Buying a Home in Oakland County MI: Responding to A Counteroffer 

Buying a Home in Oakland County MI: Responding to A Counteroffer 

Buying a Home in Oakland County MI: Responding to A Counteroffer 

When buying a home in Oakland County MI, the stakes are high for both the person buying the home and for the seller. Hence, it may take some negotiating to reach an agreement that both the buyer and the seller are happy with. Of course, the optimum scenario would be to submit an offer on a home you love and the seller accepts it with no conditions. However, it’s more common, that the seller will respond to an offer with a counteroffer, which means they are open to starting the negotiation process.  In real estate terms, this is appropriately referred to as the seller-to-buyer counteroffer. 

How Many Counteroffers Are Typical? 

Just as a seller can submit a counteroffer to a buyer, a buyer can counter the seller’s counter, which then becomes a counter-counteroffer or Buyer Counteroffer No. 1. There’s no limit to the number of counteroffers that can go back and forth. If either party does not agree to the terms, the offer becomes void, and the buyer and seller go their separate ways with no further obligation. 

Responding to a counteroffer

A counteroffer changes one or more aspects of your original offer, and basically, you have three options for responding. You can either accept the seller’s counteroffer, reject the counteroffer or present a counteroffer of your own.

If you decide to continue negotiations, know your options such as how much you can spend, whether there are (or will be) similar properties to bid on, and what you are willing to concede – whether that’s contingencies or repairs you were previously set on.  

Also, consider how you can make the deal smoother for the seller, which may help push your offer through. For example, how quickly is the seller looking to close and can you agree on that? Have they already bought a new house? Do they want reassurance that their childhood home will be well-loved?  

View Homes For Sale in Oakland County MI

Find out what the seller’s motivations are – financial, emotional, logistical – and create a counteroffer that is in alignment with your own priorities. The seller’s motivations may become apparent with their first counteroffer and your counter may address some but not all of the seller’s concerns.

Commonly negotiated aspects of home buying 

With homebuying, everything is negotiable from repairs and closing costs to furniture and appliances. Some of the most commonly negotiated aspects of homebuying include the purchase price, closing costs, closing date, contingencies, earnest money deposit, and personal property. Offers and counteroffers can negotiate on a mix of these factors:

Purchase price 

Your pre-approval letter from your lender will tell you the maximum you can pay for a property, but you may not need to increase the price up to your limit. Your Farmington Hills MI REALTORⓇ will be able to advise you on what makes the most sense for your budget and the local market. The sale price is the most commonly changed item in the seller-to-buyer counter offer.

The seller might change this number in one of two ways. They might offer a price that is somewhere in between your offer and the original asking price or counter back with their original asking price, which means they are not willing to negotiate on price. But if they give you a counteroffer below the original list price, the negotiations are on. You can then choose to accept the seller’s proposal or make another counter offer back to them.

Closing costs 

The closing costs, which include insurance, title fees, taxes, and appraisals, are often the most negotiated line item between buyers and sellers. Closing costs can add up to as much as 5% of your total loan amount.  The seller’s counteroffer might address any contributions toward closing costs.

For example, you ask them to cover $6,000 worth of your closing costs, which is a common strategy in a buyers market. The seller might simply say no to this request. They could also agree to contribute $6,000 toward your closing costs while increasing the sale price by $6,000 – allowing you to finance your closing costs into the loan.

Closing date  

This is the date that you get the keys to the home. In a counteroffer, the seller might make changes to the closing date. Maybe they need more time to pack up and move, so they sign a counteroffer back to you proposing a 45-day escrow period. As the buyer, you can accept it or not. In most cases, the buyer will accept the seller’s proposed changes to the closing date, if it’s not a big difference

Contingencies 

If the provisions aren’t met, contingencies let you back out of a contract. A seller can reject or modify the contingencies, or conditions for the purchase, that you included in your offer. A home appraisal, obtaining financing, home inspection, and home sale are all examples of contingencies:

  • An appraisal contingency protects the buyer and is used to ensure a property is valued at a minimum, specified amount. 
  • A financing contingency gives the buyer time to obtain financing for the purchase of the property.
  • An inspection or a due diligence contingency gives the buyer the right to have the home inspected within a specified time period.
  • A home sale contingency gives the buyer a specified amount of time to sell and settle their existing home to finance the new one.

