| How to Determine What to Offer on a House
Finding the home you want is a good starting point. The next step is crafting an offer that enables you to secure the home at a price you are happy with.
Before you submit an offer, you need to do some research and work out how much you should offer.
You want to get the home at the best price possible, and the vendor wants to achieve the highest price they can. This is all part of the negotiation game.
Although price is not the only factor to consider in your offer, it is definitely the single most important.
Asking the vendor’s agent for advice on your offer will not help you. Remember their most important goal is to achieve the highest sale price for the vendor, which in turn increases their commission. Having said this, asking the agent for what they think is a “fair price” is a good idea.
If you are using a Buyers Agent, you will have a professional on your side who will not only do all the research for you, but also is the best person to negotiate the best possible deal for you without all the emotion.
Following are a few tips to help you.
Research the “Comps” (short for comparables)
Researching recent sales in the same area is the best place to start when looking at what to offer on a home you like. When looking at these comparisons it is important to ensure that you are comparing with homes of similar:
- Age and
It is also important to only compare with sold properties. Only sold properties reflect the true price. A property is not always worth what owners want for it – But it is always worth what buyers will pay for it.
If you are using a buyers agent they will be able to access detailed comparison information.
How long has the home been on the market?
Also known as “days on the market” (D.O.M.) – is another important factor to consider. The number of days the home is on the market is directly related to how hard you might be able to negotiate. No seller wants their house to sit on the market for too long. The longer the house has been on the market, the more aggressive you may be able to negotiate. Do your research first, as not all sellers are in a rush to sell.
What Condition is the Home in?
A home that is ready just to move in and “live” is more likely to receive higher offers than a renovator or a home that needs work. Although some people are happy and enjoy this style of home. Most buyers prefer not to have to deal with a renovator.
Get a qualified professional to check for structural and other serious issues that may affect the offer you submit. A good buyers agent will be able to request a disclosure document from the vendor which discloses any potential issues.
Decide How flexible are you on Price?
If you don’t have much room to move within your budget, you can also use other negotiating tools to entice the seller by sweetening and being flexible with your offer. For example
- Different contingencies
- Length of settlement
- Rent back options
Use your Buyers Agent to help you craft the best offer that will enable you to secure the home at price and conditions that you and the vendor are happy to agree on. Buyers agents can save you a lot of money.