Guide to Purchasing Real Estate Part IV
Placing an Offer to Purchase a Home
When it’s time to place an offer to purchase a home in the State of Florida it is your Realtor’s or Real Estate Attorney’s duty to write the offer along with the proof of funds, proof of escrow deposit and all the other related addendum and submit them to the seller’s agent. This writing an offer process might vary in other states and is left to attorneys and the Realtors duty is to solely find you the property. But your Florida Realtor is in charge of writing an offer, which becomes a contract when signed by all parties, counter offer if necessary and see the process through all the way through the closing day.
Placing an offer if the art of negotiation that a professional Realtor should be able to perform on buyer’s behalf and to the best of his or her interest. The common method Realtors use to determine an offer price is a quick Compatible Market Analysis that will show how much other buyers have paid for the similar properties in the same market. Normally the properties considered for this analysis share the following characteristics:
- Sold within the same subdivision or located within one-mile radius of the subject property
- Sold within the past 3 months
- Same size, the number of the rooms and amenities. If the exact compatible properties are not available for comparison, the proper adjustments must take place on all comps in order to bring them to the same level as the subject property. Appraisal 101: never adjust the subject property, all adjustment should always be made on comparable properties.
- Comps must be arm-length-transactions. This means that any property sold for less value, such as Quite Claim Deeds or transactions between the family members for a lesser value, could not be considered as a good comparable.
The final price of the offer is normally less than the listing price. There are many reasons for this strategy. The most common one is to have a price in mind then offer around 10% less hoping the seller will counter offer at the desired price. That said, it is important to know that each seller is different and this strategy might not be suitable for all negotiations. This is most true during the sellers’ market when sellers receiving more than one offer, which at times forces the buyers into a bidding war and offering perhaps even more than the asking price. While your Realtor is the best source in putting a strategy in place on the offer price negotiation but at the end of the day, it is your money and should be your decision to know when it’s time to offer more than the asking price or when to fold.