How Much Should A Buyer Offer?

How Much Should A Buyer Offer For A Home?

Clients are always asking how much should they offer for the home they have decided they would like to buy. The goal, of course, is to get the property at the best possible price, and with the best terms. Should they offer a certain per cent below asking? How low can they go without "insulting" the sellers? The answer, of course, is neither formulaic nor simple. Home buyers, whether in Agoura, Westlake, Oak Park, Thousand Oaks, or other areas, have much more negotiating power than they did a few years ago. Part of the reason is supply and demand- there are more homes on the market, and the ones that are on the market tend to stay there longer than they used to.

So how much should you offer? How badly do you want this particular house? Are you willing to walk away if you do not get it for the price you want? If you can walk away, you may be able to offer less, than if it is the dream home that you absolutely must have. If the offer made is exremely low, the seller might well get insulted. It is part of my job to make sure the seller keeps talking to us!

The first step in deciding how much to offer (after speaking to a lender, of course, to be prequalifed) is to review the market comps with your realtor. The comparables to look at are the properties that have already sold, not those that are still on the market. A seller can ask for any price they like, doesn't mean they will get it. (I would like to win the lottery, but haven't done so yet.) In addition to looking at square footage, and lot size, the condition of other homes that have sold is important as well, for obvious reasons. If there are no recent comps in the immediate area, appraisors, and you, should look outside the area.

Sometimes it may be better to offer something close to the asking price, and only come up a small amount, if any, in negotiations. And you do not have to come up in price with your counter-offer. You can counter at the same price, which tells the seller, this is what you are willing to pay. At times a buyer may be better off paying slightly more than they had originally planned to, but asking for money back in closing to buy points and bring their monthly payments down.

Even in the current market, some homes will go into multiple offers. This may happen with a truly extraordinary home, or one that is priced extremely well. A savvy seller will recognize that it is not always the offer with the highest price, but the best terms that are best. In this case, make your best offer. And remember, if you do not get this house, there will be another. Your house is out there, we just haven't found it for you yet!