The Buyer Offer Process: The Documents

Recently I wrote a post on The Post Offer Timeline for Buyers, and now, I am continuing that line of analysis of the buyer offer process by overviewing the documents that are usually submitted at the time of the offer:

1. Offer to Purchase Form – this details the purchase price, dates for the purchase and sale agreement (P&S) and closing, special provisions, exclusions and inclusions, additional provisions, escrow information, etc.  As the name suggests, this form is basically the nuts and bolts of what you as the buyer are offering the seller.  Click offer to purchase to see the GBREB standard offer to purchase form.

2. Offer to Purchase Contingency Addendum Form – this includes dates and information regarding your mortgage, inspection, pest, radon and lead paint contingencies. Click contingency form to see the standard GBREB contingency form.

3. Agency Disclosure Form – this is to inform the seller that your agent is working as your buyer’s agent or facilitator. Click agency disclosure to see the standard GBREB agency disclosure form.

4. Check – a copy of the check, usually for $1,000, made out to the listing firm is included to bind the offer.  Once the offer is accepted, the check is given to the listing agent and usually “held” by the listing firm (in other words, deposited into the listing firm’s bank account).

5. Pre-Approval Letter and/or Letter of Funds – this gives the seller the confidence that you have been pre-approved to borrow and/or have the funds to buy the house.  This sometimes comes just after the offer is submitted, but these days, most sellers won’t accept an offer until they see the pre-approval letter.

6. Lead Paint Form – this is provided by the listing agent and discloses whether the seller knows of any lead paint within the home and/or has any lead paint reports.  It also gives you as the buyer a choice of whether you would like to test for lead paint or waive the inspection. Because the buyer needs to complete the form that the seller has already completed, this form is not always submitted at the time of the offer as the buyer doesn’t always have access to it.  But the submission of the lead paint form usually follows quickly thereafter. Click lead paint form to see the standard GBREB lead paint form.

So that’s about it….  Are these the documents that you submitted when you put in an offer on your house?  There can be other forms to sign with the offer (i.e., notice and consent to dual agency if this applies) or after the initial offer (i.e., seller’s statement of property condition, statement of seller’s preferences), but the above six documents are usually those that are submitted with the initial offer.  Then the negotiations begin, and once the offer is accepted (fingers crossed), the offer and addendum documents will need to be revised to reflect the agreed-upon terms, conditions and dates.  This is fabulous, and most importantly – Congratulations to all!

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

The Pre-Moving Day Checklist for Buyers

Moving Day is such an exciting time when buying a new home, but it can be stressful too. I have put together this list in an effort to help you focus on what needs to get done in the event that things become crazy leading up to the big day. Here are some things* to remember to do to make your move a bit less stressful and worry-free (I hope):

• Contact the utility companies – make sure that the gas/oil, electricity, cable and any other utility services have all been transferred into your name at the new house. At the same time, make sure you cut off service for those utilities at the home you are leaving.

• Complete a change of address form at your post office – this is a crucial step so that you can rest assured that your mail will be forwarded to your new home.

• Confirm school enrollment/information for your children – if you are moving to a new town, and your kids will be attending the public school in your new town, make sure that they are properly enrolled and that the school(s) have all of your up-to-date information.  Even if you are moving within your town/area, make sure that the schools have your new contact information.

• Take final measurements – take any last minute measurements of spaces in your new home to confirm that your furniture fits in just the right spot.

• Reserve a safe place for important documents and items – this is especially important during a move when things have a tendency to get rather chaotic.  Put your passports, birth certificates, medications, etc., in a designated place so they don’t get lost in the move.  In fact, I might put them in my purse or briefcase so they are “on my person,” as they say, rather than on a moving truck.

• Confirm your moving logistics with the moving company – by this time, you will have hired a mover so check in with the company to confirm the arrival time on moving day and any other logistics.

• Find a babysitter or family member to watch your children – if you have younger kids, you may want to do this and/or schedule play dates so that the children are cared for during the closing and first hours of the move.  This will help you focus on the task at hand.