Before you consider dropping contingencies, be sure to speak with your Oakland County MI real estate agent about the possible risks. Sellers almost always accept the home-inspection contingency, as well as the financing contingency because they know that most buyers will refuse to move forward without those contingencies.

Earnest money deposit 

The earnest money deposit – also referred to as good faith money – is the sum you put down with your offer to show the seller you are a serious buyer. The earnest money deposit applies toward your down payment or closing costs. While the buyer and seller can negotiate the earnest money deposit, it often ranges between 1% and 2% of the home’s purchase price, depending on the market.

The earnest money deposit might range between 5% and 10% of a property’s sale price in a hot housing market. Some sellers prefer a fixed amount, such as $5,000 or $10,000. Of course, the higher the earnest money amount, the more serious the seller is likely to consider the buyer.

Therefore, a buyer should offer a high enough earnest deposit to be accepted, but not one so high as to put extra money at risk. Earnest money is always returned to the buyer if the seller terminates the deal.

Personal property 

A refrigerator, washer, and dryer set, and other appliances may be included in a home sale, but if they’re not, ask for them. The same goes for furniture and other personal belongings. The structure, fixtures, outbuildings, and anything attached to the land is included in the sale and is considered the “real property.”  

Negotiate with the market in mind

How you negotiate the seller’s counteroffer will depend on the type of market you’re in. Do you know if the seller has multiple offers on the house? If they do, you need to tread carefully. In a hot seller’s market, the seller’s counter may come with an unofficial “take it or leave it” clause. 

How is a counteroffer accepted?

The buyer can simply accept the counteroffer and deliver it back signed to the seller and their agent. Time is of the essence here as all counteroffers include an expiration date. It’s also important to note that the seller can accept another offer while the buyer is deciding whether to move forward, which is another reason to act quickly when a counteroffer is on the table. 

If the seller receives a more favorable offer while the buyer is deciding, the seller will typically withdraw the counteroffer, effectively removing the first buyer from the situation.  

The bottom line

The counter-offer process in real estate is more art than science. Look at what motivates the other person, get all the information you can about your alternatives, and look for a middle ground that still meets all of your priorities. Also, don’t believe an agent who tells you the seller will always counter the offer. Even if the seller does, you can still lose the house if the home is still getting showings. 

Partner With Oakland County MI REALTOR® – Tom Gilliam

REALTOR® – Tom Gilliam is your expert to buy or sell your home in Oakland County, Michigan – the Oakland County community’s number one REALTOR®.  In Oakland County, MI, you need to find an experienced agent who knows the community.

Tom currently lives in the Oakland County area and is very familiar with the local market, neighborhoods, schools, and community issues. His office is located in the heart of Farmington Hills, with five additional offices throughout the southeast metropolitan area.

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Tom is always ready to help families find the perfect home in the Oakland County area they want to live, whether it’s Farmington Hills, Novi, Birmingham, Troy, Rochester Hills, West Bloomfield, Bloomfield Hills, Ferndale, Royal Oak, Northville, Novi, Troy, Rochester, or Rochester Hills.

Give Tom Gilliam – “Your number one Oakland County Michigan REALTOR®” – a call today!

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Homes2MoveYou.com
License #314578 

Buying A Home in Farmington Hills MI? Getting A Pre-approval is Key

Buying A Home in Farmington Hills MI? Getting A Pre-approval is Key

Buying A Home in Farmington Hills MI? Getting A Pre-approval is Key: You may have been told that it’s important to get pre-approved at the beginning of the homebuying process, but what does that really mean? And why is it so important? In today’s market, with rising home prices and high buyer demand, it’s crucial to have a clear understanding of your budget and stand out as a serious homebuyer to sellers.

Once you get pre-approved for a home loan, the seller knows you’re a better prospect than someone who hasn’t begun negotiating with a lender. Pre-approval is also helpful when you’re hunting for a house. If you have a pre-approval amount of $240,000, for example, you know not to waste your time shopping for a $400,000 home.

Is Pre-qualification the same as pre-approval?

A pre-qualification is a good indication of creditworthiness and the ability to borrow, but a pre-approval is the definitive word. A mortgage pre-qualification is usually based on an informal evaluation of your finances. You tell the lender about your credit, debt, income, and assets, and the lender estimates whether you can qualify for a mortgage and how much you may be able to borrow.

