The House OfferYou've found the perfect house and now you're sitting down with your partner or spouse and deciding to put in an offer on it. Is it as simple as that? Not exactly, although that's the first step. There are many aspects of a house offer that you should be aware of when picturing yourself in your dream home.
The first step, of course, is to put in a written offer which, should be done through a licensed agent, the seller of the house will decide to either accept your offer to buy without changing anything with the house offer, make a counteroffer to your offer, or outright reject it.
While looking at different houses, it is important to look at the advertised price of the house and consider it only as a rough estimate of what the seller could potentially receive when the house offer goes through. It is also important for you to realize that although many houses you are looking for may have all the same square footage or the same design, but, each house have different reasons to be listed at their price advertised. There are three different types of sellers that you should be aware of: those that overprice their house in an attempt to get more for their house than what it's worth, those that price their house with the knowledge that they'll get pretty close to what they ask for, and, those that underprice their house in an attempt to trigger a bidding war. Remember, a seller is under no obligation to sell to you the house at the advertised price.
When you are house hunting, look at exactly what you can pay for the house and how much you can afford in monthly mortgage payments. This includes how much money you have on hand and how much you need for the rest of the down payment. Remember to factor in the 2 to 5% closing cost fees.
Before you sign an offer to purchase, also look at comparable houses on the market in the neighbourhood you are searching in, also called "comps". To understand how a "comp" works and how it will benefit you when it comes to negotiate, there are three basic principles:
- A comparable sale should have occurred within the last three to six months, with a earlier timeline even better.
- Make sure that when doing a comparable sales find, make sure you look at the exact same type of home that you are interested in, such as the age, type and number of rooms.
- Make sure the comparable sale should also occur within a six to ten block radius of the house you are interested in.