Buying Your First Home Step by Step - Step 3 Making an Offer

Making an offer on your first home

By the time you're at this 3rd step in buying your first home you should be comfortable working with the agent you chose to help you with the process of buying your home. If you've found the home that you want to buy, and worked with you're agent through all the due diligence, then you're ready to make the offer. 
Ultimately the decision on the price that you offer is yours; however your agent will play a huge role in helping you decide how much the offer should be.

Your agent should supply a comparable sales analysis of the home. This analysis will tell you how much the home is worth in the current market. However, of course your goal should be to get the home for a price that's lower than market value. The big question is, how low will the seller be willing to sell?

Deciding how much to offer


Your goal in making your first offer should be to make the offer just low enough to entice the seller to counter your offer but high enough not to insult the sellers and get a total rejection. The question of how low an offer the seller would be willing to accept depends on a number of factors. First of which is his or her motivation to sell. Before making your offer you should have your agent help you get answers to these questions.


1. Why is the seller selling the home? Are they selling because they have to? or just because they want to? If the seller is motivated to sell because of transfer or some other need to re-locate immediately they may be willing to accept a much lower offer than a seller who just wants to upgrade or downsize to a smaller home.


2. How much equity does the seller have in the home? You may not be able to get an exact answer to this question. However your agent can help you make an educated guess through financial information contained in tax records, deeds and other public records. If the sellers equity is little, or if they have no equity, then they may not be able to accept an offer lower than the asking price.


3. Is the seller current on the payments? The answer to this question may tell you the true motivation of the seller to sell. If the seller is having financial problems and unable to make the payments, You can most likely buy this home for the amount of the pay off on the mortgage. Or in some cases you may even be able to get it for less than the pay off; if the lender is willing to consider a short sale.


4. How long has the home been on the market? Your agent can normally get this information from the mls listing. This is another good clue as to just how motivated the seller may be to sell. If they need to sell soon, the longer the home has sat on the market unsold the less the seller will be willing to take.


Once you have answers to these questions, you can use the information to make an informed decision on how much you should offer for your first home.


Offer contingencies


Contingencies are requirements that you may want to make of the seller; or circumstances in which the contract / offers validity will be dependent upon. For example, if your getting financing for your home, the offer will be contingent upon the homes appraisal and your loan being approved. You may want to ad other contingencies as well. Such as, you could require the seller to make repairs or improvements to the home or you could make your offer contingent on the seller paying all or a percentage of the closing cost or any other cost involved in the purchase of the home. Your agent should help you decide what contingencies you should require and whether or not they are reasonable.


The negotiation process in buying your first home


Negotiation is actually a step within this step. Once you've made your offer, If your offer is not accepted and the seller answers with a counter offer the negotiation process begins. Since your agent is representing you in the transaction, this is where he or she needs very good negotiating skills. Your agents negotiating skills can literally save you thousands. By the time you get to this point in the process, you should have a good idea of how motivated the seller is, and just how low they may be willing to go on price. So you may be able to use contingencies in the offer as a bargaining chip.


Ultimately the decisions will be your responsibility. But if you follow these steps and If you've chosen a good agent, you'll get a good deal on your first home.