Home Buyers: Real Estate Contract Offers
Real Estate Contract Offers:
Home Buyers: Are You Just Making an Offer or
Do You Want to Buy the Home?
The reason I ask is very simple.
The real estate market in Central New Jersey has witnessed a change beginning in 2013. While it was truly a buyer’s market in recent years(2006-2012), things have changed quickly and drastically from early January and now into May!
Home buyers are out looking.
Home buyers are making contract offers.
Home buyers are purchasing homes!
There is a shortage of listing inventory coming on the market in almost all areas of New Jersey. This has created urgency for home buyers. There is the urgency to see the home quickly as new listings are now getting immediate viewing attention and many home owners are receiving contract offers within days of placing their home on the market for sale.
Mortgage interest rates are still at historic low levels.
And there is the Law of Supply and Demand and the effect on home prices. Will this situation create higher sale prices? Economics 101 says it should!
Home buyers have competition! And that competition is other buyers looking in the same area and in the same price range. The reality for home buyers is that only one buyer can purchase the home. While that sounds simple enough, it gets complicated when more than one buyer likes the same house and more than one buyer submits a real estate contract offer.
First and foremost, in today’s real estate market home buyers need to act promptly if there is a home they see and have real interest in. They should see the home a second time to be sure they have an interest in it. A second viewing enables a closer look, seeing beyond the owner’s personal decor. And if all goes well, buyers need to act promptly in then deciding whether or not to submit a contract offer.
More often than not, the Buyer’s Agent can obtain information from the Listing Agent as to whether or not there are offers currently being negotiated or that there are other offers to be presented. Yes, the ideal scenario is that there are no other contract offers being negotiated nor other offers being prepared. But what if there other contract offers waiting to be received and or presented? If so, that may change how a buyer moves forward with their planned contract offer.
What if there will be multiple offers on a home a buyer has interest in? The buyer’s agent can be a valuable asset in explaining the process of presenting a contract when there are multiple offers being submitted. Buyers need to understand that a seller has options when presented with multiple offers. They can accept one contract as submitted, make a counter offer to some or all buyers or just refuse all offers without even making a counter offer. Yes, there is the possibility that a buyer does not get a second chance in increasing or revising their original contract offer! Again, the buyer’s agent can be a valuable asset in explaining the process and in making recommendations!
Real estate contracts consist of three major components: price, terms and conditions. And yes, there are times when price is not the most important factor in determining whether or not a contract offer gets signed or rejected. For this article, let’s concentrate on the buyer’s initial offer if there are multiple offers to be presented to the seller.
Home buyers need to realize that they need to show the seller they want to buy their home. If a home is realistically priced according to the market, why would a buyer think they can make an unrealistic low offer to start with in situations where a home is newly placed on the market and there are multiple offers? A buyer needs to know that they may not get a second chance to revise and increase their offer. Their initial contract offer could just be placed aside by the owner who then negotiates with the other buyers who appear more sincere by the amount of their initial offers. And this has been happening in the current market. Again, there is more to a contract offer then price, but for here let’s just concentrate on price.
Why wouldn’t a buyer want to start out with an offer that shows the owner they want to buy their home, especially if they want to buy the home and have been frustrated in making offers and not getting them accepted previously. While that negotiating strategy of starting low was common in recent years, the real estate market has changed and buyers and buyer agents must adapt to the change in how they think about contract offers and contract negotiating. Why start with a contract offer that in all likelihood will not be accepted? It increases negotiating time and increases the likelihood of other buyers seeing the home and making contract offers.
In the past, a buyer could lose out in negotiating and the next day another home would appear on the market that also interests them. However, that is not happening in the current market place for home buyer’s today.
Yes, there are buyers who are now starting with a full price offer on a home they want!
Yes, there are buyers who even start their negotiating with an initial offer over asking price on a home they want!
These buyers have decided that they want to buy the home, not just make a contract offer!
The above article, “Home Buyers: Real Estate Contract Offers”, was written by David Fialk, REALTOR, Broker Owner, Choice Realty Co., Iselin, New Jersey and regularly posts real estate articles of interest for home buyers, home sellers and home owners.
Licensed since 1971, David has helped over 1800 families move across town, across the state and across the country and specializes in the towns of Iselin, Colonia, Edison, Woodbridge, Avenel, Fords, Sewaren, Port Reading, Keasbey, Carteret and Metuchen in Middlesex County, New Jersey.
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