Negotiating a Successful Deal: Making the Initial Offer
There was virtually no discussion over whether they should buy the place. They both knew they wanted it. The only concern was if they could buy it. The asking price was $350,000 for the home. Dana and Sondra saw a mortgage broker who said they could afford the payments on a maximum loan of $325,000 at current interest rates. That left another $25,000 needed for the down payment plus another $7,000 for the buyer’s closing costs. However, they figured they had $40,000 equity in their current home, even after paying the seller’s transaction costs to sell it, including the commission. Therefore, they should come out okay with even a few dollars to spare.
Their big concern was timing. The property, owned by a couple named Wilson, had only been for sale for a couple of weeks and Sondra and Dana’s agent, Madeline, indicated there had been lots of interest in it. She talked to the Wilson’s agent, Max, who said several other agents had called to say they anticipated making offers, although none had done so yet. Quick action was needed.
The trouble was that while Sondra and Dana could indeed buy the property, in order to do so they first had to sell their current home and get their money from the sale. That would take weeks, if not a month or more. Yet, to get the Wilson property they needed to make an offer immediately. Madeline, their agent, suggested making a “contingent” offer.