Sales Price Isn't Everything
One mistake I often see from buyers making an offer is they only think about the sales price. What sales price should they offer to get the home. This is a big mistake as sales price you offer isn’t everything, instead there are many more variable to take in to consideration to make your offer more competitive.
The reality in a high demand low inventory market is the willingness for buyers to offer full price or over asking price. The major issue with this that many buyers do not consider is the lender will want the property to appraise for the offered sales price. The problem is many times it won’t so the seller has to consider other factors besides the sale price.
What factors am I referring too? Well sales price isn’t everything and there are many other items to take in to consideration when putting an offer together. For example will you be making a small down payment or large? The smaller the down payment the higher the risk the appraisal will be an issue, so sellers like to see a higher down payment to avoid appraisal issues. What about earnest money will you put the standard 1% or will you go higher to show you are serious? Are you pre qualified, pre approved or fully approved for the mortgage already which is music to a seller’s ears.
How about closing costs, are you asking the seller to help pay your closing costs? Or will you pay your own? Will you even offer to pay the seller’s closing costs or some?
All these and many more are ways to really make your offer be strong and as you notice they have nothing to do with the sales price. Imagine this, you offer to pay full price but offer to pay $2,000 of the seller’s closing cost, don’t ask for a home warranty and even offer to give the seller a free 10 day lease back? Now your offer is worth more than just full price, you can add another $2,000 savings in closing costs to the sellers bottom line plus another $450 since they won’t have to pay for a home warranty. On top off all that they can stay for 10 days free and have time to move out without being in a rush, now you see what I many about sales price not being everything?
When making an offer don’t get too caught up in the sale price instead strongly consider every other section of the contract and find ways to make every section as strong a possible. The key however is to know your limit up front and always make your strongest offer from the start because in this market there will be no second chance.
With a heart of a teacher I look to educate my clients about the process of buying, selling or renting real estate. I strongly feel an informed and educated consumer will make better decisions and be less likely to be taken advantage of.
Have questions about this or other topics, don not hesitate to contact me.
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Luis Cuevas, Realtor®
RE/MAX Cross Country
1990 Justin Road
Highland Village, Texas 75077
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