Making an offer on a home can be very exciting! In most
cases, the seller will not accept
your first offer, and instead will send you a counter-offer. Many times, this
will be higher than what you offered, but lower than the original price. This is all part of the process of negotiating, and you should be prepared for it. Remember: just because your first offer is rejected doesn't mean you have done anything wrong! While negotiating can be fun, you should always make sure you can
afford to pay the final price. This is one reason why it can be smart to look
for houses that are 5%-10% below your pre-approved mortgage limit, as that
gives you more room to negotiate.
Another reason it might be smart to look at houses below your price range is in case they need any repairs. If a home you like needs some major work, you may ask the seller to pay for it before you make a final offer. In some cases, the seller may decide to increase the asking price since the problem is fixed and the home is now worth more. Another option can be to apply for a mortgage that allows you to add the cost of repairs to your principal if you are below the approved limit --but these kinds of mortgages can be very hard to get. Overall, while not every home will need repairs, it is still important to know how much you can afford to spend before you start shopping.
Using your pre-approved mortgage amount from the previous module, figure out how much money you feel comfortable setting aside for negotiations. This can be a little, or as much as you like. After you have decided on how much you will set aside, subtract that amount from your pre-approved mortgage amount. This is how much money you actually have to shop for a home with.