Negotiations in buying San Diego real estate are serious, but like a good drama, they can be fun to play out. This section introduces you to the elements in the drama: counteroffers, backup offers, contingency offers and especially the jump-out clause.

You begin negotiations to buy a home the minute you say hello to a broker and/or a prospective seller. Your opening move is to try to get them to answer questions rather than to throw offers on the table. You want them to talk about what their needs and ultimate goals are. Let's set the scene. There you are, strolling through the rooms of a lovely home in the neighborhood you have targeted. Chatting with the agent or the owner, you try to find out what the owner of the property is going to do with the down payment. Does the owner have another home already purchased? How much does he or she need for the down payment? Is the owner just going to put the money in the bank? Let us say the owner is asking for $50,000 down. But it turns out that this person needs only $20,000 cash, because he or she is about to make a $20,000 down payment on another new house, and the remaining $30,000 would go into a money market fund. You could negotiate to give him the remaining $30,000 in the form of a note or some other non-cash form that pays him or her more than the money market. However, if the owner is moving to another town and needs most of the money right away, this negotiating point is out the window. You can look at this last example yet another way. If someone needs the cash badly, then the purchase price of that person's house becomes a flexible item. You might want to offer more of a down payment on a lower overall price.

YOUR OFFER
Now let us set the stage for making a formal offer. You have looked at the house, you have talked to the broker, and you probably have met the owner. At this point, both the seller and you, the buyer, ought to understand as much about each other as possible. You know whether or not the owner needs all the cash for or from a down payment, whether that person is in the middle of negotiations on another house, whether the family is moving because of a job transfer, and so on.

If you are going to make the offer subject to a pest control inspection for termites; if your purchase is subject to financing; if you have not yet had an appraisal but feel you must--each of these items should be in writing. All of the "subject to's" mentioned above are important. These are contingency clauses that define a deal and always protect you. The hardest time to change any item is after the offer is made. Leaving out a "subject to" is the biggest mistake that most people make.

INTERMISSION: CONTACTING A LENDER
In some cases, you already may have had preliminary discussions with a bank or mortgage company before putting your offer on the table, especially in a hot San Diego real estate market where you think somebody could grab the home before the end of the day. If you have not contacted a lender yet, go ahead and make your offer, subject to a lender's approval. Remember, a smart buyer checks potential trouble spots such as zoning and the availability of money. The more you check these things before making an offer, the less "subject to's" you have to put into the contract.

COUNTEROFFERS AND MULTIPLE OFFERS

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