How to Put an Offer on a House?
Negotiating for the house (analogy of negotiating for a used car)
Say for example you want to buy a used car (3 years or 4 years old).
Since we are in 2019, we will be using the 2016 and 2015 models.
Let’s discuss how to put an offer on a house by relating it to the concept of buying a used car.
You want to buy a house, it is not new but an existing house and is a few years old. You go to open homes every Saturday and don’t know what to offer as a price. Every week, when you come back from the open home, you see that the next day the house goes under offer.
You wonder, why didn’t the agent call you and tell you that the house has received an offer, as you could have offered a bit more and bought it. You are looking to buy a house. Every week you go to open home, one week you go to the western suburbs, another week to the northern suburbs, and some weeks to the southern suburbs.
It is similar to going to buy a used car, one week you go to view Nissan, another week Toyotas, and occasionally Audi’s BMW also you check out. As you are circling around so many brands, you wonder what price you should offer to buy them. You seem to be lost. After weeks of running around and not getting anywhere, you finally sit down and do some homework. You find that you have around the budget of 40000 to buy a car. You decide to narrow it down to Audi Q5.
You see that Audi has a few options, you can buy a sports add-on, lane assist, blind spot check, music package, safety package, leather interiors, alloy wheels, and sunroof. You sit down with your partner and discuss that sunroof is the absolute must-have and some of the other features are must-haves and some are optional and nice to haves.
You create an excel sheet and write down the absolutes/must haves/nice to haves. Then from next week onwards, you only go to see Audi Q5. You find that 2016 models with sunroofs are around 425000. Other must-haves and nice-to-haves range from 38000 to 45000. You see that 2015 is around 3000 cheaper. You also narrow down that you will need black color. You start offering prices to the dealers. Dealers are more interested in you as you have narrowed down what you want.
You know that there is no point offering 38000 on a black Q5 with a sunroof as it sells for around 42500 usually. You miss a few of them as you offered too low or missed by just 1000 or a few hundred dollars.
Finally, another black Q5 comes and you sit with the sales agent to negotiate. The sales agent also knows that you want too badly as you missed the last one by a few hundred. He also wants to help you and work with you to get over the line as he knows you are a serious and committed buyer and not someone who is aimlessly running around. You and your partner sit with the agent and go through the points and features and finally you offer a fair price based on your focus and past experience from a few weeks. You also talk to the bank or broker and make sure that they will be able to finance the car and that you already have a pre-approval for a certain amount. And finally, you pay the token price and get it sealed, Audi Q5 is all yours. So how to put an offer on a house, the idea is simple, instead of running around from Hornsby to Schofields.
Leppington to Strathfield, Sit down with your partner and talk to a bank or broker. Make an excel sheet and write down absolute, must-haves, and nice-to-haves. Sort out your budget and deposit. Then go to market with a focussed approach. It is ok to not buy a dream home as your first home. It is ok to not impress your friends with a mansion. It is ok not to over-commit. It is ok to look at your immediate needs for the next 5 years. It is ok to give weightage to commute time to work, it is ok to consider a school for kids, it is ok if you have to save for the next 2 years for the initial deposit, it is ok to buy an apartment, it is ok to do things which are in the best interest of your family, it is even ok not to buy and it is ok to rent for whole life. Do your homework, create a priority excel sheet, budget it, talk to a bank or broker and bring the focus back to life. It is really that simple and it is not rocket science.
Hope you get a decent idea of how to put an offer on a house for your next investment.
Disclaimer: – Articles in this blog are just the personal opinions of the author or authors.
It may or may not be correct. Pls do your own due diligence and pls seek professional advice according to your own personal circumstances. The author or authors cannot be held responsible/liable for any content in this blog.
