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You will work with your agent to complete the offer contract. The issue of price is usually foremost on the mind of the buyer, although there are circumstances where the terms and the conditions of the sale may drive the agreement.
In determining the price, you will suggest an offer price that is either a) based on your personal knowledge of the market as a result of homes you have recently previewed, or b) based on the research and professional advice of your agent, or c) based on some combination of your knowledge of the market and the agent's advice, as well as information the buyer's agent might have about the seller's motivations.
You need to decide before you start the offer process just how much you can afford to pay, and how much you are willing to pay to secure the house. These are not necessarily the same numbers! Share these with the agent and discuss what price should be submitted as a starting point. Your goal should be to offer enough to either cause the seller to accept your offer or to prompt the seller to counter your offer, thereby engaging the negotiation process.
Although it is tempting to start low and then work your way up to the higher price hoping to end up with a slightly better final price, this approach can have its disadvantages. It may make better sense to bypass the negotiation process, which is often emotional and can be side-tracked by a seller who experiences doubts, fears, and second thoughts. Instead, begin with a number that is close to what you believe the house is worth and what you are willing to pay. A strong offer will challenge the seller to jump on it. Most sellers do, in fact, know when a buyer is trying to test the waters with a low offer versus submitting an offer that indicates a serious intent to finalize the deal. Talk with your agent about these two different strategies and then proceed according to what makes sense given your particular situation.
If the terms and conditions of the purchase are more important to you than the actual price, then make sure the contract clearly spells out your requirements.
Examples of terms or conditions that could appear in a contract
a) The date of occupancy can be of critical importance to you if you are relocating with a family and beginning a new job. Make sure the seller can vacate the house according to your time frame.
b) The seller might need to fund some repairs before you will agree to purchase. If the house needs a new roof, and you don't want to pay for it, then itemize this in the contract.
c) There may be fixtures that are currently a part of the house, but were not supposed to transfer with the sale, that you would like to see included. You might want to request that the custom drapes stay, or that certain appliances remain behind. The discussion over what stays and goes usually doesn't affect the cash value of the property as much as it affects the appeal of the property to the buyer. A sale should not hinge on the willingness of the seller to leave the curtains behind, but then sales have been lost over such seemingly insignificant issues because the two sides were unwilling to compromise.
d) Some sellers will agree to offer special financing which supplements or replaces the financing that would be provided by a lender. If you need this help from the seller, write it down!
e) The size of the escrow deposit is also a point of discussion, since most sellers will want to see as much money as possible placed into escrow to protect their interests. Likewise, the buyer will want to minimize this amount.
f) Sometimes it is necessary for you to close on the purchase of the house and then rent the house back to the seller because they are not quite ready to move out. This is a special arrangement that needs accurate legal documentation. Get advice from your real estate agent or attorney if this is something you will need to address.
g) Most contracts will allow you to hire a home inspector to look at the property for possible hidden defects. Even if the house you are buying is newly constructed, this is a wise option. There may be other inspections that you also want to conduct (do you need someone to look at the pool? Does the well water need to be tested?). If so, state in the contract that your agreement to purchase the house is contingent on the particular inspections that you feel should be done.