When you are ready to make an offer, consider the below terms and tips.
Sales Price - What you will pay at closing for the home
Tip 1: Get comfy with what the home is worth. Need help?
- request a premium property report
- review sold listings with search filters
- request a CMA (Comparative Market Analysis)
Tip 2: Let DOM (Days On Market), alternatives, your own financial limits, FOMO, etc. guide how aggressive you should be.
Tip 3: In a competitive situation with a deadline to submit your "highest and best" you likely only have one chance so make it count.
Financing - How you will pay for the home
Tip 1: Sellers see all-cash buyers as the strongest, next is pre-approved buyers and finally pre-qualified buyers.
Tip 2: Make sure your lender letter either references the home address of the property or the price referenced is at least as much as the Sales Price on the offer.
Tip 3: Get an updated letter if it's more than 90 days old.
Earnest Money - Your initial $ deposit held by the title company.
Tip 1: A rule of thumb is to offer approximately 1% of the Sales Price.
Tip 2: This money is fully refundable to you if you cancel or will count towards your down payment at closing.
Inspection contingency - $ paid to the seller to freeze terms for a time while you inspect.
Tip 1: 7 to 10 days is typical in non-competitive situations.
Tip 2: You can get out of the contract for any reason during this time so the amount offered should be compelling enough for the Seller to take the listing off the market.
Other terms - Terms not as critical for negotiation (unless in a bidding war).
Title Policy - An insurance policy issued to you by a title company that protects you against losses if there’s a claim of ownership in the future.
Tip 1: This is an expensive closing cost item. We recommend an offer based on the local market precedent and to focus the negotiation on other terms.
Sellers Disclosure - Shared info about the property from the seller.
Tip 1: We recommend you review and sign seller disclosure(s) prior to submitting your offer.
Tip 2: Request repairs of known issues in the initial offer, if possible. You will have another chance to request repairs based on new info after the inspection.
Home Warranty (Residential Service Contract) contribution - $ from the seller to reimburse you for a home warranty. This is typically a one year contract to minimize your out-of-pocket costs in case a system (HVAC, water heater, etc.) fails.
Tip 1: Unless this offer is a competitive or financial distress situation it is reasonable to ask for the seller to reimburse for base-level coverage.
Closing Date - When you sign, fund and get the keys to your new home.
Tip 1: Set a date as soon as possible when financing and title work is complete. ~15 days with cash and ~30 days with financing.
Seller Paid Closing Costs - Seller contribution to your closing costs.
Tip 1: We don't recommend requesting this in an initial offer unless you are short on cash and need it to make it work.
Tip 2: This can be a useful term when the seller agrees to compensate for a repair.
HOA Transfer Fees: HOA charge to transfer ownership
Tip 1: Some HOA's charge a ridiculous fee to transfer ownership but there is hardly any cost to it. They use it as an alternative to build reserves. We will cap it at a reasonable ~$100.