How Much Do I Offer?
Finding your dream property can be a very exciting time in your life. Making an offer on that special home however can be somewhat of a stressful task in ones life!
The written offer is a step in the home buying process that requires the finesse, experience and negotiation of a skilled REALTOR professional.
HOW MUCH DO I OFFER?
There are several factors to consider when deciding how much to offer: the listing price of the home, the prices of comparable properties that are also for sale or have sold and lastly, what you, the buyer can afford.
The Listing Price : Also known as the “asking” price, this is a rough estimate of what the seller would like to receive. It is important to consider a few factors:
- how long has the property been on the market;
- have there been any price reductions;
- whether the property is a foreclosure or short sale;
- and finally if there are multiple offers being presented to the seller.
Price of comparable properties: Your Realtor can provide you with a list of comparable properties or “comparisons” that have recently sold in the area near the property you are about to make an offer on. The most relative and supporting comparables should fall within these guidelines:
- Sales that have occurred within the last three to six months – the most recent the better’
- Sales of properties similar to the one you’re making an offer on, in terms of age, size, number of bathrooms and bedrooms.
- Sales within a reasonable proximity to the property you are about to make an offer on (six to ten blocks in urban areas), for rural properties it’s a little bit different.
Once you’ve considered all the factors mentioned above, it’s time to decide on a number. In competitive areas or what they call “hot markets”, you may have to offer no less than the asking price. You should be mentally prepared for negotiations, and in some cases bidding wars may occur among aggressive buyers. In hot markets, properties often sell for 10% – 30% above the asking price and normally sell in just a few days.
In a less competitive area or “cold markets” or in more rural settings, you will have more room to negotiate with the seller at a lower purchase price, only because inventory moves at a much slower pace.
This information is meant to be guide, please consult your Realtor for more information on making an written offer.