Deciding how much to offer
A REALTOR® can help you find your perfect home, but only you can decide how much you are willing to offer for it.
Making an offer on a house is difficult. If you bid too low, others will outbid you; if you bid too high, you may be spending money you don’t need to. Here are some things to keep in mind when making an offer on a house…
How much house can you afford? This should be the #1 factor when house-‐hunting. You can’t offer more money than you can borrow, so secure a loan before seriously shopping around. Also, don’t forget to include the closing costs when deciding how much money to borrow.
The Seller’s price -‐ Your offer will of course be highly dependent on what the seller asks for in the first place. Sellers typically follow one of three paths. Some sellers may overprice the home to give them substantial room to negotiate. Some sellers price according to what they think they should receive and don’t really want to haggle. Finally, some sellers may marginally under-‐price the home in the hopes that it will attract many buyers and create a bidding war.
The seller’s position -‐ Always consider the seller’s position when making an offer on a house. If you were a seller, would you be willing to take a little bit less if someone agreed to close the deal quickly and came with a loan preapproved? Some sellers need to close quickly, so having everything ready to go can make the difference between a winning offer and a losing one. Be flexible and try to play to the seller’s needs when making an offer.
Prices of comparable houses -‐ To really get a good idea for how much you should offer, find out how many comparable houses sold for in the area. To ensure that it’s really comparable, a similar house should have sold within the past six months, be in the same neighborhood, and be similar in terms of age, size, and number of rooms. Your REALTOR® can provide you with information about the selling prices and marketing time of other houses in the area.
The real estate market -‐ This can make a huge difference in terms of what you should offer. During busy markets, expect irrational bidders who drive up house prices considerably. Similarly, in down times, you can safely offer on the conservative side.
Once you have determined the amount you are willing to spend, your REALTOR® will help you prepare a written offer. In most transactions you will offer to deposit earnest money held in trust by Coast Realty Group, as a stakeholder, showing your sincerity in making a reasonable offer and abiding by the terms of the written contract.