Are you considering buying a home in Texas? Navigating the home-buying process can be daunting, so having the right information at your fingertips is important. In this post, we’ll answer some of the most common questions about negotiating and closing a good deal.
What Strategies Should I Use When Negotiating a Home Price?
The first step in negotiating a good home price is researching the current real estate market. It’s important to know what homes in your area are currently selling for and what comparable homes have sold for in the past. This will help you determine what a fair price is and give you leverage when negotiating with sellers. Additionally, a competitive offer with a larger down payment or a pre-approved loan may attract sellers. Finally, don’t forget to factor in any non-monetary items, such as repairs or upgrades, that you’d like the seller to include in the purchase price.
What Factors Should I Consider When Deciding Between Multiple Offers?
When deciding on which offer to accept, several factors must be considered. First, look at the financial components of each offer—things such as the down payment amount, contingencies, and financing type. You should also consider whether any offers include non-monetary items, such as upgrades or repairs. Lastly, consider the timeline for closing on the property; some buyers may be willing to close sooner than others.
What Happens After an Offer Is Accepted?
Once your offer has been accepted, you must start closing on the home. The first step is obtaining a title search to ensure no liens or other legal issues with the property. Once this is done, you can obtain homeowner’s insurance and review all the paperwork involved with the sale. During this period, it’s important to stay in contact with your real estate agent and lender—they’ll be able to answer any questions about the process. At the end of negotiations, you’ll come to a contractual agreement regarding the terms of the sale and then finally close on the property.
What Are Some Tips for Closing on a Home Quickly?
If you’re eager to move into your new home quickly, consider these tips:
- Get pre-approved for a mortgage before starting your home search if possible; this will speed up the lending process during closing.
- Make sure your finances are in order before bidding on a property – being organized with your paperwork can lead to quicker turnaround times.
- Stay on top of communication with your agent, lender, and lawyer—sometimes, delays can be avoided if everyone works together.
- Consider offering incentives, such as waiving certain contingencies or including extras in the sale, to encourage sellers to act quickly.
Is a low offer a good idea?
While your low offer in a normal market might be rejected immediately, a motivated seller will either accept or make a counteroffer in a buyer’s market.
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 selling 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, an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
What contingencies should be put in an offer?
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 as passing clear title, maintaining the property in its present condition until closing, and making any agreed-upon repairs.
How is the price set?
It’s very important to price your home appropriately relative to current market conditions. Because the real estate market is continually changing, and market fluctuations affect property values, selecting your list price based on your neighborhood’s most recent comparable sales is imperative.
A comparative market analysis provides the background data on which to base your list-price decision. Study the comparable sales material presented to you by the different agents you interviewed initially. Have your agent update the report if the analyses are over two or three months old.
If all agents agree on a price range for your home, go with the consensus. Watch out for an agent whose opinion of value is considerably higher than the others.
Are low-ball offers advisable?
A low-ball offer is a term used to describe an offer on a house 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. Unless the house is very overpriced, the offer will probably be rejected.
Before making an offer, you should always do your homework about comparable prices in the neighborhood. It also pays to know something about the seller’s motivation. For example, a lower price with a speedy escrow may motivate a seller who must move, has another house under contract, or must sell quickly for other reasons.
Are interest rates negotiable?
Some lenders are willing to negotiate the loan rate and the number of points, but this isn’t typical among established lenders who set their rates like large corporations set the prices on their goods. Nevertheless, it pays to shop around for loan rates and know the market before you talk to a lender. You should always consider the combination of interest rates and points and get the best deal possible.
The interest rate is much more open to negotiation on seller financing purchases. These usually are based on market rates, but some flexibility exists when negotiating such a deal.
When shopping for rates, look for published rates in local newspapers or check the growing number of Internet sites that publish such information.
Can you buy homes below market?