Pre-approval is the next step if you get a thumbs up during pre-qualification. During the mortgage pre-approval process, a lender will pull your credit report and review documents to verify your income, assets, and debts.  If you are confident about your credit and financial readiness to buy a home, then you might skip the pre-qualification step and go straight to the pre-approval and start shopping for a home. 

Mortgage pre-approval

A mortgage pre-approval is an offer by a lender to loan you a certain amount under specific terms. Pre-approval is not a guarantee you will be given a loan and the mortgage can still be denied. A home appraisal must be completed before a loan can close to ensure you aren’t paying more for the home than it’s worth. 

Also, the lender’s offer may not stand if your financial situation changes between pre-approval and closing. Keep in mind that it can take several days or longer to get preapproved for a mortgage. The timeline varies by lender and how quickly you are able to provide the lender with the information it needs, including proof of your income and assets.

When you are ready to make offers, a seller often wants to see a mortgage pre-approval and, in some cases, proof of funds to show that you’re a serious buyer. In today’s competitive market, sellers have an advantage because of intense buyer demand and a limited number of homes for sale; they may be less likely to consider offers without pre-approval letters.

According to the National Association of Realtors (NAR), homes are receiving an average of 5.1 offers for sellers to consider. As a result, bidding wars are more and more common. Pre-approval gives you the advantage you need if you get into a multiple-offer situation, and these days, it’s likely you will.

When multiple buyers have made legitimate offers for the same Farmington Hills MI property, the seller can choose which one they want to accept. A pre-approval letter indicates to both real estate agents and home sellers that you’re financially able to buy a home, and it’s expected that a pre-approval letter will accompany any offer you make.

How to get pre-approved for a home loan

Start by requesting copies of your credit reports. Dispute any errors that might be causing your score to be lower than it should be. If you find delinquent accounts, work with creditors to resolve the issues before reaching out to a lender for mortgage pre-approval.

A credit score of at least 620 is recommended, and a higher credit score will qualify you for better rates. Generally, a credit score of 740 or above will enable most borrowers to qualify for the best mortgage rates. 

Calculate your debt-to-income ratio. Your debt-to-income ratio, or DTI, is the percentage of gross monthly income that goes toward debt payments, including credit cards, student loans, and car loans. Lenders prefer borrowers with a DTI of 36% or below, including the mortgage, though it can be higher in some cases.

Gather income, financial account, and personal information such as Social Security numbers, current addresses, and employment details for you and your co-borrower (if you have one). You will also need bank and investment account information and proof of income. 

Documents you will need to get a mortgage pre-approval letter include your W-2 tax form and 1099s if you have additional income sources and pay stubs. Two years of continuous employment is preferred, but there are exceptions.

Self-employed applicants will likely have to provide two years of income tax returns. If your down payment will be coming from a gift or the sale of an asset, you’ll need a paper trail to prove it.

Understand what the lender is offering you. Make sure you understand all the terms of your mortgage. If you don’t know what something means, the lender must explain it to you. The Truth in Lending Act requires all lenders to provide you with comprehensive loan cost information so you can comparison shop.

Comparing offers from multiple lenders can help you compare rates and fees and save you thousands of dollars over a 30-year mortgage. Going through the mortgage pre-approval process shouldn’t hurt your credit score. FICO, one of the largest U.S. credit scoring companies, recommends confining those applications to a limited time frame, such as 30 days.

Time your pre-approval. A pre-approval is typically good for 90 days. Wait until you’re ready to start hunting for your house before you request a pre-approval, otherwise, you are wasting both your time and that of the lender who’s preapproving you.

The bottom line

Every step you take to gain an advantage as a buyer is crucial in a market that’s constantly changing. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards.

It is important to have the information, resources, and the right team of professionals such as a loan officer and a trusted Farmington Hills MI real estate agent to help ensure that you take the right steps. If you’ve been trying to decide if now is the right time for you to buy a home, let’s connect to discuss your options.

Partner with top-rated Farmington Hills MI REALTOR® – Tom Gilliam

With a passion for real estate, Tom Gilliam has been serving Farmington Hills and the surrounding Oakland County MI area for nearly two decades. Tom is known for his friendly demeanor, dedication, and professionalism. He will be able to quickly ascertain your needs and goals and create a plan of action based on your specific criteria. 