• Schedule your walk through – ask your buyer’s agent to schedule a walk through of your new home the day before or morning of your closing. During the walk through, you want to make sure that everything has been removed from the property and that any inspection items have been repaired or resolved.

• Review the HUD-1 Settlement Statement with your real estate attorney – the HUD-1 Settlement Statement is usually available to review with your attorney the day before the closing. You can also wait to review it with your attorney at the closing, but many like to go over it in advance of the big day.

• Send out  change of address cards – make sure all of your friends and family know about your move and your new address and phone number. It’s a fun way to reach out to and connect with your loved ones and share the exciting news.  Congratulations on your new home!

I think that pretty well covers it….  Are there any other things you did just prior to moving day that you would add to the checklist? I can’t wait to hear….

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

* This list does not include the packing of items and furniture and the determination of what is being given to goodwill or other family members, thrown away, potentially sold at a yard sale or to a consignment shop and/or moved to the new house as these efforts are part of the overall and ongoing moving out process.

Home Buying: Love for the House or Financial Security?

During your most recent home buying process, you most likely found yourself in one of two scenarios: (1) you fell in love with a house and bought it before having sold your existing home or (2) you sold your current house before buying, and then either bought another home or rented a home if you couldn’t find a home that was right for you. Buy and then sell OR sell and then buy – very different approaches to home buying with a variety of pros and cons….

The first scenario is really about falling in love with a particular house. You have to have it – no matter what. It’s irrelevant that you haven’t sold your existing home and that you may not sell it for months to come. The good news about this approach is that you have the home you love when you want it. The bad news is that you may very well find yourself in a precarious financial situation. What if it takes months and months for your home to sell, which means that you are carrying two homes instead of one? This can be a stressful, financial burden and can keep you up fretting a night or two to say the least. You can try to negotiate an extended closing to try to give yourself more time to sell before you ultimately buy. But there are some drawbacks to an extended closing too (i.e., mortgage commitment timeline, locking in a rate, etc.). And yet sometimes luck is on your side – you price your home competitively, and it sells relatively quickly. When you are in this kind of situation, more times than not, you are a “motivated” seller intent on doing what it takes to sell your existing property and move on with your life in your new home.

The second scenario is about financial security – making sure you have sold your home, and the money is in the bank before contemplating a home purchase. There are several advantages to following this path. First, having sold your home and knowing the price for which it sold, you know how much you can spend on your next property. You also don’t have the added stress of carrying two properties and the uncertainty about the final price and timing of your existing home sale. As referenced earlier, these kinds of unknowns can go round and round in your head night after night while you’re trying to sleep. As with everything, however, there are also cons to this approach. Once your house is sold, the inventory may not cooperate, and you may not be able to find the right home for you and your family. In fact, it could take months upon months until you do. And so it’s important that if you opt for the financial security route, you feel comfortable with the prospect of living in a rental or temporary housing. This generally means having to move twice and can cause some logistical issues, but on the bright side, your stress level will be lower and you will be having restful nights of sleep.

Where do you find yourself on this spectrum of home buying? Are you one who acts for the love a particular house or do you wait to act until the selling of your home is not a question mark but an exclamation point? When I bought my house in Weston, MA almost 12 years ago, I was a home buyer who acted for the love of a house. Luckily my current home at the time sold within a day, and so I was able to close on both homes on the same day. Phew…. Honestly, though, if I had to do it all over again, I would still act for the love of a house. And I see it happen with a majority of my clients too. The bottom line is that whichever path you choose, it all works out – one way or another, sooner or later. What are your thoughts and experiences on this aspect of the home buying process? I can’t wait to hear….

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

How to Win in a Multiple Bid Situation

This is the question of the day particularly when there is low inventory and high demand especially with homes priced under $1 million – and even up to $1.5 million. Multiple offers can be quite frustrating for all involved, but mostly for you. You are blindly bidding without any information about what your competitors are offering. You want the house, and yet you don’t want to overpay for the house. Overpaying could be an issue when it comes to the house appraising (if you are getting a mortgage) not to mention resale. On the other hand, you want to submit an offer that is so appealing to the seller that he chooses yours. It’s stressful to say the least. To help with this scenario, I am sharing a few tips and thoughts to help guide you when you find yourself about to dive into a multiple bid situation.

