You’ve found the home of your dream, but you are clueless on how to make an offer price. Determining your offer price can be influenced by a number of factors.
Know exactly what you can afford. Get pre-approved for a real estate mortgage. This way, there is no wasted time in looking at houses not within your budget.
Compare the home you would want to purchase with others in that area. Called comparable sales, these are homes that are very similar to your prospective home. Collect and review real estate information from other recent sales that have been made. Comparisons to consider may be the number of bedrooms and bathrooms, age, square footage, garage, size of the lot and other features.
-Property Condition Effects on Real Estate Offer Price
Check the home’s interior and exterior. Walls, floors, windows, doors, ceiling, the paint, plumbing, roof, electricity, fixtures should be in good condition.
A buyer's real estate market or slow market is one in which there are too many homes on the market for a number of buyers. Homes take longer to sell and prices fall. Factors that affect home values may be an exit of major employers from the area, floods, or earthquakes. A lower offer price may be made but the seller will make a counter to your offer price. This is when real estate negotiations begin.
A sellers' market or hot market is the manifestation of conditions that favor the seller over the buyer. There are more buyers than homes for sale. Real estate prices tend to rise, and homes sell quickly, often with little bargaining. It can be stimulated by a strong economy, bigger salaries, stable jobs, even the penetration of major employers. When making an offer price during this time, a low deal may offend the seller.
A real estate market in equilibrium or steady market wherein demand for and supply of housing are balanced, neither the buyer nor the seller is disadvantaged by market conditions. It is difficult for an offer price during this time because you are not sure what you can get away with.
-Real Estate Property Improvements
Major improvements made should be taken into consideration like addition of bedrooms and bathroom, upgrading of tiles, remodeling of kitchens. Most buyers do not understand that upgrades made means an increase in the offer price of the property.
-Motivated Seller Effects Offer Price
In this situation, seller’s may be willing to give up a few thousand dollars on the offer price. Reasons may be relocation-seller is transferring to another state or country, or he already bought a new home and he wants to avoid making two real estate mortgage payments, or even a divorce.
But not all motivated real estate sellers are for real. At times, they advertise this just to generate more phone calls and to call the attention of more prospective real estate buyers.
All these factors will help determine a offer price range for a property. A low offer on a home may turn off a seller and as a result, negotiations will not push through. Your agent may give you advice but the final offer price will be your decision on your new home. Make a realistic offer price on your real estate purchase today!
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Related resources for purchase offer fundamentals: Deal in Details | Home Buying Process | Home Buying Cycle | Home Buying Considerations | Purchase Offer Basics | Offer Price Influences | The Agent Derivative