Essentials of the offer: how to be the perfect buyer in today's sellers' market. (It's not just about dollars.)

(Part 4 of a series) 

At last, you and your broker have found the apartment of your dreams.

You've seen it at least twice, and so has your partner.  

Your broker has pointed out any negatives as well as the positives. (She's objective.  You may not be.  And not only will this help you make sure it's the right one for you, but it will help in negotiating the price.)

And if you're planning to finance the purchase, you were pre-approved (not just pre-qualified) for a loan of up to 80% of the amount you're planning to spend before you even started looking. 

Before you make an offer:

First, your broker should let the seller's broker know that you're seriously interested, find out if there are any offers currently on the table, and, if there are none, ask to be notified if any are made.  

Your broker should also try to find out about possible negotiability and should ask for comparable sales to support the price.

Second, alert your real estate attorney.

Third, make sure you have a substantial amount of cash readily available.  When you sign a contract, you must accompany it with a check for ten per cent of the purchase price.

At the same time, your broker should be looking for comparable sales in addition to the ones the seller's broker has given her.  She should research the price as carefully as if she were pricing it for the seller.

Now for the offer.  

It's not just a number.

The strongest offers are all cash.  The next strongest are those that include financing but are not contingent on it.  The weakest are those that are contingent on financing.  

Strong qualifications are also a highly motivating factor, particularly if the property is a co-op and the buyer will have to pass the board.  

An all-cash offer from a well-qualified buyer will often trump a higher offer with a financing contingency from someone with less impressive resources.

If the property is new to the market, well priced and likely to attract several buyers, you may want to make a preemptive bid, with a time limit.

A seller who is doing business in good faith will immediately accept an all cash, full price offer (in a sellers' market like today's, circumstances might even warrant a number over the full price), to close at his convenience, from a qualified buyer.

However, there are those sellers who will have another open house to see if they can get a higher number or stimulate a bidding war.  That's why a time limit is a good idea.

If there are no other offers on the table, and the property has been on the market for more than a month, you may be able to negotiate a bit.  

But in today's market, in order to get a response from the seller, your opening offer should be at least 90% of the asking price.  Most actual sale prices are now within two or three per cent of the asking price, either over or under.

If you don't think the property is worth that much, your broker can sound out the seller's broker to see if the seller will respond to a lower offer.

The formal offer should thus include the number, the closing date, the amount to be financed (if any), the pre-approval letter from the bank, and whether or not the offer is contingent on financing.  

It should also include your net worth, liquid assets, annual income (not just salary) and source of same. 

Your broker should present your offer the INSTANT you make it, by phone, and should follow up with a formal presentation by e-mail.

If yours is the only offer on the table and it is less than the full ask, the seller has three options:  she can turn you down flat, she can accept it, or she can make a counter offer.  

The third option is the most likely.  Then there will be some backing and forthing between you and the seller, via your brokers, before you agree on a price and terms.  

Both parties may assume that they'll eventually arrive at the midpoint between the opening offer and the asking price, but this is not necessarily true.  One or the other may refuse to budge at some point.  

A broker is an experienced negotiator and can help you through an impasse.  She will do her best to make sure the seller is the one who blinks.

Once you and the seller have agreed on price and terms, the next step is getting the contract signed.  

Unless, of course...

NEXT:  How to win a bidding war.