You should discuss with your agent what price you’re willing to offer
to the Seller. Keep in mind that the realtor’s commission check is
based on the selling price; lower price, lower commission check.
There is no rule of thumb for that first offer price; however, there is
always some wiggle room. This is where the CMA comes in handy. Look
at what the homes were listed for and what they actually sold for. If
the homes were listed at 5% above what they sold for, then you know to
offer around 5% less than the listed price.
It is ultimately up to YOU to figure out what you are willing to pay
for this property. Don’t let anyone, including your agent, know
the highest price you’re willing to pay for the property. You’ll be
taking a chance but you can usually raise the stakes later.
Contingencies – A Buyer’s Best Friend
Contingencies are conditions (your safety blanket) written into the
offer to prevent you from being obligated into buying a house that would
be a financial disaster or one that is structurally defective.
Contingencies also insure that you will get your Earnest Money returned to you
in the event things fall apart. Keep in mind that too many
contingencies are likely to make the Seller bolt, so choose your contingencies
carefully. Some examples of contingencies are:
Financing Contingency – the purchase is subject to you being
able to obtain a satisfactory mortgage. You can even state maximum
interest rates you’re willing to pay, and/or other specific terms.
Home Inspection Contingency – the purchase is subject to an
acceptable whole house inspection report. This one is a must; it’s your
protection that you’re not buying a train wreck. Count on hiring a
professional to conduct the inspection, the extra money is well spent
and could save thousands down the road.
Included Property Contingency – State exactly what non-real
property you expecting to be included in the sale. Don’t assume that
really nice swing-set is included. You should have the Property Condition
Disclosure, but you might want to add something not covered in the
Property Condition Disclosure.
Other Terms and/or Conditions Contingency – If you want the
Seller to replace the roof (or reduce the sale price to cover a new roof)
this is where you state clearly what has to be done before you will buy
the property. You can be specific as to what work needs to be done and
even set a time limit on completion.
Remember you're in a better position to negotiate price and get your
offer accepted if you don't have a lot of contingencies so use common
sense when protecting yourself and your Earnest Money.