There are a number of factors you should
consider before making an offer on a home:
Is the asking price about the same as the recent sales
prices of similar homes in the neighborhood?
Records are kept on the sales of homes
in every neighborhood. Using these records, a real estate
agent can compare the asking price of the house you want
with the sales price of similar homes in your area. This
will give you an idea of what is called the market
value of the home. It will help you decide if the
asking price of the house is a fair one.
Is the house in good condition?
As you learned in Lesson 2, it is important
to know about the overall condition of the house and calculate
into your offer the cost of any major repairs that may be
needed.
Are there any special factors to consider?
It may be that the owners need to sell
the house quickly (perhaps because they have a contract
on another house). Or the house may have been on the market
for a long time. It’s a good idea to find out this
information as well as what the seller paid for the house
and when. This information may help you decide whether or
not to make a lower offer.
How much can you afford?
Before you make an offer, you need to
know if you can afford the house. If you have pre-qualified
for a mortgage, you should have a good idea of the current
interest rate for the mortgage loan you are considering
and how large a monthly payment you can make. Don’t
be tempted to offer more than you are sure you can afford.
Making the offer
You make an offer by signing and giving
the real estate sales professional a purchase and
sales agreement stating that you plan to purchase
the house for a certain price under certain conditions called
terms. The real estate agent gives the offer
to the seller.
At that time, you usually give the real
estate agent a check. There is no set amount for the check,
but it should be enough to show you are serious about buying
the house. In real estate terms, this is called earnest
money. This check is not made out to the seller.
It is usually made out to a financial organization or a
real estate company. The money will be returned to you if
the seller does not accept your offer within a specific
number of days. If the seller accepts your offer and you
back out, you could lose this money.
The purchase and sales agreement should
include a complete legal description of the property, the
amount of earnest money you are giving with the offer, the
price you are offering, the size of the down payment, and
how you will finance the rest of the purchase price. You
should also write down any items of personal property (such
as a washer and dryer) the owner has said will stay with
the house, the date you would like to close the sale and
move into the house, and the length of time the offer stands
(usually three to five days). It may also include certain
conditions that must be met called contingencies.
(See the Looking further sections
in this unit to learn more about contingencies.)
