Tuesday, October 23, 2012
6. The First Offer
The "perfect" house has come. You used your Realtor to get the inside scoop. They will advise you on a price they think is acceptable, but ultimately, your Realtor will do what you tell them to do.
You set your max price, Stick to it! Your first offer should be well under that price, but rarely is your first offer accepted. (If it was accepted... I'd personally feel ripped off. "could I have gotten it cheaper? Yuuuuppppp!!!")
You calculated what you can afford before, so don't let your emotions get you into trouble. Compare this house to others on the street. is it the most expensive? it'll be harder to sell. Is it the cheapest? Why?
You WON'T get them all.
There is one out there for you, at your price. If you find an amazing house, and its too expensive, It isn't the house for you! The last thing you want is to have a nice house, but pouring every spare penny you have into keeping it - Then it becomes a place of resentment, rather than your fortress of awesomeness. You have Time. You're renting or living at home, you're not in a rush. Use that first time home buyer to your advantage! However, it may not be YOU that is the reason an offer doesn't go through... Some crazy unexplainable stuff happens sometimes...
True Example story #1
We found a cute side split the day it came in on the market - It had 6 offers by 9PM that night, we were offer #7 at 9:00PM, We knew it was "hot" and going to sell, so we came in at what they were asking for it. Said and done, it was implied that we were the LOWEST offer at "asking price" They ended up getting $15,000 OVER asking. This broke our "offer" cherry, and we were so demoralized that we weren't even CLOSE to getting it, considering we reacted within hours to try and get it.
True Example story #2
We also put an offer on a house for asking price that was then promptly taken off the market, then re-listed for $50,000 More than it was the week before. Sellers do some weird things some times, and are inherently greedy. (I would be too!) We didn't even really like the house, but it was a super deal and saw it as more of an investment.
Offer Conditions, Nothing is set in stone... (Haggle!)
If I'm at a "cash" establishment, I will naturally just start haggling. This happens with houses. The list price is by no means set in stone.
Take lots of pictures at your viewings - Some people will be sneaky and take out their 500 dollar Chandelier and replace it with a 30 dollar Ikea special. Pictures can prove otherwise. it'll also let you go through them when making your offer to determine if you want and are getting the proper...:
ELF and Window Coverings
Generally, offers will say "all existing ELF (Electrical/Existing Light Fixtures) and window coverings" But If there are 1000 dollar sheer blinds you love, Make sure to write them in as well. Its your first house, so going to blinds-to-go and sinking 2 grand so your neighbors can't see you changing isn't exactly ideal. If you move into your new house and put up sheets and tinfoil, your neighbors will probably disown you before they've met you!
As a first time home buyer, you probably want those appliances, unless something has been growing in them for years. (even then... bleach works wonders) Write them in, Explicitly naming each appliance. We had trouble with this on one of our offers.
Generally, anything bolted or screwed into a wall is yours. Exceptions are generally TV mounts. When in doubt, put it on the offer. We thought the backyard umbrella was bolted on. Alas, it was not. We don't have 400 bucks to freely spend on a "luxury" item like a 12 foot umbrella, so we invest in sunscreen instead.
Look out for things like Mirrors, wall mounted shelves, Bars, Wineracks, and substantial decorations if they're part of the yard (flower pots, Greenhouses, those self contained firepits/firepot things.
These three conditions Cover your ass completely, and wording is VERY important.
Condition One: "Conditional on 2 (or 3) visits to take measurements before the closing date"
This allows you to ensure: You can draw up a floor-plan to figure out where to put your stuff, You can ensure they're taking care of your new house, you can show your place to very limited special people in your life before you get it.
Condition Two: "Conditional on the buyer obtaining personally acceptable financing
Not that this comes into play often, but the "personally acceptable" financing gives you an extra degree of protection. If your mortgage company comes back and says your rates are higher for some unknown reason, you have an out. if you decide you just want to pull the plug and walk away, it helps you say "I didn't like the financing" and walk away. You want the freedom to be able to walk away, and this is a sneaky way of doing it, that doesn't scream "I'm a flight risk"
Condition Three: "Conditional on personally acceptable Inspection Results"
The wording on this one is much longer than what I've put (usually there's a time limit to this condition, 14 days or something, but the idea is the same. You're probably not a builder, or even super handy (owning a house will help make you handy... trust me!) So HIRE someone to tell you if you got a good house. At this point, your Realtor is starting to smell money, so they LOVE the look of the house and will talk you into it. I've worked with sales people and as a sales person in previous jobs. No salesperson will be truthful if they deny that when they smell "close money" its similar to a shark tasting blood. There's a thrill when there's a big deal about to close, and you need to look out for yourself at this point. The Inspector can save you from making the most costly mistake of your life, and this condition allows you to walk away with zero commitment if he finds something you can't cope with. Other options are to re-open the offer and haggle. I'll call this "the tango"
The Price on your offer:
If a house has been on the market for more than a few weeks, the owners start to sweat. Generally sellers want a flurry of activity right off the bat, and a bunch of offers. Lowball! Get your Realtor to estimate what you should offer for. There's a low point at which you'll insult the owners, the Realtor will know this best. Come in Just above that point, with all your desires (appliances, ideal closing date, etc) If you didn't insult them by implying their house isn't worth much with your offer, you'll probably get a counter offer.
Begin "The Tango" (aka... the next post!)