Making an Offer on Real Estate

Once you have found your preferred piece of real estate, you will then need to give the seller your offer to buy it. Your offer should be presented in writing. A standard real estate purchase and sale contract is the proper document to present an offer. This document remains an offer until the seller accepts it, by signing it, presents a counter offer, or declines the offer. Once the seller agrees to your offer and signs it, it then becomes a binding contract.

The first thing you should look at before presenting an offer is comparable sales of real estate in the area. Knowing what other similar homes have sold for recently will assist with determining the market value of the home you are looking at.

Consider all the smaller details in the home you are interested in purchasing. Look at the condition of carpets and flooring, paint, light switches, faucets, windows and doors as well as the major construction elements of the home. This will give you an idea of where this property sits in comparison to others that sold lately. If the overall condition of the home is below average then the price should be too. If the condition of the home is excellent then its value should be in the upper range of comparable sales.

Substantial improvements such as renovations or additions to the home will add more value to the home that may not be reflected in comparison sale prices. A similar home may not have the same level of improvements as the one you may be considering. Most improvements add significant value but should be discounted off of what it would cost to have the improvements done today.

The value these improvements add to a property vary greatly. The real value lies in whether a buyer likes the improvements and is willing to pay to own the home. A $20,000 kitchen makeover with solid hardwood cabinets and attractive countertops could add $30,000 or more to the value of the home, while a $20,000 swimming pool only adds $10,000 to the value of the home. The actual costs of improvements are not the deciding factor on the value they impart. It is a matter of perception and the desirability the improvements create for the home. Do you like the improvements? If so you may be willing to pay more money than somebody else.

Market conditions will influence your offer. In a hot real estate market there will likely be multiple offers on the home you are interested in. You may need to add a few thousand dollars to your offer to avoid your offer being rejected in favor of another. In a slow market you could offer a few thousand less than you are willing to pay and may still have the offer accepted.

Your offer will state the price you are willing to pay for the property. It should also state how you plan to finance the property and include a deposit of earnest money. You will need to negotiate with the seller who pays what closing costs and what inspections are performed. Be certain there are provisions for which personal property is included in the purchase. Also include closing dates and terms of cancellation, any repairs you want performed, and which professional services, such as escrow will be used to facilitate the transaction.

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