Making an offer on a home can be somewhat confusing for most first time home buyers. Before making an offer, most people inevitably ask themselves if maybe the offer is too low or too high. Unfortunately, there is no set in stone rule when making an offer on a home. There are several factors that you should take into consideration before contacting the seller with an offer. These factors can make it easier for you to tell how much the seller might be willing to accept for his or her home.
Whatever your offer ends up being, keep in mind that a verbal promise is not legally enforceable. You will need to make an offer in writing, which will also include the terms and conditions of the purchase. Your offer will only be the first step of the negotiation process. The seller will, most likely, get back to you with a counter offer, which you can take or try to negotiate further.
Deciding on How Much to Offer
When making an offer on a home, you will have to make sure that the offer is not too low, which can result in the seller feeling insulted. Also, you have to make sure that the offer is not too high, because that will be more money out of your pocket. So the solution is finding a middle ground, a price that will satisfy the seller, and one that you can live with. Before making an offer on a home, you should do some research, which will help you better evaluate how much the home is actually worth, and give you information to back up the price you offer.
- Find out how much other comparable homes have sold for recently. Your real estate agent can probably help you with finding out how much other homes like the one that you are prepared to buy have sold for in the past few months. Try to find homes that are as similar as possible, in the same area with the same number of rooms, similar amenities and appliances.
- Find out if the local demand for homes is high or low. Finding out if there’s a high or low demand for homes in the area is really important and can help you significantly in coming up with an offer. If the demand for homes is high in the area, then prices are going up because it’s a sellers’ market, and you will probably have to compete against other bidders for that home. If the demand for homes is low in the area, then you probably won’t have any competition, and it will give you more room to negotiate.
- Find out if other buyers are interested in the home. Having competition means that you will probably have to outbid other buyers in order to purchase the home. This is not a good situation to be in, so your first offer should be closer to the asking price. This will increase your chances of being the one that wins the bidding war, but it is up to you to decide if paying close or even exactly the asking price is worth it.
- Find out if the owner is in a hurry to sell. The seller might need to move quickly or need the money from the sale for a new home. Knowing this means that you can negotiate more aggressively, especially if there are no other buyers involved.
- Find out what condition the property is in. It may cost you a few hundred dollars, but having the home professionally inspected before signing a contract can save you a lot of money and headaches in the future. Based on the results of the inspection, you can also decide how much to offer.
Making an offer on a home is not as easy as it looks. But researching your purchase and knowing what you are looking for can put you in a position where you know how much you can negotiate, and better estimate how much the seller is willing to accept. Remember that making an offer that is too low is almost as bad as making an offer that is too high. The price will usually be the maximum that the seller expects to receive for the home, but that doesn’t mean that they will go much lower than that. Based on the factors listed above, you should be able to come up with the perfect offer which the seller will hopefully accept.