But a quick segue first outlining the general timing of the offer process. After your offer has been accepted, you have 7-10 days to have the home inspected and come back to the seller with any issues you would like addressed, which usually results in another negotiation. This is the time when most deals fall apart. Assuming you get through this hurdle, you’re on to the P&S, which is signed 14 days after the accepted offer. When signing the P&S, you put a hefty deposit down as well – in our towns of Weston, Wellesley and Wayland, it’s generally 5% of the purchase price. The last hurdle is the satisfaction of the mortgage contingency – in other words, when you receive your mortgage commitment from your lender – and this generally happens 5 weeks after the accepted offer. So in essence, with a mortgage contingency in the offer, a seller won’t be able to rest assured that his house has sold until 5 weeks from the accepted offer.

Now back to the tips and thoughts about how to win a multiple bid situation (note that I’ve evaluated these tips in terms of effectiveness and frequency with which they occur):

• Exclude your mortgage contingency – Very effective, and happens often – This is the first contingency that buyers tend to remove in a multiple bid situation. From the seller’s perspective, this is very appealing because now he knows his house has “sold” after the inspection issues have been resolved and you’ve signed the P&S and put down your deposit. In this scenario, he has peace of mind that the deal is done just two weeks after the accepted offer. Phew…. From your perspective, if you are paying cash there is no need for a mortgage contingency so this is a no brainer. But if you still need to get a mortgage in order to purchase the home, excluding the mortgage contingency is a bit risky. You would only do this if you are extremely confident about getting the mortgage – based on the counsel of your mortgage broker – and if you feel strongly that the house will appraise. The repercussions are as follows…. If you don’t ultimately get approved for the mortgage, you forfeit your deposit money – not good. And/or if your new potential home appraises at a lower price than the agreed-upon purchase price, you must come up with the extra money necessary for the loan to be approved or you can try to renegotiate the price of the house with the seller. Both are less than ideal scenarios. So think seriously about this tactic before you commit to it.

• Increase the purchase price significantly – Very effective, and happens occasionally – You can also decide to inflate the price and “blow it out of the water” as they say. This is not always financially prudent from a resale perspective, but almost always, price is the most important thing to the seller. Therefore by paying a high price for the house, your odds are better that the seller will choose your offer. In reality, though, most people don’t want to overpay for a house, and so buyers don’t often go crazy when it comes to the “best and final” price.

• Remove the inspection contingency – Very effective, and happens rarely – Sometimes in a competitive bid situation, buyers will waive their home inspection contingency though it’s not often done. We only advocate removing the inspection contingency if you are tearing down the house. Sometimes a seller will have his own home inspection prior to putting his home on the market, and then share the inspection report with you. The seller’s reasoning is that this way you might be less likely to do your own home inspection – after all the seller has had an inspection and repaired the items that were found in the report, right? Well, not exactly…. The problem with this is two-fold. First, two home inspections of the same house usually result in different issues arising. It may sound hard to believe, but I have seen this happen time and again. This brings me to my next point. What happens if you decide not to do your own home inspection and just accept the seller’s inspection report. And then five months later when you own the home, you find that there is significant termite damage – something that the seller’s inspector missed. Unfortunately at this point, this is your problem and you are stuck with remedying the damage without any recourse from the seller. Despite the fact that removing your inspection contingency significantly strengthens your offer, it puts you at significant risk and so most home buyers do not follow this path.

