So, you've found a home you could really see yourself living in. That’s when the real fun begins: sitting down and making that offer.
As we’ve discussed before, offers have many different components, but the biggest factor among them is the price.
Before going any further, you’ll need to figure out what to offer on the home. So, we’ve rounded up a set of considerations to help you land on a price that feels comfortable to you, feels fair to the seller, and keeps you competitive.
1. Look at comparables
"Comparables" or "comps" refer to homes in your area that have sold recently and are similar to the home you’re looking at. Buying agents can typically help you figure out how much to offer, but you can also find your own comps, thanks to the magic of the internet.
With Open Listings' comps tool, you'll be able to select similar properties immediately, and get an idea of how much you should offer based off of their sales prices.
Comparables are great for giving you an idea of the fair market value of the property. By looking at properties similar to yours -- in terms of neighborhood, house type, number of bedrooms and bathrooms, upkeep, and square footage -- you can can begin to formulate a range of acceptable sale prices that your offer should probably fall within.
2. See how long it's been on the market
Once you have the price range you want to aim for in mind, it’s time to take a closer look at your property to find out where you fall within that range.
To sort this out, there are a few distinct factors that you can take into consideration, but one of the most compelling is time on market, or how long the home has been for sale.
The theory behind time on market goes like this: if the home has just been put on the market, offer a high sale price.
If you try to low-ball here, the seller is likely to pass your offer over and wait for another opportunity. On the other hand, if a home has been sitting on the market for a while without much interest, the seller will be more likely to negotiate.
Find out how long the home has been listed, then go from there. However, no matter how long a home has been on the market, remember that you still want to write an offer that makes sense. If you make an offer that’s insultingly low, the seller may just refuse you outright rather than come back with a counter offer.
3. Consider the condition
The property's condition also plays a role in how much money is fair to offer for a home.
Obviously, a turn-key home will fetch a much higher sale price than a rehab that needs a lot of TLC. As you mull around the idea of offer price, think about how much work you’ll have to put into your home to make it liveable.
That said, the key here is “liveable”, meaning how many improvements will need to be made before you can live in it full-time.
This means fixing structural or functional aspects like water in the basement or a sagging roof. Unfortunately, aesthetic changes don’t count. Those are more a matter of personal preference and would be solely your responsibility if you decided to move into the home.
4. Be flexible outside price
If you’re unable to offer a relatively high sale price, you can play around with the other components of the offer to make sure it still feels compelling to the seller.
As a refresher, the biggest negotiation points of an offer are:
- Offer price
- Contingencies (anything - like inspections and an appraisal - that needs to happen successfully in order for the transaction to continue)
- Closing date
- Rent backs
- Closing costs
When going in at a lower price, do your best to cater the rest of the offer towards the seller.
That way, he or she may see your concessions as a gesture of good faith and be willing to bend on the dollar amount. You can ask the agent you’re working with to reach out to the seller’s agent and get this information for you.