The Offer to Purchase

In most places you will be expected to give a 'deposit or earnest money with your offer to purchase real estate. Usually the more money you can come up with at this point, the better position you will be in to negotiate. Put yourself in the sellers' shoes: Your offer will be taken more seriously you accompany your offer with a check for a reasonable amount of earnest money. And if you have taken the time to prequalify for a loan, that will give you even more credibility.

A basic rule of thumb is that the more you want to negotiate the price, the higher the earnest money should be. There are only four basic things that one negotiates when purchasing a house: Price, dates, personal property, and earnest money. If you want the best price, you cooperate on the sellers' dates, and don't ask for anything extra in the personal property. If the date of closing is important to you, you may have to flex on the price if the date doesn't suit the seller. If you want extra personal property that the seller didn't plan to leave with the house, you'll probably pay a bit more.

The logistics of the negotiating process. If you are buying through a REALTOR®, the agent who has shown you the house usually writes up the contract (or agreement) for you to sign. Keep in mind that typically the agent is being paid by the seller and first allegiance is to the seller: That does not mean that he or she won't treat you fairly. It does mean that the Realtor is legally obligated to tell the seller anything you say that has to do with the negotiations. In some states you may be able to work through a “buyers” agent or an attorney. These agents are not obligated in the same way to the seller, however they are obligated to conduct all negotiations in an upfront and ethical manner. Check with the local or state real estate board where the home is located for regarding your options.

Prior to making an offer to purchase, you need to find out the sale price of comparable homes in the immediate area. In many areas a REALTOR® will be able to share that information with you. If not, go to the county court house or contact an appraiser. Real estate transactions are public information.

You must expect to pay the seller a fair price, but you don't have to overpay. When comparing the prices of other similar houses that have sold, you want to compare similar properties. This process will assure you that you are not paying too much. If the house you want has a garage and the other house sold didn't have one, you'll usually pay more for the added feature.

Ask your agent for a time frame. At what time will the offer be presented to the seller? When can you expect to have a response? Try also to schedule when and where can you get together again if there are changes to the contract. There is not a contract until there is agreement to all parts and all changes have been initialed by all parties. It is tempting to let the details go until "tomorrow", and that may not be a problem. Then again, another offer can come in, or the seller can change his mind. Until that contract is fully executed, that is, signed and all changes initialed, you don't have bought the house.

During the negotiation process, keep in mind that all areas can flex. You might choose to put a few things on the contract that you are willing to let go. For example you may ask for the refrigerator that you don't really have to have, so that you can give it back later as a point of concession. You also don't want to give your absolute best offer right off the bat. When the offer is immediately accepted, the buyer thinks he's paid too much and the seller feels he received too little. So play the game just a little bit to make sure every one is happy.