Whether we are buying a new car, computer, plane tickets, or Real Estate, we all want the same thing, which is “The Best Deal”. With most items, the best deal is assured when we buy the item that we want at the lowest price.
Real Estate doesn’t work that way. In addition to the purchase price, things like closing costs, lenders fees, property taxes, and state taxes affect your initial overall total cost. As a buyer, this overall total cost should be what you are concerned with minimizing. Keep in mind that most seller’s are focused on PURCHASE PRICE. Let’s take a look at how to put together a smart offer.
Purchase Price: This is the most visible and important of all terms in the offer. It’s also potentially the most offensive and emotional component. If the property is fairly priced and you want the best deal then make a reasonable offer and focus on the other items. Seller’s often don’t even look at the rest of the offer if this value is not in the range of their expectations.
Closing Costs: These can be 2%-4% of the transaction. Many shrewd buyers will ask seller’s to pay these. The net effect is a reduced overall total cost to the buyer and is achieved with less pain than offending the seller’s with a low-ball purchase price. I’ve had several listing agents tell me that my offers have been accepted, even though the seller netted less, because of the overall structure and presentation of my offers.
Lenders Fees: These are fees charged by your lender. Neither I nor the seller’s have any control over this. I’ll discuss negotiating the best lending or mortgage deal tomorrow.
State Taxes: These are charged by the State. The amounts are not negotiable but who pays them are. Smart offers ask the seller to pay for these. These can amount to 1%-2% of the purchase price.
Pre-Paids: These are required by insurance and mortgage companies in order to establish an escrow account. The amounts of these are dependent on the purchase price of the home and are not negotiable. However, who pays them can be. Again, smart offers have the seller paying a portion or all of these costs.
“Smart Offers” are for buyer’s that have found the property that they want and want to get “The Best Deal”. Combined with my expert negotiation skills, I’ve found that my buyer’s normally get in their dream home or condo for 3%-6% than otherwise possible.
Tim Shepard, Broker/Owner
Destin Real Estate, LLC
Cell: (850) 259-4133
Toll Free: (866) 678-SOLD
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