Real Estate Offers: How to Submit a Bid

In a highly competitive real estate market, buyers are usually prepared to offer asking price for a property. If multiple buyers are competing for the same home, a low offer may push you out of the game. While buying a new home is an exciting time, the process of locating the perfect home and getting your bid accepted by the seller is frustrating.

Bids are often followed with counteroffers and renegotiations until the buyer and seller agree on specific terms. Yet, there are techniques to speed up the bid process. Prior to making an offer on a property, consider the following tips for determining a realistic and fair offer.

Asking Price of Similar Real Estate Properties: Even though sellers are prepared to negotiate on the sale price of their home, rarely are they willing to play games with buyers submitting low-ball offers. Several factors determine the suggested asking price. Do not rely on the seller's agent to handle the transaction and provide information on comparable sale prices. Buyers should have their own agent, who is able to supply comparables of similar real estate transactions.

Buyers working without an agent can access real estate comparables by visiting the local real estate assessor's office. Learn how much the seller paid for the home, recent sale prices of homes in the neighborhood, and the current estimated market value of the property by visiting Web sites such as http://www.zillow.com.

Condition of the Property: Prior to submitting a bid, thoroughly review the property. Does the cabinet and countertops need updating? Will bathrooms have to be redone? These and other factors can play a huge part in the offer. If the home needs extensive repairs or improvements, buyers typically offer lower bids. On the other hand, if the property owner invested thousands of dollars on upgrades, seldom will they entertain an offer below the asking price (assuming the asking price was realistic to begin with).

Length of Time on the Market: If the real estate market in your area has slowed down, expect properties to stay on the market longer. On the contrary, if a home is having trouble selling in a hot market, inquire why. Perhaps the property is located in a flood zone, or maybe the home has widespread termite damage. Whatever the reason, proceed with caution and have the home carefully inspected.

How to Submit an Offer?

Generally speaking, real estate agents guide buyers through the bid process, offering expert advice on contingencies and counteroffers.

Several details are included within the written contract. These include:

Description of property

Sale price

Contingencies (such as the buyer's ability to secure financing and satisfactory home inspection)

Estimated closing date

Earnest money amount (money is usually returned if the seller rejects an offer)

How title and escrow costs will be paid

Offer expiration date

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Understanding Counteroffers

A seller's motivation can affect their decision to accept an offer. For example, if the seller recently accepted new employment in a different state, and the property has been empty for several months, they may be willing to sale the home below asking price to simply get rid of the property. Touring vacant homes may serve to a buyer's advantage, especially in stalled housing markets. The homeowner may be making two mortgage payments. Thus, buyers have more leeway to start with a lower offer.

Upon receiving an offer, sellers will either accept the terms of the agreement, reject the offer, or submit a counteroffer. Motivated sellers usually submit a counteroffer. Do not expect sellers to accept your first offer. Nonetheless, their counteroffer may be lower than the asking price, which may fit comfortably into your budget.

For example, if the asking price is $250,000, buyers may begin bidding at $225,000. If the home has substantial equity and the seller is motivated, they may accept the first offer. On the other hand, if the property was recently purchased, the owner may submit a counteroffer for a more reasonable figure.

Buyers may also agree to pay full asking price if the seller is willing give credits for repairs and pay closing costs. Sellers may be willing to accept an offer for a lower price than the asking price if the offer is clean, with little or no contingencies, and where the offer provides for a quick closing.

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