The rules for what to offer on a home are difficult to find. Each buying situation, each buyer and seller, and other issues present unique angles on what makes a good offer price. Read on for some thoughts on what should go into your offer price.
Understand Your Financial Situation
Unless you are wealthy enough to pay whatever is needed, you are limited by your financing situation. One of your first moves after deciding to begin looking for a home is to be pre-approved for a loan. Once you supply the facts about your income and your credit is checked, a lender can provide you with a range of numbers in which you are likely to be approved when it comes time to apply for the mortgage. Just because you are approved to spend a given sum, however, doesn't necessarily mean that's the right sum for you. Use the pre-approval number to make your decision, but only you can decide if you want to spend that much each month for housing expenses.
Know the "Comps"
The above term refers to comparable prices on homes. Comps should be made between homes that are as alike as they can be, in the same or similar location, and the sales as recent as possible. Using comps is useful for buyers, but it's also how many sellers set prices. Real estate agents are aces at running the numbers and accessing data to determine a comp for either a buyer or a seller. Unfortunately, not all sellers use an agent and that can result in unrealistic sales prices. Using a comp to set an offer price is smart and allows you to more closely target what the seller will find acceptable.
Know More Than Comps
While comps are helpful, not everything can be drilled down to bits of data. What makes a home attractive can mean intangible and tangible things like the feel of the neighborhood or how close you will be to your job. Likewise, even if a home has a comp price that you can afford, it may just not be the right home for you. In the end, you must set your own list of priorities when it comes to what you want in a home. To some, having a large fenced-in yard ready for your furry friends trumps the extra bedroom or fancy appliances.
Work closely with your real estate agent when trying to decide on how much to offer on a home for sale.