The Basics of Presenting an Offer on a House
The Basics Of Making an Offer on a House
Buying a home is a little bit like getting married, first comes love then comes the legal contract.
And like marriage, the way you structure your proposal will have an effect on the outcome.
Typically, the “cleaner” the offer, the more chance there is that the seller will entertain accepting the offer. A “clean” offer simply is an offer with the least “subject to’s”, reasonable money offered, and a reasonable deposit.
A “subject to” is a way of saying to the seller that you will buy their property but you reserve the right to back out of the offer if, for example, you fail to get financing. The most common subject to’s are financing, a property inspection, or selling your current home. But “subject to’s” can be other things as well, such as ” my Father viewing and approving the property by August…”, or, ” the city bylaws allowing a garage to be built”, etc.
Most buyers believe that it is just the amount of money you are offering that influences the sellers decision to accept. Although the amount of money offered plays a large part, it is the “package” of your offer than can make the difference of whether the seller will accept or deny your offer.
The seller, guided by their realtor, will view your offer and categorize difference aspects of it, such as, the amount of money offered, the amount of the deposit accompanying the offer, how many “subject to’s” are there. All of these things will play a part in your negotiations.
All things being equal, the seller will usually go with the offer they view as being the most reasonable and has the most chance of ending in the sale of their property.
This is to say that unless there is an underlying reason for the seller to accept a less than “ideal” offer, such as needing the money from the sale, the seller will usually “counter” your offer with different terms or outright refuse it.
In some cases a buyer will attempt to give a “low ball” offer to a seller in an attempt to see if they will “bite”. Although this is a legitimate thing to do in the case where the buyer truly believes that the price that the seller is asking is either inflated, or the property needs a lot of work such as a foreclosure property etc., it is generally not a good thing to do.
Presenting an offer that is unreasonable does several things. First, it immediately angers or insults the seller, second, the seller will usually outright refuse the offer, third, if the seller does not refuse the offer and chooses to counter the offer, the counter offer will usually be as unreasonable as the offer that was presented to them. Remember the marriage proposal? Do not tell your girlfriend that the meal she prepared for you is terrible just before you ask her to marry you!
There are many other factors that go into a successful offer to purchase and just one single factor can make all the difference. For example, pretend you are the seller and you receive two offers on your property, your Realtor will council you on what to do in this situation, but let’s say the offers are identical, same amount offered, same “subject to’s” , etc. and the only difference in the two offers is that one party gave a $10,000 deposit and the other $5,000. Which offer would you choose? Of course, you would most likely accept the one with the largest deposit because they appear to be more serious about buying your property.
As you can see, the amount of money you offer is not the only factor that will influence a seller to accept your offer. Like a marriage proposal, it is sometimes “how you say it”, and the “sincerity of your proposal” that can make the difference whether you are single or homeless!
