Making an offer to buy a home and actually buying a home are generally two different actions, but home buyers sometimes confuse the two. In California the purchase offer, many times will not be the final negotiation due to contingencies in the contract.
Reality of Purchase Offers
When a home seller accepts an offer, the seller is optimistic the buyer will complete the transaction at the price agreed upon and believes there is nothing wrong with the condition of the home. The home buyer, on the other hand, is hoping the transaction will close because the home is in A-1 condition and perfect.
It’s rare that either of those expectations are in line with reality. No home is perfect and many conditions can change once a contract is accepted.
- Buyers often submit repair requests
- Low appraisals can threaten to blow the deal
- Mortgages can be denied in underwriting
Hesitating to Take the Next Step in Buying a Home?
If the home you’re thinking about buying is likely to sell quickly, and if you have a “contingency or subject to clause” which allows you to perform your due diligence and cancel if you find a red flag, you should immediately make a purchase offer. Don’t sleep on it or try to get every single question answered beforehand or you may very well lose the home. Somebody else could beat you to the draw.
If you like the home, odds are several other active home buyers will, too. You’re not the only smart cookie who can spot a great buy.
And no, losing the home doesn’t mean it was “supposed to be that way.” Consider instead that you were supposed to buy it, and you messed up.
Types of Homes That Quickly Sell
In seller’s markets, almost every home sells quickly. In buyer’s market’s, the Days on Market, (DOM), will be longer. There are many inherent characteristics and qualities that determine whether homes are likely to sell fast, but these are the top two combinations:
- Turnkey homes in high-demand neighborhoods, excellent condition and priced right.
- Cosmetic fixers in good locations and priced below comparable sales.
If the home you want to buy falls within those two categories, you should move quickly to make an offer, provided you know you have a contingency period in the contract to perform your due diligence.
Pros to Making Immediate Offers to Purchase
The obvious reason to make an offer right away, you can block another buyer from buying it. When the seller accepts an offer from you, the seller cannot accept another, except as a back-up offer, good only if your contract is canceled by you.
If your offer is first and sole, you can negotiate on price and terms. You can make a lower offer. If there are multiple offers, your negotiation power is minimized.
Even if other buyers are interested, they will generally move on to another property once the seller accepts an offer.
Cons to Making Immediate Offers to Purchase
If you’re unsure between two homes and go into contract on property A, property B might not be available if you should change your mind and cancel the first transaction.
Return of an earnest money deposit is not automatic. Both parties are required to sign cancellation instructions.
Buyers can incur costs that are not refundable such as appraisal, credit report and home inspection fees that are non-refundable. Generally, title policy / escrow and other closing costs are waived upon cancellation.
Given the alternative of losing the home you want, however, take advantage of lessens learned by other Buyers who have lost opportunities because they were hesitant to act with urgency — instead of learning this painful lesson yourself.
Cathi and Ben Walter bring the skills and experience to help you navigate through the home buying process; if you’re thinking about a home purchase in the desert, call Cathi & Ben today for more information 760.218.5752