• Conduct a pre-offer home inspection – Very effective, and happens rarely – This is a great option, and my buyer clients and I just followed this strategy in a recent multiple bid situation. There are several advantages to this approach. First, since you’ve had your own home inspection prior to submitting the offer, you don’t need to include an inspection contingency in the offer making it much stronger. Not to mention that most of the deals fall apart because of inspection issues and the ensuing negotiation, and so this gives the seller complete peace of mind from that perspective. The seller knows that you have accepted the house and its condition, and you don’t run the risk of walking away because of something discovered during the inspection. Furthermore, you can make a better informed pricing decision when you’re in the “best and final”phase of the multiple bid situation. You will know the work that needs to be done to the house and the price tag attached, and this will enable you to make a more informed pricing decision. The disadvantage to this is that you’ve paid for a home inspection, which isn’t inexpensive, and you are not guaranteed that the seller will choose your offer. Yikes…hundreds of dollars potentially down the drain.

• Remove all contingencies – Very effective, and happens rarely – This, of course, is the best case scenario for the seller from a security standpoint so it’s quite effective, but it’s also a rarity. The seller will love your offer if it doesn’t have an inspection or mortgage contingency because technically and for the most part, as soon as he signs the offer, the deal is done…. You are not protected, however, at least from an inspection and financing perspective. It’s like a complete leap of faith, and most buyers are not willing to throw such caution to the wind, especially when it comes to their most expensive asset. That being said, if you’ve had a pre-offer home inspection and can pay cash for the property, then this is certainly the path to follow, and the offer will be quite compelling to the seller.

• Include an escalation clause – Can be effective, and doesn’t happen often – Let’s assume a list price for the home of $1,000,000. In this scenario, an escalation clause would go something like this….”I will pay $5,000 more than the best offer up to a maximum of $1,030,000.” So if the best offer is $1,020,000, then you would be paying $1,025,000 for the house. If another buyer is willing to pay $1,035,000 for the house, then you are out of the running. Some agents don’t like escalation clauses because they feel that it gives that party an unfair advantage. They feel that a buyer should come up with a price – and not a moving target – at which they feel comfortable buying, or not buying, the house. This has an element of gamesmanship which some agents don’t like. Other agents are fine with it…. Something to consider.

• Find out what is most important to the seller – Always important, but not very effective – On rare occasions, price is not the most important thing to the seller. Sometimes it’s the closing date. Sometimes it’s the buyer’s profile. Some sellers might want to sell their home to a family and not to a builder, who is planning to tear down their beloved house where they spent years building happy memories.  In these cases, you’ll want to give the seller some information about you and your family. Find out from the listing agent, the seller’s priorities and then work to put together an offer that mirrors what he wants as much as possible.

Hand’s down, price is generally the most important thing to the seller. But so is the security of his house ultimately selling. And so sometimes, a seller may accept an offer with a slightly lower price if there aren’t any contingencies. And if you can meet their ideal closing date, that can go a long way too. The bottom line is to put your best offer forward in terms of price, contingencies – or lack thereof – closing date, etc. In other words, submit the strongest offer with which you feel comfortable – both financially and emotionally. And then keep your fingers crossed and do a lucky dance too!

Have you ever found yourself in a multiple bid situation when purchasing a home? What was your strategy, and did it work? Did some approaches work better than others? I can’t wait to hear….

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

Home Buying: The Best Time to See a House

After 15+ years in the real estate business and many home purchase transactions, I can say with confidence that the best time to see a house is ironically the worst time to see a house. In other words, the best time to see a house is when the house is not looking its best – when its imperfections, wrinkles and warts are obvious. It’s easy to love a house when it’s a sunny, beautiful and warm afternoon, and when it’s in the middle of the day with the least amount of traffic or commuting noise. Those are nearly perfect conditions, and what house wouldn’t look great in that kind of situation? You want to see your potential new home in its worst case scenario. After all, if you still love the house in its worst state then you stand a much better chance of being happy with your home purchase.

Before we get into the meat of this topic, I have a bit of a disclaimer and a general rule of thumb about home showings. First, you can’t always control when you see a home, especially that first showing. You could be relocating to the area, and you have 10 houses to see each day for three days. Your real estate agent is setting the schedule, and so you don’t have control over the time of the showing nor do you have control over the weather or cloud cover. In fact, you’ll never have control over the latter because as we know, the weather and skies can change in an instant. But I digress…. The time of the showing, however, is something you can and should try to control, especially when it’s the second time seeing the house. Next, the rule of thumb is about seeing the home in the light of day – be sure that you do. If you saw the house for the first time in the dark, which happens frequently in the winters of New England when it’s virtually nighttime by 4:30 p.m., make a point of scheduling the second showing when it’s light outside.

