Dale 'Kent' Shaw

Dale 'Kent' Shaw

DRE#

Offers & Negotiations

 

Offers & Negotiations

When we've found the right home for you and you're ready to make an offer - keep your emotions in check and your eyes on the goal - you’ll save money when purchasing a home!  There's a lot more to negotiate besides the price - in fact, virtually everything in a real estate transaction is negotiable!

Buying a home can be emotional, but negotiating the price and terms shouldn’t be. The key to saving money when purchasing a home is sticking to a plan during the turbulence of high-stakes negotiations.  Buying a home is a business transaction, and treating it that way helps you save money - that's another important area where your Realtor® will be a valuable asset.  I will help you determine a negotiating strategy and suggest terms that accomplishes what you need and want in order to construct the offer.  As your Realtor®, who represents your best interests, I can guide you and offer you advice, but ultimately you are the one who must make the final decision regarding offers and possible counter offers.

First step, I will prepare a Comparative Market Analysis (CMA) that compares the home to similar properties that recently sold in the neighborhood to estimate the market value of the home and possible final purchase price.  With the estimated final purchase price established in advance, we will work back from that number to determine your initial offer amount, which can set the tone for the entire negotiation.  Think of the list price as the seller’s opening bid in your negotiation to buy the home.  A bid from you that's too low may offend sellers emotionally invested in the sales price, a bid that's too high may lead you to spend more than necessary to close the sale.  The goal is to arrive at an initial offer amount that engages the sellers yet keeps money in your wallet.

Several other factors can also affect your bargaining position and offer price.  I will investigate and attempt to obtain information to help you understand the sellers’ financial position and motivation as much as possible.  The more signs that sellers are eager to sell, the lower your offer can reasonably go (but the opposite is also true).  For example, if the home has been sitting on the market for a while, or the home was previously under contract but the sale fell through, the seller may be willing to accept an offer that’s below list price.  On the other hand, if you’re in a seller’s market where buyer demand exceeds supply, or the seller has already received another offer on the home, that may impact the price you’re willing to offer.

If you’re making a lowball bid or going up against multiple offers, the seller may decide to make you a counteroffer — amending your original purchase agreement with new terms, such as a higher sales price or fewer contingencies.  At that point, it’s up to you to accept the new contract, make your own counteroffer to the sellers, or walk away.  In a multiple offer situation, the seller may even request you submit a new purchase agreement offering your "highest and best" terms.  Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating.  Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or pay for a home warranty for example.  If sellers won’t budge, make it clear you’re willing to walk away; they may get nervous and accept your offer.  Great homes and those competitively priced can draw multiple offers in any market.  Don’t let competition force you to go beyond your pre-determined price or agree to concessions — such as waiving an inspection — that aren’t in your best interest.

Most real estate offers include contingencies — provisions with deadlines that must be met before the transaction can be completed, or the buyer is entitled to walk away from the transaction with their earnest money deposit (EMD).  Sellers favor offers that leave little to chance.  We will work to keep your offer free of unnecessary contingencies if possible.  Although contingencies can offer protection to buyers, they can also make offers less appealing to the seller because they give buyers legal ways to back out of the sale without any financial repercussions. So, if you’re going up against multiple offers, making an offer with fewer contingencies can potentially give you an edge over the competition.

An Earnest Money Deposit (EMD) is a sum of money the buyer puts down as evidence to the seller that you’re serious (read: earnest) about buying the house. If the seller accepts your offer, the earnest money will go toward your down payment at closing.  However, if you try to back out of the deal, you might have to forfeit the cash to the seller.  A standard EMD is 1% to 3% of the sales price of the home ($2,000 to $6,000 on a $200,000 home). But depending on how hot the market is where you live, you may want to put down more earnest money to compete with other offers.  In most cases, the title company is responsible for holding the earnest money in an escrow account.  In the event the deal falls through, the title company will disperse the funds appropriately based on the terms of the purchase agreement.

Time Off Market Fee (TOM fee) is a tool buyers can use to avoid putting their EMD at risk while conducting their initial investigation of the property.  The TOM fee is a negotiated sum of money, usually 0.1% to 0.2% of the sales price of the home ($200 to $400 on a $200,000 home), paid by the buyer to the seller within a day or two of the date of acceptance of the purchase agreement.  The TOM fee compensates the seller for taking the property off the market while you review the Seller’s Property Disclosure and conduct inspections, and if applicable, to resolve any objections you may have to the TOM fee inspections. During this time, the seller shall not accept any other offer to sell the property, except a back-up offer.  Upon the successful completion of the TOM fee inspection process, you will submit your EMD for the balance of the purchase agreement contingency process.  If you complete the purchase, the TOM fee SHALL NOT be refunded to you or applied to the purchase price, down payment, and/or closing costs - even if you terminate the agreement for any reason, the seller still retains the TOM fee.

Closing Costs — The party responsible for paying each individual closing cost is completely negotiable, although the lender and the loan product may have some restrictions.  Sample closing costs shown in the table below include approximate fees, if available, and are marked as "customarily" paid by one party or the other as determined in our local market.

Closing Costs

Fees shown are estimates and may be subject to NMGRT. Actual costs depend on sales price, lender, lender product, title company or other vender.

