Part II: Negotiations
You found your house! Now what?
The first step is putting together your offer. Since we bought new construction, our realtor was working directly with the builder to hammer out offers and counteroffers. One thing we did not expect was going in list price. We were actually THIS close to signing our offer and I finally asked what we were going in at!
From the market here in Washington, builders wont even entertain an offer that is under list price. A friend of mine in Florida had the same experience buying new construction a few months ago, so maybe it’s a national trend…that’s for the experts to figure out. Ultimately, our offer was for list price with $5,000 in closing costs and some minor upgrades for the house (such as hardware for kitchen and bathroom cabinets).
Next comes the counter offer. Unless the seller is desperate to sell, they will never accept your first offer (and if they do….that should probably raise some questions). Our builder countered with $2,500 in closing costs and no upgrades. This was pretty much what we expected and met our requirements of what we needed from them to be able to get the house. But of course this wasn’t good enough for us!
This next step is at your discretion-your counter offer. In some situations it may not be in your best interest to counter back. In other situations, it is. Your realtor is there to help you make this decision. In our situation, we countered back with $3,500 in closing costs and to have the hardware “rolled in” to the purchase price- meaning instead of the builder giving it to us at their expense, the cost is added to the purchase price of the house. Not every builder allows this.
Depending on the number of counter offers, at some point the two parties will either reach “mutual acceptance” (you both accept the offer” or one party will cut their losses. For us, the builder accepted the above counter offer.
In our area, “earnest money” is widely needed to solidify the sale. It’s sort of like putting a security deposit on an apartment. It shows you are interested in the property. For us, our earnest money ($2,000) will be refunded to us at closing. We gave our earnest money to the seller (who then passed it off to escrow) when we signed our acceptance of the final purchase contract.
What next? See part III