Now back to the task at hand…. Let’s say you’ve had the first set of showings for a variety of houses, and you are about to see the #1 house on the list for a second time. When planning this second showing, as I mentioned above, keep in mind that it’s ideal to see the home in its worst case scenario. So for example:

• If you think the house may be dark – see it on a gray day when the natural light is at its least.

• If you think the basement may be weepy or wet – see it on a day when it’s raining, preferably heavily, or see it just after a heavy rain.

• If you think the house is noisy because it’s in close proximity to a commuting route, on a busy road or near a train line – see it during the peak morning or evening commuting times. (We did this when contemplating the purchase of our current home in Weston, MA 12 years ago. We wanted to make sure we were comfortable with the noise issues, and we ultimately decided that we were and bought the house.)

• If you think a nearby school, baseball field or house of worship could affect the traffic congestion or parking around the house – see it when the school is letting out, the baseball game is in play or the church service is just about to begin.

• If you think a restaurant or factory just a few doors down may emit foul-smelling odors – see it when the restaurant is serving dinner or the factory is operating in full swing.

I could go on and on…. The bottom line is that no house is perfect and that every house has its pros and cons. But when it comes to the cons, it’s prudent to make sure you see the home before purchasing it when the negatives are amplified or at their all-time worst. This way you’ll have fully researched and evaluated the property’s drawbacks and pitfalls so that there aren’t any surprises (or maybe more accurately said, so the surprises are minimized). If your new potential home is still appealing after seeing it at its worst, then you can have the confidence that it’s the right house for you. And on that positive note, I hope you enjoy the home-buying process, and I wish you the best of luck in finding the home that is right for you. Cheers!

What are your thoughts on the best time to see a house? Have you encountered some of these concerns about your potential new home and scheduled a second or third showing at a time when you could see it in its worst case scenario? And did you end up buying that particular house? I can’t wait to hear….

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

Buying a Home: How Much to Bid Up in a Bidding War?

This is a question that every home buyer wants to know if they are involved in a multiple bid situation, a.k.a. a bidding war. How much should they bid up the price to successfully purchase the home that they have finally decided to pursue while still not completely overpaying for it. My experience tells me that most people don’t go crazy when it comes to bidding wars. Ultimately buyers don’t want to overpay for a house and face an appraisal problem – and thus potential trouble with the mortgage contingency – or perhaps more importantly, a re-sale issue.

As I pondered this, I realized that I had never tracked the numbers, and so I decided to do a brief analysis to see what the facts and figures told me. My study consisted of sold properties priced from $600,000 to $2,000,000 in the Wellesley and Weston markets in the last six months (August 8, 2014 – February 8, 2015), and I learned some interesting things. But before I get into all that, a few disclosures. First, it should be noted that this time frame represents the solds from the summer into the fall and early winter markets  – not nearly as active as the Spring market is. Therefore the number of bidding wars was less than if I had used the Spring market time frame. Second, I focused on this particular price range because this is where most of the bidding wars take place.* Below $600,000, there’s not much of a market in either town. And bidding wars aren’t nearly as prevalent above $2M as they are below it. Third, some of these bids could have been higher during the offer stage but were ultimately reduced after the inspection issues were negotiated. And finally, we are assuming that these properties that sold at or higher than the list price were the result of bid wars, but it could have been a case in which a buyer saw strong competitive interest in the property and decided to “take the home off the market” by making an offer at list price or higher.

And now onto the numbers and what I found:

Wellesley

1. 40 out of 106 properties (38%) sold at list price or above.

2. Of those 40 properties, 7 sold at list price (17.5%) and 33 sold above list price (82.5%).

3. Of those 33 properties that sold above list price, the average sale price was 4.7% above list price.

Weston

1. 5 out of 46 properties (11%) sold at list price or above.

