I Found a Home to Buy - How Much Money Do I Offer?
Great question! And, a very common question. You find a home to buy and you
wonder, should I offer the full list price, should I come in low or just what
should I do?!
Today I'm going to tell you how to crack the code on knowing just how much money
you'll offer the Seller for the home they're selling. We'll be analyzing the local
Real Estate market where the home resides, how close to perfection is the home you
want to buy, what type of Buyer representation do you have and is time on your side,
to name a few. Once you understand and recognize these circumstances you'll be well
equipped to be on your way to buying a home in Coral Springs or neighboring southeast
Florida cities or anywhere in this great nation, for that matter! This will affect
all first time home Buyers or the experienced home Buyer alike.
We can crack the code by answering the questions below. Our answers will reveal how
much money you will offer to buy the home.
WHAT IS THE HOME'S VALUE?
This is the first thing you must know in order to know how much money to offer on the
home you're considering buying. To begin, what have nearby homes sold for in the last
3 months or perhaps even having to go out to 6 months ago? Such homes will determine
the value of the home you want to buy. This is where you'll value the hiring of a
Buyer's Real Estate Agent who will guide you with their expertise. A Buyer's Agent
represents you and not the Seller and they're able to dig in to see the particulars
of the homes that have sold in the recent past within close proximity to the home you're
considering buying.
From these homes that have sold, how do they compare to the home you're considering
buying? You'll compare their features, condition and location. From the comparable homes,
your Agent will be able to determine a fair market value for the home you like. This is
your starting point from which your offer will be considered. An ideal situation will be
fulfilled when the Listing Agent for the home Seller knows how to price homes to sell and
the value your Buyer's Agent comes up with will be in line with the list price.
Unfortunately, we aren't always fortunate to stumble upon ideal home buying price
circumstances and this will be another area where you will most certainly benefit from the
use of a skilled Buyer's Agent.
WHAT DOES SELLER'S REALTOR REVEAL ABOUT THE HOME?
Try to discover any desperation from Seller. If the Seller's Agent is present at any of the
home showings, your Realtor can cross examine to discover the reasons why the Seller is
moving. His or her answer may reveal desperation. Desperation can mean savings to you. You
really don't want your Realtor to cross examine the Seller's Agent, yet I wanted you to
understand the value that can come from this when you hire an Agent to represent you who is
talented at unearthing such valuable details.
A desperate Seller means that you could possibly consider an offer to them that is below what
they're asking or below fair market value. However, keep in mind that a Seller's desperation
is not the sole factor in determining an offering price as your very own desperation may also
come into play as discussed below.
ARE YOU WILD ABOUT THE HOME?
Whether it's the first home you've fallen in love with or the second, third or more, your
feelings of overwhelming joy can most certainly have an effect on the price you are willing
to pay for a home.
Overwhelming joy can keep you awake at night envisioning yourself in this new home that would
be just perfect, you imagine. Oh, if you can only get this home, you think, your life will be
perfect!
If you're wild about the home, don't learn the hard way by losing the home you love to another
Buyer, because you thought you'd lowball the Seller. By determining the home's value as
discussed above, you should have a good idea of where your offer should be and are you really
willing to risk what you love for your lowball offer? In fact, depending upon your local Real
Estate market, your love of the home and any other interested Buyers, it could warrant an offer
above fair market value. Yes, that's correct. This is commonplace in a Seller's market when
homes are priced right and there are several Buyers vying for the same home; there aren't
enough homes to satisfy the wants and needs of home Buyers.
WHAT IS YOUR MOVING TIMELINE?
Do you have all the time in the world or is your clock ticking? Perhaps you're just starting to
look for a home and you aren't in a rush, as you don't want to have regrets and want to avoid
the horror's of home buying pitfalls that you've likely read all about.
If you're not in a rush then you likely may be afforded the opportunity to save on your home
purchase. It isn't a guarantee that you'll save if the Seller is looking for a fair value for
their home, yet if you're willing to risk the home because your clock isn't ticking, then you
may win the prize of paying a bit less than a home's value, if you're willing to risk losing
the home to another Buyer or an outright Seller rejection of your offer. You'll find this
strategy can work for you as a home Buyer if the Seller is on the flip side of a coin in that
their clock may be ticking and need to sell.
What if the other scenario holds true for you and your clock is ticking and need to find a home
to buy now?! You're going to have to rely on your Realtor to provide you with the details of
the home's value as discussed above, in order to make sure your offer is fair market value so
you have a good chance of the Seller accepting your offer. Yet, what happens if the Seller's
vision of their home's value is way above market value, you love the home and your clock is
ticking? In other words, the home's list price is above market value. Then you forget this home
and go on to the next home, unless your Realtor can discover that the Seller is indeed willing
to negotiate down to market value or a market value offer on your part would be considered by
the Seller. If not, it is time to search for a new home as time isn't on your side?
WHAT LOAN AMOUNT HAVE YOU BEEN PRE APPROVED FOR A MORTGAGE, IF FINANCING YOUR PURCHASE?
This is pretty simple. If you've been pre approved for a mortgage at R1 000 000 then you cannot
offer more than what the Pre Approval letter states. Your Pre Approval letter lets the Seller
know that you're well qualified to buy their home for a set dollar amount: Pre Approval letters
are a powerful tool when buying a home.
WRAP UP
Now that you know the answers to the questions above, you're able to determine the right offer
price, you've cracked the code! From a low offer starting point, to right on the money, to
sometimes above the asking list price, your answers will make the decision for you – it will
crack the code.
As you can see, there are many factors that you need to consider in order to determine what is
the ideal offering price for buying a home. To know how much money to offer, you'll need to
prioritize all of these factors, which will then ultimately decide for you. You'll answer your
question; How much money do I offer when buying a home?
