The Basics of Making an Offer on a House
Falling in love with a home and coming to the realisation that this is where you want to put down your roots and make special memories is an exciting moment. However, there are many important aspects that need to be taken into consideration before making an offer that will essentially bind you to the property.
Understanding the market as it is at present should play an important role when determining the value of the offer that will be presented to the seller. Establishing whether it is a buyer’s or a seller’s market is key.
Buyers need to remember that in a buyer’s market (such as the current market) sellers will be more open to offers. With fewer buyers and therefore less competition, sellers may be more willing to accept lower offers than miss the opportunity for a sale. In a seller’s market, the buyer may not be able to get away with an offer that is below the asking price as the seller may have already received a number of offers and will settle on the one that is the most attractive and lucrative.
It is always a good idea to find out exactly why the seller wants to sell the property. Should the reasons for the sale be as a result of negative qualities or aspects of the property, these could influence the offer that is put forward. It may not be easy to find out this information as the listing agent and seller may not want to disclose the reasons behind the sale.
It is also important to find out the home’s history and for how long it has been on the market. If a home has been on the market for a lengthy period, the seller may be willing to accept a lower offer. In some cases, a listing may expire and then be resubmitted, and this may also mean that the seller may consider a lower offer.
When a property has been owned for a long period of time, the price that the seller originally paid for it is of little significance to a potential buyer. However, if the property was purchased in recent years, your offer could be relatively close to the original purchase price and, although possibly of similar value, it would need to take into account the appreciation value and any remodeling improvements since the time of purchase in order for the offer to be of the appropriate value.
Compare the recent sales of property that are in the same area as the desired property, have the same configuration and are of similar size in order to get an idea of the average price range that they were purchased for before putting in an offer. Obtain a current trend report and compare the prices that homes were listed for versus the prices that they were actually sold for. If the majority of the listings are selling below these prices, it may be a strong indication that the seller will accept a lower offer than the initial asking price.
It is all about accurately judging the situation and making an informed offer that the seller will not be able to refuse.
Source - Private Property