2. Of those 5 properties, 2 sold at list price (40%) and 3 sold above list price (60%).

3. Of those 3 properties that sold above list price, the average sale price was 1.4% above list price.

Some intriguing conclusions for sure. First, there were significantly more bidding wars – or more accurately, cases in which the ultimate sale price was bid up from the list price – in Wellesley than in Weston. Though that’s not a surprise given the larger size of the market. What’s most  to me was the average percentage that the prices were bid up – 4.7% in Wellesley and 1.4% in Weston – not much above the list price in either town. This is something to remember when you find yourself in a bidding war, competing against several other buyer parties for the home that you want to be yours.

I’m hoping this study and the findings serve as a guide for you when you find yourself in a bidding war. One last caveat, however…. Keep in mind that this report detailed the average percentage increase in price. There were some sale prices that were 10% – even 28% – higher than the list price. In those cases, the term “multiple offers” was an understatement. For example, there were more than 15 competing offers on the property that sold for 28% more than its list price. This is not the norm, but if you ever do find yourself in a multiple bid situation with more than 10 other offers, then it’s time to shoot for the stars if you want to have the winning bid and successfully purchase the property….

What are your thoughts on this subject? Have you ever found yourself in a bidding war situation during a home purchase process? If so, did you bid at or higher than than the list price? And were you ultimately the winning buyer? I can’t wait to hear….

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

* The majority of multiple bid situations actually take place below $1M. In fact, 28 of the 40 Wellesley properties (70%) that sold at or higher than the list price were below $1M. And in Weston, 3 of the 5 properties (60%) that sold at or higher than the list price were below $1M.

Buying a Home and Determining the Right Purchase Price

Let’s consider this scenario…. You’re buying a home and have finally found the ideal* property for you and your family. The next question becomes how to determine the purchase price so that you successfully procure your dream home, but at the same time, you don’t overpay for it. And what is the best way to determine the winning purchase price? This – as you might guess – is the $100 million question for buyers….

The answer is that there is no one way to determine the right purchase price. It’s not derived from a mathematical equation or a scientific approach but instead is more of an art form. It’s a blending of all kinds of information to ultimately determine the price. To this end, here are some approaches to use when you are trying to assimilate all the information at your fingertips to ascertain what’s going to get the deal done while simultaneously leaving both parties feeling satisfied and financially secure.

1. Review the sold comparatives (comps) and assess the market trends – This is step #1. Find the sold properties in the price range of your potential new home and adjust for condition, square footage of the home, lot utility, location, etc. When reviewing the comps, you’ll need to assess the information using a state-of-the-market-filter. In other words, how does the current market affect the pricing? What has happened since these comps sold? Has the market gone up or down? This is another element of the comparative analysis that needs to be considered.

2. Compute several mathematical equations – There are a variety of mathematical equations that will help provide valuable data points in your analysis. Again as you did with the comps, you begin with the sold properties in the price range of your potential new home. Then you turn your sights to the various equations. One is the average assessment to sale price ratio. Another is the average sale price/square foot then multiplied by the home’s square footage**. Next on the list are the average sale price to list price ratio and the average sale price to original price ratio. And there are others such as the seller’s purchase price plus cost to renovate or build***. This kind of equation can be especially relevant if the seller is “flipping” the home.

3. Assess the Competitive Situation – How many other homes are on the market in this price range and how many other buyers are “circling” or seriously looking at this home? For example, if there are multiple buyers making offers on the property you feel is ideal for you, the right purchase price will likely be much higher, especially if you want to eliminate your competition, win the bidding war and ultimately be the home buyer.

4. Look at the Days on Market (DOM) – Timing is not everything in the world of real estate, but it certainly plays a significant role. The longer the house has been on the market and hasn’t sold, the more likely the seller will be to negotiate (see #5 below). Conversely, if the property has just come on the market, and you hear that several buyers are making offers on the property, you know these will be very close to – or over – the asking price.

