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You have just completed a successful search and you are ready to submit an offer. Whether you looked at twenty homes or at just one, the decision to move ahead with an offer is a very critical step in the Home Buying process. There is one piece of advice that you should heed as you prepare to take action. Do not hesitate!!! There are countless tales of the diligent home seeker who finally finds the perfect property, and then drags his feet because the house has been listed for several months with no signs of activity. Just when you assume you have time on your side, an out of town buyer will show up and submit an offer that beats you to the table. If you know you want to enter into negotiations, then do so immediately!
Understanding the Process
Although there is a standard method to how offers are written and submitted, many regions of the country have peculiarities that may affect how you begin the offer situation. You will need a professional opinion on how to initiate the process, which forms to submit, and how to proceed in the negotiations. If you are not using a real estate agent, then contact a real estate attorney for guidance.
In some areas, the process begins with a signed contract that outlines your preferences for price and terms. This is usually accompanied with some kind of a check to bind the contract, which is later credited toward the down payment. In many other areas, the offer takes the form of the actual purchase contract that will be used to close the sale, which can be a lengthy document. This, too, may be accompanied by a binder.
Assuming you are working with a real estate agent who is representing your interests, the first step is to inform the agent of your decision to make an offer. Arrange to sit down as soon as possible and decide the terms of the contract. Preferably this meeting will take place within the same day or even within hours of your decision. Once the agent knows that you will be making an offer, he/she will contact the selling agent and inform him/her of your decision to make an offer. This allows the agent who represents the seller to notify the seller of your pending offer, which usually means that the seller will wait to see your offer before making decisions on any other offers they might be reviewing. If you are in a competitive offer situation, this serves to buy you a little time.
Your agent will want to submit the offer as soon as possible. Generally, you are not expected to be present when the offer is presented, nor are you encouraged to be there. Most sellers will not want you there! They will expect to deal directly with your agent representative. This is where representation by a buyer's agent can be very valuable, since they will approach the negotiating table with the clear directive to represent only your interests.
Negotiating the Offer
In some ways, this is the easiest part of the offer process. Negotiations tend to either take on a life of their own because the parties are motivated to reach a final contract, or they collapse because the two sides simply cannot come together. If both parties are eager to make the deal happen, then the negotiations will be as much about points of agreement and possible compromise as they will be about debates over a particular price. On the other hand, if either the buyer or seller is unwilling to compromise on key issues, then even the best negotiator is limited in what they can do to bring the parties to an acceptable level of agreement.
Unfortunately, there will always be those situations where the seller simply will not agree to the terms that you offer, even though you are certain that your terms are reasonable and fair. This is when you will need to decide whether it is better to walk away from the opportunity and resume your search, or give in at the risk of feeling that you are making a bad business decision. This call is personal and not easy to make; hopefully, you will not be forced into this decision.