 

Conventional

FHA

VA

Cash

Assumption

 

Buyer

Seller

Buyer

Seller

Buyer

Seller

Buyer

Seller

Buyer

Seller

LOAN RELATED COSTS AND FEES 1

 

 

 

 

 

 

 

 

 

 

Appraisal Fee

-

500

500-Negotiable

500-Negotiable

-

-

-

-

Appraisal Re-inspection Fee

-

-

250-Negotiable

-

-

-

-

-

-

Credit Report

50

-

50

-

50

-

-

-

35

-

Loan Assumption / Transfer

-

-

-

-

-

-

-

-

Consult Lender

Origination Fee (1-1.25 % of loan)

X

-

X

-

X

-

-

-

-

-

Points - Buydown (% of loan)

Negotiable

-

X

-

X

-

-

-

-

Points - Discount (% of loan)

Negotiable

Negotiable

Negotiable

-

-

-

-

Tax Service Fee

25-Negotiable

-

78

-

25

-

-

-

-

VA Funding Fee (maximum 1.25% of the loan)

-

-

-

-

X

-

-

-

-

-

Flood Zone Certification

20

-

20

-

20

-

20

-

20

-

 

1 Buyer shall pay all other allowed direct loan costs

PREPAIDS REQUIRED BY LENDER

 

 

 

 

 

 

 

 

 

 

Flood Insurance (14 mos-varies)

X

-

X

-

X

-

-

-

-

-

Hazard Insurance (14 mos-varies)

X

-

X

-

X

-

100%

-

100%

-

Interest (paid from day of funding to end of the month)

X

-

X

-

X

-

-

-

-

-

PMI (% of loan + reserve)

1%

-

-

-

-

-

-

-

-

-

MIP (% of loan)

-

-

.038%

-

-

-

-

-

-

-

Taxes (3 months)

X

-

X

-

X

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

TITLE COMPANY CLOSING COSTS

 

 

 

 

 

 

 

 

 

 

Closing Fee (425 + 1/M of purchase price)

-

X

-

X

-

X

Negotiable

Negotiable

Pro-Rata Data Search

 

 

 

 

 

 

 

 

 

 

Legal Document Prep (eg. REC)

200-Negotiable

200-Negotiable

200-Negotiable

50%

50%

50%

50%

Special Assessment Search

-

50

50-Negotiable

50-Negotiable

-

50

-

50

Buyer Recording Fees

50

-

50

-

50

-

25-Negotiable

50

-

Seller Recording Fees

-

25

-

25

-

25

25-Negotiable

-

25

E-File Fee

10

5

10

5

10

5

5/Document-Negotiable

10

5

Transfer Fee

17.50

17.50

35-Negotiable

-

35

17.50

17.50

17.50

17.50

Remote Notary Service (varies)

Paid by the party needing service

Courier/Express Mail Fee (varies)

Paid by the party needing service

Wire Fee

Paid by the party needing service - 20

 

 

 

 

 

 

 

 

 

 

 

POLICY PREMIUMS

 

 

 

 

 

 

 

 

 

 

Title Commitment

100-Negotiable

100-Negotiable

100-Negotiable

100

-

100

-

Owner’s Title Insurance Policy

-

X

Negotiable

Negotiable

-

X

-

X

 

(varies + NMGRT) (200,000 purchase price = 1,199 - 300,000 purchase price = 1,646)

Lender Policy

100

-

100

-

100

-

-

-

-

-

Lender Endorsement - Survey

50

-

50

-

50

-

-

-

-

-

Lender Endorsement - Mech lien

50

-

50

-

50

-

-

-

-

-

Lender Endorsement - Additional

25 ea

-

25 ea

-

25 ea

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

MISCELLANEOUS

 

 

 

 

 

 

 

 

 

 

Survey

200-Negotiable

200-Negotiable

200-Negotiable

200-Negotiable

200-Negotiable

Pest/WDO Inspection

100-Negotiable

100-Negotiable

-

100

60-Negotiable

-

-

HOA/COA Transfer Fees

Negotiable (determined by association)

HOA/COA Disclosure / Certificate

Seller (determined by association)

Property Tax Proration

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Broker Commission

-

X

-

X

-

X

-

X

-

X

 

Essential Tips for Successful Real Estate Negotiating

1. The market dictates the balance of negotiating power.  I will try to help you recognize your position and adjust your negotiating style to match the strength or weakness of it.
2. We will attempt to determine if the negotiations are going to be collaborative (win-win) or competitive (win-lose) and use the proper negotiating style.
3. I will try to help you understand the personality types of the other Broker and their clients.  We will decide how I can best communicate with them effectively.
4. We will identify areas where we think you will be able to come to agreement.  We'll begin by aiming where you are going to end up.
5. We'll start negotiations at a level that will get a response, but leave room for future give and take. Your first position is important and will affect the final results.
6. We will adapt our negotiation strategy in a multiple-offer situation.  We will need to adjust our style based on the number of offers.  I will try to help you determine which items are most important to the seller and aim to give them what they truly want in order to accept your offer.
- During the Negotiation
7. Keep hostile emotions in check.  As your Realtor, I will be a shock absorber and use positive emotions to support your proposal.
8. We will not accept the first counter-offer unless there is an overwhelming reason.  If you accept the first counter-offer, they will feel they could have done better.  Also, the first counter-offer is seldom the final offer.
9. We will develop a game plan and identify issues likely to come up and a plan for solving them.  We'll save something unimportant to you that you can give away as a concession later.
10. We won’t give up easily.  We'll try again and if it isn’t working, walk away slowly.  We won’t burn bridges in negotiation - things change, sometimes unpredictably.
11. When it comes to negotiation on repairs, the market and your alternatives will guide us on how to proceed on the spectrum from “as is” to “fully repaired.”
- Finishing Strong
12. Just before closing, we'll nibble for one last victory.  It never hurts to ask and it might pay off.
13. We won’t give the other side what they want before getting what you want.  We'll confirm all concessions ASAP.
14. I will try to help you anticipate last minute issues that could arise just before closing.  Preparation is essential.



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