Buying Step 5: Offers, Counteroffers and Negotiation

When you are ready to buy, you will need to make a written offer. Sutter Team Real Estate has standard purchase agreements and we will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. We will also guide you through the offer, counteroffer, negotiating and closing processes.

How Much Should You Offer?

You sometimes hear that the amount of your offer should be x percent below the seller's asking price or y percent less than you're really willing to pay. In practice, a successful offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order. We can help you determine a suitable offer price and terms, based on all of the given circumstances.

Terms and Conditions

While much attention is given to offering prices, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value for buyers - or additional costs. Terms are extremely important and should be carefully reviewed; they may include an escrow deposit, contingency deadlines for inspection and/or mortgage approval, payment of closing costs, etc.

Contingencies and “Subject to” Clauses

Buyer offers often contain contingencies or “subject to” clauses that must be met before the contract is considered binding. This gives you time to take care of final details. Contingencies can include the following:

  • approved financing
  • buyer selling an existing home
  • satisfactory home inspection report
  • test results for environmental factors including radon, mold and water quality
  • termite inspections
  • easements
  • liens

We can help you determine which contingencies you should include for your home buying situation. You will likely be required to include a time clause, also called a kick-out clause, which limits the contingency to a short time period (say 12, 24 or 48 hours) should the seller receive another acceptable offer.

How Do You Make an Offer?

When you have settled on a home that meets your requirements, and you have determined the price that you wish to pay for the home, you will then have the opportunity to submit an offer to purchase the home from the seller.

Typically, you complete a written offer that we will then present to the owner and the owner's representative.  When we submit the offer, we will also use our experience and negotiation skills to convince the seller the give great consideration to your offer.
After you have submitted your offer, then the owner may accept the offer, reject it or make a counteroffer.

What is a Counteroffer?

If the seller decides not to accept your offer, then most-likely, they will submit a counteroffer back to you.  A counteroffer is nothing more than a new offer with different terms. Offers and counteroffers reflect the back-and-forth activity of the marketplace. It's a common, efficient and practical process, but also one that may contain tricky clauses and hidden costs. Because of this, and because counteroffers are common, it's important for you to be available during the negotiation process so that any proposed changes can be quickly reviewed.

How Do You Negotiate?

No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of experience is clearly evident because we know the community, have seen numerous homes for sale, know local values and have spent years negotiating realty transactions.

Real estate bargaining typically involves compromises by both sides. It's not war; it's not winner-take-all. Instead, negotiating should be seen as a natural business process: buyers should be treated with respect, and owners should never lose sight of either their best interests or their baseline transaction requirements, which must be met before the home can be sold.

There are a lot of considerations, not just price, in making and negotiating offers. When it comes time to negotiate, make sure that you have a representative on your side that can look out for your best interests, and make sure that you are protected at all times.

 

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