Tom’s clients appreciate his honesty and transparency and feel it helps them as they make important real estate decisions. He understands how important good communication is to every transaction and is available for his clients whenever they have questions or concerns, promptly returning all phone calls, texts, and emails.

Having someone like Tom by your side to advise and guide you means there is one less thing you need to worry about. He will protect your interests, advocate for you, negotiate on your behalf, and go the extra mile to ensure the best results possible. If you are interested in buying or selling Farmington Hills real estate or homes in the surrounding area, please give Tom Gilliam a call at (248) 790-5594 or you can reach him by email.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Homes2MoveYou.com
License #314578 

Map Farmington Hills MI

What is Motivating Americans to Move and Buy Homes Right Now?  

What is Motivating Americans to Move and Buy Homes Right Now?  

What is Motivating Americans to Move and Buy Homes Right Now? – Today, Americans are moving and purchasing homes for a variety of reasons. The current health crisis has reshaped our lifestyles and needs. It has prompted many of us to think more about what we truly want in a home and where we want to live. In the early days of the pandemic, many people escaped small apartments in crowded cities to the suburbs and more open locations to escape the deadly virus.

As remote work became an option for many, people suddenly felt they had more freedom to choose where they wanted to live, as they were no longer tethered to where their employers were located. And just like that, 2020 made moving a reality for millions of Americans. Some moved in with their parents to be around family and even save on rent. For others, it finally gave them a reason to focus on pre-pandemic dreams such as moving across the country in pursuit of a more quality lifestyle and cheaper cost of living.  

According to the 2020 Annual National Movers Study: “For customers who cited COVID-19 as an influence on their move in 2020, the top reasons were concerns for personal and family health and wellbeing (60%); desires to be closer to family (59%); 57% moved due to changes in employment status or work arrangement (including the ability to work remotely), and 53% desired a lifestyle change or improvement of quality of life.” 

With a new perspective on homeownership, here are some of the top reasons why people are reconsidering where they live and thinking differently about what they want and need in a home:

1. Remote Work 

What is Motivating Americans to Move and Buy Homes Right Now?  

According to the Census Bureau, the percentage of people who change residence each year has been declining since the mid-1980s and reached its lowest point just before the COVID-19 pandemic. This trend may have continued if not for the sudden and rapid adoption of remote work. Real estate brokerage firm Redfin found in a recent survey that a third of home buyers and sellers would consider moving to a different city or area if remote work becomes permanent. Remote work became the new norm, and for many, it’s persisting longer than initially expected. 

Apartment List notes: “The COVID pandemic has sparked a rebound in residential migration: survey data suggest that 16 percent of American workers moved between April 2020 and April 2021, up from 14 percent in 2019 and the first increase in migration in over a decade… One of the major drivers in this trend is remote work, which expanded greatly in response to COVID and will remain prevalent even after the pandemic wanes.  

Working from home was already gaining popularity before COVID but the pandemic accelerated the trend. According to the latest research, even after the pandemic subsides, the economy will contain significantly more remote jobs than ever before. And this newfound flexibility is getting people moving again. Many in the workforce are discovering they don’t need to live near their office and can get more for their money if they move further outside the city limits.  

Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) notes: “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.” If you’re renting a small space or recently tried to convert your dining room into a home office with minimal success, it may be time to make a change. The reality is, your current house may not be optimally designed for today’s lifestyle, making remote work and continued productivity very challenging.

2. At-home Fitness Space

What is Motivating Americans to Move and Buy Homes Right Now?  

Staying healthy and active is a top priority for many Americans. COVID-19 may have closed gyms for most of 2020, but it didn’t keep us from working out. Instead of going to the gym, many turned to home-based alternatives. From March to October 2020, health and fitness equipment revenue more than doubled, skyrocketing to $2.3 billion, according to data from market research firm NPD. Treadmill sales increased 135 percent, and stationary bike sales almost tripled, with Peloton reporting $1.8 billion in 2020 revenue.

Peloton chief membership officer Brad Olson told The Washington Post: “We do believe that the pandemic has compelled consumers to re-evaluate their fitness routines and many have discovered that the best, most connected workout can actually be experienced at home.” Buying their own equipment and accessing instructions through apps or teleconferencing is enough for them.

It’s expected that 59 percent of Americans don’t plan to renew their gym memberships post-pandemic, according to a TD Ameritrade survey. Many people, however, don’t have space for a dedicated home gym or even for exercise equipment. Having room to maintain a healthy lifestyle at home – mentally and physically – may prompt you to consider moving to a place that includes space for the healthy lifestyle you desire.  

