Real estate agents like to use jargon and industry-specific terms that might make you nervous if you've never bought a house. Your agent might call the initial paperwork you submit to the seller a "sales contract," but that's just another term for an "offer." Offer better speaks to what you and your spouse are actually doing; entering into a negotiation. The terms "counteroffer" and "final offer" indicate various stages of the process.
When you are out house hunting with your agent and stumble upon your dream house, she'll probably say, "Great! Let's write up an offer." She might have the boilerplate offer forms in her briefcase, but most likely, you'll go back to her office to fill out the paperwork. An initial offer draws upon the seller's terms included by his agent in the multiple listing service -- which your agent will have. It specifies the property address and the things that come with the house, such as the appliances, and notes the amount of money you're putting on the table to show you're serious (usually a few thousand dollars) and a proposed closing date. Initial offers also stipulate a few "deal breakers," called contingencies, like whether you want a home inspection. The most important part of the initial offer is the price. If you offer the seller exactly what he wants, the negotiation's over. You can proceed with final loan approval and prepare for closing.
If you offer the seller less than the asking price or request terms that vary from those spelled out in the listing, expect a counteroffer. A counteroffer looks a little more messy than an initial offer because the seller or his agent uses a pen to scratch through and write above terms he's doesn't like. So, for example, if a home's list price is $260,000 and you offer $250,000, the seller might counter your offer by crossing out your price and writing in the price he's willing to accept, let's say $256,000. Most items in real estate contracts are negotiable, so you could get a counteroffer regarding any number of contract items, even if the seller agrees to your price.
In cases where either you or the seller simply can't negotiate, either of you can indicate when an offer's final. For example, if you and your spouse only qualify for a $250,000 home loan and you won't be able to accept any counteroffer from the seller regarding price, let your agent know that your initial offer will be your final offer. Continuing with this example, the seller might not be able to accept your offer if his mortgage obligation exceeds your price. Final offers show that one side simply can't meet the other side's terms, and negotiations may fall through as a result.
In fast-moving real estate markets, offers are negotiated and accepted within the same day. In slow markets, however, you might have to sit tight and wait a few days while the seller considers your offer. Don't be anxious even when the seller doesn't respond to your offer quickly. To buy the home of your dreams at your price and terms, you may have to play it cool while the seller warms up to the idea of accepting your offer.
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