you and empowering you with all the industry news, information, tips and things to consider before buying or selling your home. If you found this article interesting and know someone else that might benefit from it please feel free to share!
We invite you to like us on facebook, connect with us on Google+, follow us on twitter and connect with us on linkedin. We hope that you find our website to be a great source of information and visit often. Whether you are looking for Homes for Sale, Moving Resources, or even Mortgage Information everything you need is right here.
We will always be available for personal service by phone or email, so feel free to contact us with questions any time! My offices are located on 2326 Del Prado Blvd. S., Cape Coral, FL 33990. You can reach me at 239-425-2503 or email me at Bob.Ashworth@gmail.com and you can visit my website at www.BobAshworth.com.