If your haven’t already done so, you’ll now sign an agreement with your agent stating whether she’s a seller’s agent (and therefore representing the seller) or a buyer’s agent and therefore representing you. At Lake Gaston, we’re a little behind the trend and in most cases the agent is acting as a seller’s agent.
In some places, it’s common to make a very low first offer. This isn’t the norm at Lake Gaston however. Sellers at Lake Gaston are often quite wealthy and somewhat older, so this can sometimes lead to a tradeoff. By making a very low offer, you might snag the property at a bargain price – the good possibility. However, the bad possibility is that the seller may be insulted and simply refuse to counter. I’ve even had sellers (against my advice) refuse to deal with a particular buyer after they made an extremely low first offer.
Nobody can tell you how much to pay for a particular property. However I would take into account your alternatives. When we saw the lake house we ending up buying (I was not in real estate then), my wife and children were wild over it. The sellers dug in on their price and I was considering walking away. However, we had already looked around extensively and none of the other homes generated anything like the enthusiasm this one did. Even though we had never met, I was stupidly taking the sellers’ intransience personally. I swallowed my false pride and agreed to their counteroffer. I’ve never regretted it.
You will normally write a personal check to serve as earnest money. This is to give the seller a measure of confidence that you’re a serious buyer. As a practical matter, once a property is marked “pending” (for contract pending) in our multiple listing system, the agents will stop showing it. Understandably, the sellers don’t want to effectively take their property off the market only to find out later the buyer wasn’t really serious.
Usually your earnest money check will be held undeposited until you reach an agreement with the sellers. When you do reach an agreement, it will be deposited in the listing company’s escrow account. At closing, this amount is of course credited to you.
Obviously, the larger your escrow check, the easier it is for the sellers to believe that you’re really serious, credit worth buyers and will in fact close on this piece of property. The average escrow amount around Lake Gaston is probably between $1,000 and $2,500. However, over the years, I’ve had several low offers accepted when the buyers put down earnest money of $10,000. In the final analysis, it’s your decision.
Next you have to decide on what contingencies to put in your offer. A contingency basically says “This offer is good only if I can also do the following”. The main contingency is the amount and terms of your borrowing. In other words, this offer is only good if I can borrow $290,000 at a 5.75% fixed interest rate for 30 years. If your financing contingency is to borrow 80% or less of your offering price, the seller will likely pay it little mind. However, if you’re borrowing more than 80%, the seller may become concerned as to whether you’re really going to be able to borrow that much.
The solution if you’re a 95% borrower is to work with your realtor and get a preapproval letter from a local lake lender as to the amount they’ll lend you. There’s no charge for this, but it could take a couple of weeks to get, so plan ahead.
The next major contingency is the home inspection, if you’re offering on a house. Basically this says in many, many words “The buyers will have a home inspection (usually about $300). They will then present a list of items they’d like repaired to the sellers. The sellers then have 3 days to reply. If the sellers say “We’ll fix everything on your list” everything’s fine. If the sellers say “We’ll fix some, but not everything on your list” and you agree, everything’s fine. If you don’t agree or if the sellers say “We’re not fixing anything on the list” then the deal is off unless you decide to accept the sellers’ decision.
A common contingency at other places is “I’ll buy your house when I sell my house”. This is uncommon at Lake Gaston and sellers will rarely accept a contract with such a contingency. The reason is the same as above, once a home is marked with this contingency in the multiple listing system, many agents will stop showing it, effectively taking it off the market.
Offering, counter offering, and counter counter offering is rather muted at Lake Gaston. Probably the average is the buyer offers, the seller counters, and the buyer makes a counter offer which the seller accepts. If you’re like my wife and love to bargain, you might want to draw a deep breath before you start as this can be a real turn off to many lake sellers.
You’ve got an accepted offer, so now on to We got It!
The above is not legal advice, but only the writer’s opinion.