Tips for Determining Your Offer Price

With mortgage rates so low these days, many first time home buyers are jumping into the market to purchase a home. One of the most difficult parts that they may face about buying a home is deciding on your offer amount before the transaction even begins. Lowballing, or offering a bid that is way below the asking price, could get you a great deal if the seller is motivated to get rid of the house. However, it could also insult the seller and they might refuse to work with you any longer. However, if you offer a price that is too close to the asking price, you could be overpaying for a home that is not worth the cost. Here are some tips to keep in mind so you can come up with a decent offer somewhere in between.

Study Comparable Sales
The term “comparable sales” refers to the sale price of homes that are similar to the one you are considering buying. These homes have similar features, amenities and sizes. The best way to do this is to look for homes in the same neighborhood that have sold recently. This will give you a good idea about a decent offer that will neither insult the seller nor take too much out of your bank account.

Know Why the Seller is Selling
If you know the reason why the seller wants to sell their house, you can get a better idea of how much to offer. If they are selling it because it has some major problems that need to be fixed, you can be confident in offering a low price because you will have to put some major bucks into it after you take ownership. You might even be able to offer a lower price if the seller is excited to move for whatever reason. However, if the seller is just selling it because it serves as a second home or for some other reason that is not an emergency, they will probably only accept offers that are closer to their asking price.

Find Out What the Seller Paid
If the seller has only owned the home for a couple years, they will probably only accept something that is close to the asking price. Since the home has little to no appreciation over just a couple years, there is not much of a difference between their mortgage balance and the actual price of the home. If the seller did some remodeling, the value of the home may have increased since they bought it. Take these probabilities into consideration before making your final offer.

These are a couple ideas to keep in mind when calculating an offer price for a home you want to buy. The key is to be shrewd and knowledgeable when putting in a bid so you can get the best price that works for all parties involved in the transaction.