Searching for the perfect home is usually a fun process — until it comes time to make an offer. Buyers may wonder if they should offer less than the asking price, or how much to go over if there are multiple bids.
Here are five tips from Long Island real estate agents on how to navigate the offer stage.
1. Go in prepared
“Whether there’s multiple offers or not, a buyer has to really be prepared,” says Judith Edge, an agent with Better Homes and Gardens Atlantic Shores in Garden City.
That means having a preapproval letter for a mortgage from a reputable bank and being ready to close quickly. If you need to sell your current home, you should be far along in the process.
“Most sellers wouldn’t consider a buyer unless their house is under contract,” says Samuel Marcus, an agent with Daniel Gale Sotheby’s International Realty in Glen Head.
If you’re paying all cash, be prepared with proof of funds with a statement from a U.S.-based bank, Marcus says.
When going over the asking price, make sure you have the resources to do so.
“Having the winning bid isn’t always winning,” Edge says. “You have to know that if you are going over asking price that you’re prepared with extra cash on hand should the home not appraise for what you are paying.”
If a home needs work, buyers should be familiar with renovation expenses.
“You have to be more educated so you can react quickly,” says Lyssa Gugliotta, an agent with Coach Realtors in Smithtown. “Know what a new kitchen costs.”
2. Ask questions
Buyers should not be afraid to ask questions about the property before submitting an offer.
“Some buyers feel that they can’t ask the questions until an offer has been accepted,” Edge says. “Don’t be afraid, if you see a screened-in porch or an obvious addition, to ask if there is a certificate of occupancy on this room or on the improvement. Does this fence belong to the homeowner or the neighbor? Ask when something was installed. All of these things factor into an offer.”
Buyers can have a home inspection performed before making an offer, but be aware that they might not have the opportunity in a seller’s market.
“If you are concerned about a house, I would ask the listing agent if you can bring in an electrician or plumber and get that done within 24 hours,” Edge says. “If there are enough offers, the listing agent may choose not to let them have someone come in.”
In today’s seller’s market, many buyers have been forgoing inspection and making offers with no contingency, Gugliotta says.
“I don’t recommend it, but that will give them a leg up,” Gugliotta says. “That’s an option, but not really a safe option. The days of asking people to fix things are gone. But that will change.”
3. Put your best foot forward
When competing with other qualified buyers, you should make sure your mortgage preapproval is current and plan to put more than 5 percent as a down payment.
“If you can do 10 percent or 20 percent, that makes you a stronger buyer,” Gugliotta says. “People now are looking at the terms because they’re getting multiple bids. They want to know how much down, how quickly can you move. You have to look as good as you can on paper.”
Edge recommends having a plan in place in case you have to close earlier or later than you anticipated.
“You can stay with family if it takes longer,” Edge says. “Always have a backup plan in order to get the home that you want.”
4. Use the proper channels
Buyers have a better chance at winning a bidding war by explaining their situation beyond a broker just emailing the amount. An offer should include the price, the down payment amount, the type of mortgage and when they would like to close.
“Explain that you are preapproved, have a flexible time frame, that you appreciate this home and the neighborhood because you have been looking there for a long time,” Edge says. “The industry has gotten so used to verbally giving an offer or emailing an offer that it doesn’t have the same weight as explaining their entire situation and asking the listing agent to convey that or presenting it on behalf of their buyer.”
5. If it doesn’t work out, on to the next
Buyers are often competing with all-cash offers from regular house hunters and also investors.
“The average buyer can’t compete, so know that, accept that, and move on,” Edge says. “In this market, where the inventory is very low, multiple offers are happening more and more often, you can only do what your parameters allow you to do. That’s why being prepared before you have to make the offer is most important. I think that’s the secret: having your loan in place, your people in place and have good communication among your team. They’re all there to help you do the best you can with the finances you have.”