|
|
|
How much should you offer for that home? |
 |
 |
 |
You've found a home you want to buy, but how much should you offer to pay for it?
One of the most perplexing points in the home-buying process is the
decision of how much to offer for the home you want to buy. If you
offer "too much," you might experience buyer’s remorse or feel the
house was "overpriced." Yet if you offer "too little," you might
infuriate the seller and lose your opportunity to purchase the
property.
So, what’s the right amount?
To answer that question, you’ll need to do some homework and give some
serious thought to how sincerely you want to buy that particular home.
Your agent can make offer recommendations
Don’t rely on the listing agent who represents the seller to help
you decide how much to offer for the home you want to buy. Rather, ask
your own real estate agent about the asking and selling prices of other
homes in the area and market conditions that might indicate whether you
should offer more or less than the seller’s asking price.
If the market is characterized by multiple offers and strong demand
relative to the supply of for-sale homes, you might want to offer more
than you would if the market were characterized by price reductions and
weak demand relative to supply.
You also might want to offer more if the home has certain features that
are must-haves for you, but aren’t widely available on other comparable
homes in the area.
Time pressure could be another reason to offer a higher price if your
current home is already on the market or you need to move by a certain
date due to school schedules, employment or other reasons.
Some buyers try to anticipate the direction of home prices and build
that expectation into their offer. Future prices may be important if
you intend to sell the home within a few years, but market cycles may
be less relevant if you plan to stay put for a while. Moreover, sellers
may be loath to discount their asking price simply because you think
prices might be lower in the future.
Offers that are contingent upon an appraisal, financing, the sale your
current home or other conditions are less attractive to the seller than
are offers that don’t include such requirements. If your offer contains
contingencies, you may wish to offer a higher price as an inducement to
the seller to accept those conditions on the sale.
Be cautious about online estimates
Automated valuation services on real estate Web sites are a popular
resource for home price estimates. These estimates are not appraisals;
rather, they rely heavily on historical home-sales data. Consequently,
they might not be a reliable indicator of a home’s current value,
especially if the market is on a turning point.
A similar resource is local multiple-listing services data about homes
that are currently on the market. This data may be available on local
MLS or brokerage company Web sites.
Don’t exceed your budget
Never offer more for a home than you actually can afford to pay. Get
a pre-approval letter from your lender that states how much you can
borrow and an estimate of your closing costs. Be honest with your agent
about how much you’re willing and able to spend and what features you
must have in your home |
|
