When buying a home, it’s important to think carefully about your offering price—but also your offering terms. Most purchase offers define both. And in some cases, terms and conditions can represent thousands of dollars in additional value for buyers—or additional costs.

Terms may include inspections, requests for specific property repairs, or timing considerations, such as a conditional purchase clause (if, for example, you must first find a buyer for your current home).

DETERMINING A PRICE

Some buyers mistakenly believe there is a predetermined formula for offers—that offering prices should be X percent lower than the seller’s asking price or the amount they are really willing to pay.

In practice, your offer price actually depends more upon the basic laws of supply and demand. If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order.

HOW TO MAKE AN OFFER

The process varies by state. In most cases, you complete an offer that your representative presents on your behalf. The owner, in turn, may accept the offer, reject it, or make a counteroffer.

Because counteroffers are common (any change in terms can be considered a “counteroffer”), it’s important that you remain in close contact with your representative during the negotiation process so that any proposed changes can be quickly reviewed.