At first glance, an offer $20,000 over asking price might sound outstanding. However, there are over 20 additional points of negotiation in the contract agreement to purchase a home. When presenting an offer as a homebuyer or reviewing offers (multiple in most cases) as a seller, some of these negotiable items and terms could make for a more attractive offer than a higher purchase price:
• Appliances and other fixtures, like smart home devices, curtain rods, & tv mounts
• Earnest money amount submitted with offer (more earnest money can communicate a stronger offer)
• Method of payment: cash vs financing
• Different types of financing
• Time to complete formal loan application after the offer acceptance (the sooner the better)
• Amount of time your lender will take to give you full loan approval
• Seller concessions and closing costs
• Closing date
• The settlement fee charged by the title company
• A contingency to sell a home
• Possession date
• Home heating fuel
• Property survey location report
• Flood insurance requirement contingency
• Appraisal contingency
• Homeowner’s insurance contingency
• Building use contingency
• Inspection contingency
• Home warranty
• Title insurance
• Lender insurance
• Title company selection
• Property taxes
• Realtor commissions
• HOA fees
As a buyer, you can use the above terms to your advantage to write a more competitive offer. Even if you’re not able to purchase a home with cash upfront, you might be able to offer the flexibility of granting time after possession for the seller to move. Or, you could offer to waive as many contingencies as you’re comfortable forgoing.
Conversely, as a seller in this market, you will likely be presented with multiple offers. It’s important to read the entire contract and take note of all of the negotiable costs and terms because highest price purchase doesn’t always mean more for your wallet.