Constructing a good offer to purchase property

Making the decision to purchase property is a big life decision. Hopefully you gave good time and consideration into finding the right property for you. The one that meets most, if not all, of your needs/wants that you noted as most important. Then, it is time to determine how to construct the right offer... one that positions you to get acceptance from the buyer without overpaying. If one there were a crystal ball to help you determine where that line in the sand is.

Working with a local real estate expert who can provide you data on recent 'solds' will help you get closer to that "right" number and make an informed decision. In this article, I wanted to address some more common myths related to making an offer head on to help you prepare for this stage of the purchasing process.

Although there are occasions where generalities may help you in the development of an offer, you have to keep in mind that property sales are somewhat like snow flakes where no two are the same... the homes are different, the sellers are different and the buyers are different. For that reason, you have to be careful not to get to fixated on myths such as;

• Cash always means a lower offer. - Certainly having a cash offer means that there is no financing contingency. However, at the end of the deal, whether you pay with cash or a mortgage loan, it is all the same on the bottom line to the customer.

• Always offer less than asking price. - This really depends on how the market is behaving and whether there are other houses that you would be almost as happy with. If you placing an offer on a home that is likely to have competing offers, going lower isn't always the best strategy to secure yourself as the chosen buyer.

• Don't ever pay asking price. - This one goes in line with the one we just addressed. It all depends.

• Going directly to the listing agents allows you to pay a lower price for the home. The seller pays the same commission % whether you have an agent representing your needs or not. Since the seller is the one that accepts, counters or declines your offer, going direct should not have any bearing on the price you will pay to the seller to purchase their home.

• The house has been on the market for X days, the sellers must be desperate and we can offer a low offer. - Not necessarily. In fact, in Naples, many home owners owe nothing on their properties removing that ongoing, nagging mortgage payment. Each person's situation is different and time on market does not always equate to appetite for lower offers.

• Always ask a seller for a concession (aka asking them to give you something of value). - Again, it all depends on the market behavior and the circumstances for this specific home.

• Ask your family or friend, they have bought lots of homes. - Although having input from knowledgeable sources can be beneficial, it is most important to have the most recent and relevant data and information as considerations for the home you are intending to purchase.

• Keep the deposit small so you don't risk losing it. - This is likely not to go far on getting your offer accepted in Naples. In fact, in Naples, it is 10% escrow is a common deposit amount, which is higher than many other places in the US. Certainly this is not set in stone but is often expected. Of course, it all depends on the other parts of the offer.

It goes without saying that before you start constructing offers, you need to make sure you have been pre-approved by a lender or if paying cash can provide proof of funds. In a sophisticated real estate market like Naples, sellers want to make sure you can back up your offer. Pre-qualification letters just aren't as valuable these days. Many sellers wouldn’t even entertain your offer if you do not have a pre-approval letter along with the offer.

The buyers will be evaluating your offer (potentially along with others) to determine if it is a fair and acceptable offer evaluating the offer price, closing details, deposit amount and risk in the form of contingencies and other factors. This also holds through on the inspection asks as well. Just because you get a house under contract, doesn't mean it stays there! Asking for unreasonable concessions can kill a deal.

Engage your Realtor to pull comps to see what the similar homes are selling for to determine a fair market value of the home you wish to make an offer on. They may also be able to learn a little bit more from the listing agent about what some important considerations are from the seller (e.g. closing timing, etc). The key is to find the intersection between where what you are willing to pay aligns with what the seller is willing to accept. And if they don't align, you have to be comfortable walking away for the deal or adjusting your expectations.