Freddie Mac covered '4 Tips for Making an Offer' in a recent Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration.
1. Understand How Much You Can AffordWhile it's not nearly as fun as house hunting, fully understanding your finances is critical in making an offer. By this time, you have established yourself with a mortgage lender and gotten an idea of the price range that feels comfortable for you. Now that you have selected a home to pursue, consider the monthly mortgage costs, as well as any additional expenses that may be associated with this home, e.g. HOA dues, potential repairs, or updating that may need to be done soon after move in. Have a conversation with your lender again to review all the costs and determine the maximum offer that you would feel comfortable submitting for the seller consideration.
2. Act FastEven though the number of investors has decreased from a few years ago, the inventory of homes is so low yet the competition among home buyers continues to heat up. According the the latest Market Action Report from Portland's RMLS, we ended 2016 with just 1.3 months of inventory for the Portland metro area. This is well below the 6-month supply that is needed for a 'normal' market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream home. Ask your Realtor to discover the seller's time to review offers and be sure to submit your offer prior to the cut off time. If no offer deadline is established, work with your Realtor to present your offer as soon as possible.
3. Make A Solid OfferGone are the days when low-ball offers will even be considered by a seller. In many cases, if you anticipate the home will be getting multiple offers, you will need to submit an offer at least at the list price if not higher. Your strongest offer will be comparable, or a tad higher, than other recent sales in the neighborhood. Work with your Realtor to understand the current market dynamics in the neighborhood and talk about other ways of making your offer stand out - such as writing a personal letter to the seller, putting a larger down payment down on the home, modifying inspection times, etc. Your Realtor will have options for you to consider - helping you understand the pros and cons of each - to submit your best possible offer.
4. Be Prepared to NegotiateChances are that you will get one counteroffer from the sellers, so be prepared. The two things most likely to be negotiated are the selling price and closing date. Give that, you'll be glad you did your homework first to understand how much you can afford. Your Realtor will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.
Whether buying your first home or your fifth, having a local real estate professional, like me, on your side is your best bet to make sure the process goes smoothly. Let's get together and see if we can make your dreams of homeownership a reality!