3. Outdoor Living Space

What is Motivating Americans to Move and Buy Homes Right Now?  

For apartment owners and city dwellers, the experience of having to stay at home month after month during the pandemic has emphasized the desirability, importance, and value of having private outdoor space. You may be able to find small balconies or terraces in the midst of urban living, but larger backyards and space are more likely to be found, and more affordable, in the suburbs.

While outdoor space has always been considered an appealing feature to homeowners, many have emerged from quarantine with a new appreciation for a place to step outside, breathe in the fresh air, and have enough space for humans and pets to run around and be active. At the end of the day, it’s all about how we can make our homes the most comfortable and enjoyable place to live and pass the time, both inside and out.

An outdoor living space can take many different forms. It can be a few chairs around a fire bowl, a poolside gazebo, or a deck with a barbeque grill. It should have places to sit and tables for beverages and snacks. Think about when you’ll be spending time in the space. Do you need lighting? What about shade? For privacy, plant a hedge or a vine growing on a trellis.

Better Homes & Gardens recently released the outdoor living trends that are huge for 2021. Building on last year’s momentum, homeowners can expect to bring indoor conveniences outdoors with multipurpose add-ons, smart technology, and structures that allow us to be outside longer and more often throughout the year. Whether it’s a spot to grow herbs for homemade meals, a private patio with plenty of shade, or a place to do the cooking, outdoor living in 2021 is synonymous with more time spent at home.

  • Outdoor Kitchens – A 2021 design trends report by the National Kitchen and Bath Association (NKBA) found that 60% of homeowners are looking to add outdoor kitchens. 
  • Edible Garden: Millions of people began gardening during the pandemic. Motivations varied from the desire to be outdoors to wanting a new hobby to fill the time at home. One of the biggest reasons for increased interest in edible gardening was to supplement pantries with homegrown fruits and veggies.
  • Front YardsSocial front yards are the newest home “addition,” according to Blythe Yost, CEO, and co-founder of online landscape design company Tilly. Creating an outdoor living space at the front of the home is not only about maximizing available space for daily living—it’s for welcoming our communities, too. “Because of the pandemic and the change in our social lives, there is a desire to feel connected more than ever,” Yost says.
  • Secluded Spaces – As outdoor activity increases, so does the need for privacy, shade, and shelter from the elements. Whether it’s a secluded space to practice yoga or a place to use your laptop out of the sun’s glare, a mix of landscaping, hardscaping, and even furniture, can provide protection and add privacy to outdoor spaces.
  • Outdoor Technology – As people integrate the outdoors into everyday living, they’re “looking to incorporate all the technology they use on the interior, for the exterior,” says Joe Raboine, director of residential hardscapes with Belgard. Working from home has many people adding boosters to amplify Wi-Fi signals outdoors for home offices. “The pandemic really has driven great interest into creating outdoor office spaces,” he says.

For many homebuyers, having ample outdoor space Is the main consideration for moving.  

Bottom Line

If you are in need of more room to accommodate your changing needs and lifestyle, making a move might be your best option, especially while you can take advantage of today’s low mortgage rates. It’s a great time to get more home for your buck, just when you need it most. If you’ve been trying to decide if now is the right time for you to buy a home, let’s connect to discuss your options.

Partner with top-rated Farmington Hills MI REALTOR® – Tom Gilliam

With a passion for real estate, Tom Gilliam has been serving Farmington Hills and the surrounding Oakland County MI area for nearly two decades. Tom is known for his friendly demeanor, dedication, and professionalism. He will be able to quickly ascertain your needs and goals and create a plan of action based on your specific criteria. 

Tom’s clients appreciate his honesty and transparency and feel it helps them as they make important real estate decisions. He understands how important good communication is to every transaction and is available for his clients whenever they have questions or concerns, promptly returning all phone calls, texts, and emails.

Having someone like Tom to advise and guide you means there is one less thing you need to worry about. He will protect your interests, advocate for you, negotiate on your behalf, and go the distance to ensure the best results possible. If you are interested in buying or selling Farmington Hills real estate or homes in the surrounding area, please give Tom Gilliam a call at (248) 790-5594 or you can reach him by email.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Homes2MoveYou.com
License #314578 

Map Farmington Hills MI

 

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