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The Dangers of Firm Offers in Real Estate
Mar 21, 2014
Making a firm offer on real estate gives you the advantage of securing the home you want. But you can run into costly issues if the property has any hidden defects.
Although a firm offer does provide you with some benefits, it should be made with caution. With careful planning, you can decide if making a firm offer is the right choice for you.
What is a Firm Offer?
When you make a firm offer on real estate, you’re choosing to purchase the home without any conditions related to inspection for financing. This can be useful in certain situations.
As the buyer, you’ll know the exact cost of the house with a firm offer. You’ll save inspection and testing costs that can quickly add up.
A firm offer commits you to the purchase of the house if accepted by the seller. This benefits both sides of the purchase by speeding up the buying process.
The seller can provide a fast response to your offer if made firm. When the offer is accepted, you’re able to quickly move into your new home.
Although sellers are relieved of undergoing inspections and repairs, the buyer is at the mercy of any potential problems within the home. Should any repairs be required, you won’t receive any compensation once you’re offer has been accepted.
Severe issues involving electrical wiring or appliances can result in unexpected and costly expenses. Requests to the seller for extra equipment can’t be made with a firm offer.
Finally, you must have the finances available for the purchase. The offer cannot depend your securing a lender. If you have a house to sell prior to your purchase, your offer stands regardless of whether your previous house sells or not.
Proceed With Caution
You’ll need to have all the necessary documents prepared in advance. This includes pay stubs, letters of employment, and confirmation of down payment.
Preparing your firm offer will ensure that your broker can confirm that there are no issues with lenders. To ensure your pre-approval, your financial information must be accurately presented.
Before making a firm offer, take a few opportunities to tour the property. Assess the major systems within it to ensure that you can confidently move forward without inspections.
A firm offer can help speed up a home purchase. It gives you an advantage over other conditional offers and provides benefits to the seller as well. But there are dangers to firm offers.
Unexpected property issues and financial issues can arise. If you understand these risks, and do the required preparation, you’ll know when a firm offer is the right one to make.