While a typical buyer may look at five to 10 homes before making an offer, an investor who makes bargain buys usually go through many more. Most experts agree it takes a lot of determination to find a real “bargain.” There are several ways to buy a bargain property:
- Buy a fixer-upper in a transitional neighborhood, improve it, and keep it or resell it 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.
Can you negotiate the price of new homes?
Negotiating the sales price with a developer can be difficult because they may claim their prices are based on fixed construction costs. But it doesn’t hurt to try.
Experts say builders are more likely to be flexible on price at the beginning and end of a development project. Early on, most developers want to move people in quickly, so the project picks up momentum. Later, developers may be more inclined to accept lower offers when only a few units remain.
If negotiating the price doesn’t work, buyers commonly negotiate for better amenities (upgrade carpet, light fixtures, etc.) or lot location. Experts say a developer will rarely pass up a deal over a couple hundred dollars worth of carpeting, for example.
Who gets the furnishings when a home is sold?
Any personal property permanently attached to a house (such as drapery rods, built-in bookcases, tacked-down carpeting, or a furnace) automatically stays with the house unless specified otherwise in the sales contract. But you can consider anything that is not nailed down negotiable. This most often involves appliances not built in (washer, dryer, refrigerator, for example), although some sellers will be interested in negotiating for other items, such as a piano.
What do you think of get-rich-quick real estate schemes?
Most real estate experts say there is no such thing as getting rich quickly in real estate. But there is no end to get-rich-quick programs presented to the public as alternative methods of buying real estate.
Some are reputable, while others depend on your financial circumstances to work. A handful are simply scams.
Many get-rich-on-real-estate programs offer advice on how to buy government foreclosure properties and participate in other government programs. Most of this information can be obtained by directly calling the government offices.
Anyone interested in real estate investments would be wise to explore a variety of sources. Most investors view real estate as a long-term investment. Deals that sound too good to be true often are.
What is the best time to buy?
Because many buyers prefer to move in the spring or summer, the market starts to heat up as early as February. Families with children are anxious to buy so they can move during summer vacation before the new school year begins.
The market slows down in late summer before picking up again in the fall. November and December have traditionally been slow, although some astute buyers look for bargains during this period.
What are some tips on negotiation?
The more you know about a seller’s motivation, the stronger your negotiating position. For example, a 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 wants 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.
What repairs should the seller make?
Most sellers like to make all minor repairs before going on the market to seek a higher sales price. In addition, nearly all purchase contracts include a buyer contingency “inspection clause,” which allows a buyer to back out if numerous defects are found. Once the problems are noted, buyers can attempt to negotiate repairs or a lower price.
What is the difference between list price, sales price and appraised value?
The list price is a seller’s advertised price, usually 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.
What is the first step to buying a home?
Finding out what you can afford is one of the first steps, which can be done by pre-qualifying for a home loan. This step will help you narrow your search for a neighborhood and particular houses. A pre-qualification is a simple calculation considering several factors, primarily your income. There are no guarantees with a prequalification, but it will be expected of you when you offer a home.
Should I include an inspection contingency in my offer?
An “inspection contingency” protects you as a buyer in a purchase offer by allowing you to cancel closing on the deal if an inspector finds problems with the property.
The document becomes a legally binding contract when the seller accepts a written offer. The purchase contract can be written to include a contingency for any repairs found to be needed or related items the seller must take care of before closing. If these are not dealt with, and you have such a clause in your contract, you can delay or possibly cancel the closing. You could lose your deposit if it’s not stated in the contract. There also may be costly legal implications stemming from backing out of a contract.
You usually have the right to choose the inspector (and be responsible for paying for the inspections). In addition to an overall inspection for structural soundness, you can request a satisfactory pest control inspection report, roof inspection report, or contingency for no potential environmental hazards such as asbestos or radon gas.
Contingency clauses should satisfy the concerns of both the buyer and seller. Buyers also can protect themselves by inserting additional necessary contingencies. Indicate which items like curtains and appliances are to remain with the house. Then stipulate you have the right to inspect the home 24 hours before closing to ensure everything is in order.