5. Try to Understand the Seller’s Mindset – Has the seller bought another property? What’s important to the seller besides price – closing date, buyer profile or other factors? Has the seller turned down other offers? All of these questions will give you great insight into understanding whether the seller is more or less negotiable and therefore what purchase price s/he is willing to accept. This is a crucial element to understanding the pricing puzzle….

As you can see there are many factors that enter into determining the right purchase price, and it is prudent to consider them all and weight them accordingly depending on the scenario. It also should be noted that you might very well find that each of the above analyses and equations will lead to different answers about what is the right purchase price. Some of them could yield similar numbers but not all of them will, which again leads you to the pertinent question – what is the true value of the home and what is the right purchase price to successfully buy the home but not overpay? My recommendation is to take all of the data, put your best foot forward with your offer and then negotiate keeping in mind your assessment of the right purchase price. The bottom line is that you’ll never know until you try….

Have you been in this kind of situation when you’re trying to determine the right purchase price for your potential new home? What factors did you consider? Was your strategy successful? I can’t wait to hear….

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.

* An ideal home is a bit of a misnomer because, in my experience, there is no perfect home no matter what the price point. There is always some kind of concession the home buyer must make.

** Note that with this equation, the reported square footage on the listing sheet can be falsely inflated (its not usually deflated) to include finished basements, for example. The only way around this so that you are truly comparing apples to apples is to use the town’s public record for square footage, but even then this number can be out of date.

 *** This requires you to assume various prices to build/renovate which aren’t necessarily correct. For instance, if the seller renovated the kitchen, you could value that at a cost of $50,000 or $80,000 (or even more). And depending on which number you chose, your pricing answer would be very different.

Buying a Home: The 3 Do’s of Putting in an Offer

So after months of researching, assessing and looking, you’ve finally found it – the home you want to buy. And now that you’ve found it, you need to strategize about how to successfully purchase it while not overpaying for it. This can be a tricky process, but if you keep these 3 essential Do’s in mind while journeying down the offer road, your path should be smoother and easier (fingers crossed):

1. Do make your initial offer as high as you can. In other words, as much as possible – do not lowball. It’s crucial that you start the negotiation in a positive way – it will influence the rest of the process. Starting off on the wrong foot will have dire consequences. I’m not suggesting that you overpay for a house or start the offer at a price with which you are uncomfortable; just remember in the back of your mind how important and significant your initial offer is. It will influence the rest of the entire negotiation, interactions and process, which as you know, can take months from start to finish….

2. Do talk about your love of the house. In other words, don’t trash the house in an attempt to justify your initial offer price. Focus on the positives instead of the negatives. Of course, you may need to mention some of the work that you’ll have to do or the drawbacks to the house to explain your price, but do this as politely, gingerly and lightly as possible. I can guarantee you that a seller won’t want to sell his house to someone who talks endlessly about the flaws and shortcomings of his home.

3. Do complete all of the necessary paperwork. In other words, don’t put in the offer with half of the documents missing. Yes, buying a home is an emotional process, but it is also a business transaction and having all of the paperwork completed, legible and organized will make the seller – and the listing agent – think that you cared enough to take the time to make the process earnest and professional. The seller will likely take your fully-documented, typed, buttoned-up offer more seriously than one that appears to be “thrown in” and that is sloppy, careless and missing necessary documents. Furthermore he may interpret your professional offer as an indicator that you want the house, whereas he’ll question the motivations of the buyer who presented a sloppy, off-the-cuff, haphazard offer.

What are your thoughts on the subject? Were there certain do’s or don’ts that you followed as you were making your initial offer on a property? Did they help or hurt you and your ultimate goal of purchasing the home? I can’t wait to hear….

And last but not least…please check out my corresponding blog – Selling a Home: The 3 Do’s of Responding to an Offer.

For more information on this or about the real estate market in Weston, Wellesley, Wayland and the surrounding towns or if you are considering selling your home, please contact me, Lisa Curlett (www.lisacurlett.com, 781-267-2844 or lisa.curlett@compass.com), to answer any questions or for a complimentary home appraisal.