Finally – you’ve found the condo of your dreams. Now it’s time to make an offer. How do you know what to offer? Sure the market’s not what it was a few years ago. Buyers have more inventory from which to choose. But a low ball offer will seldom secure the deal in the Hoboken market. Sellers still tend to feel that Hoboken is a very desirable location. In the majority of cases, they are justified in their asking price. Here is some valuable inside info to know for when it is offer time:
1. Always make your offer in contract form.
It is the standard of excellence. Besides, verbal offers are meaningless. Some realtors use a one page ‘offer sheet’. Don’t let them fool you. This is usually just a way for a bad realtor to do less work. It takes less than an hour to fill out a standard form sales contract. The New Jersey Association of Realtors has them available on-line and one the blanks are completed it generates the contract automatically. Your realtor should sit down wiht you, hopefully in advance of offer time, and go through the sales contract with you paragraph by paragraph so that you are familiar with it and understand what it says. By using a full blown contract, there is less room for dispute later.
2. Be prepared to pay a $1,000 good faith deposit
This is a deposit the buyer pays to the seller upon making an offer. It shows that you are serious. It (hopefull) deters nut jobs from making offers on properties. The money goes into escrow on your behalf. Should the offer not be accepted or the contract not make it out of attorney review, you get the money back in full. Have your checkbook with you when you are out shopping for properties. You may need it.
3. Decide how much you’d like to offer
This is always a touchy subject with buyers and sellers. I’ve seen buyers (and sellers) get very angry and emotional over amounts as small as2 or 3 thousand dollars when it comes to purchase price. Think about this, though. When the average price of a Hoboken condo is over half a million, even 5 thousand is less than 1 percent of the purchase price. So the first thing you must do is keep things in perspective and not loose out on the home of your dreams over an insignificant amount of money. How can thousands of dollars be called insignificant? Ask your mortgage person to calculate it for you but, on a 30 year fixed mortgage at 6% an additional $5,000 added to your purchase price comes to about $25 a month in mortgage payment. If you’ve been shopping within a price range you can honestly afford, that amount should not make any real difference in your life.
Here is where your realtor can earn his or her commission. First, get them to give you the history of sales of every condo in the building. Most will be on the MLS and can be had via a simple search. Even private sales will be in the tax records and are easily obtainable unless they were all cash deals. Sit down and look at the numbers. Then, have your realtor give you figures for sales of other comparable properties within the past year. Try to stick to similar style buildings, maybe even the same developer. Of course, the area of Hoboken makes a huge difference too. So look at the surrounding buildings. This should give you a very good idea of whether the condo you like is priced right.
Then look at the comps. Did they sell for full price? Over asking? Or 5% off asking? That should give you a pretty good idea of where to make your offer. You also should have your realtor ask the seller or the seller’s realtor if there have been any other offers. If so, why were they turned down? Why is the seller selling? Have they already bought something else? How long has the property been on the market. Anything you can learn about the seller’s motivation will help you assess how likely they are to take less than asking and how much less.
Negotiate the sales price
Just because the seller is asking a certain amount does not mean he or she is going to get that. Most sellers expect to negotiate. There are, however, some units that are so in demand that full price or even more is needed to secure the deal. These tend to be the restored brownstones on uptown Bloomfield or Garden Streets and some of the best units in buildings like the Shipyard or Hudson Tea. In most cases, the buyer will make an initial offer and, if it is not accepted or rejected out of hand, the seller will counter. Here is where your negotiating skills are important, especially if there are multiple offers on the table. Keep in mind that there is more to an offer than just the price. Other factors sellers will consider in evaluating an offer are the amount of the downpayment, how quickly you can close, if you are preapproved for a mortgage and whether there are any other contingencies in the contract.
If your offer is accepted, ask that all further showings be for back up offers only
Having found the condo you wish to buy and negotiating an agreed upon price, the last thing you want is for another buyer to come along and out bid you. Unless yours is a full price offer, few sellers are willing to stop showing their property. Very often, however, if you simply ask that all further offers be only for ‘back up’ purposes the seller will agree. This gives you some protection during the attorney review period.
Sign the contract and get a good, local real estate lawyer.
That’s the next topic so keep reading!