How Much Should I Offer on a Home?
How much should your offer be on a home you wish to buy?
Consider three sets of facts/information:
- Price of similar sold/pending properties in the last six months (possibly more) within a 2 mile radius, same school district
- Current percentage of list price to sold price (however, if the property is priced "right", this won't apply)
- Supply and demand (market absorption rate)-what is the current month's supply of available properties; if under 5 months, expect to pay more in a competitive environment
- Time on market-compare the property marketing time with other available properties active, pending and sold
- Property condition-the more updated the condition, the higher the sales price as most buyers do not want to have to renovate/redo/remove wallpaper, paint, etc.
- Length of time on the market- find out the property marketing period for the home (not just the current marketing time); the longer the time on market, the more likely the seller will negotiate unless the seller is "stuck" on a price
- Motivation-often the most difficult to discern, but try to find out the reason for selling; the higher the motivation, the more likely the home price will be negotiable
- Property history-what mortgages/liens appear on the property tax records; when was it purchased; if more recent, it is unlikely the seller has much negotiating room
- Terms-the less contingencies your offer has (such as mortgage, house sale, etc), the more likely it will be accepted; the buyer's financial strength is very important to sellers
- How soon do you need to move? If you don't get this house, what is the cost of waiting (rent, increased mortgage rates, etc.)