How to determine what to offer on a house
Do you think hard work is done once you’ve found your ideal home? Not really. You will want to find out how much you should bid before you begin to submit offers.
These are the four factors to help you decide what to offer on a home.
We’re not going to beat around the bush; price will be one of your most essential items. Unfortunately, it is a common problem for many buyers to figure out what to offer.
You should ask yourself (and perhaps your agency officer) four questions below to help you determine the best price for your bid.
1. What have similar homes sold for?
Researching the most recent sales in the area is a great starting point to look at what to offer on a home. Comps (short for comparables) are a collection of recent, similar and neighboring domestic sales. Consider the following guidelines when creating comps for the property you want to buy:
- Location Construction type
- Bedroom/bathroom count
- Square footage
- Condition (i.e., new construction, updated or “fixer”)
Pulling comps for the area, you’re shopping in can help you start formulating an assortment of appropriate selling prices that your bid is likely to fall within. Your buying agent can help you access information on comps.
2. How long has the home been on the market?
You have to consider the amount of time a house has been on the market when setting your price for the offer because The duration of a home on the market has a direct correlation with how much you should offer.
So if a house has just been put on the market, your offer price should be higher and vice versa, the longer the house has been on the market, the lower your offer.
Please note as well that sometimes regardless of how long a house has been on the market, there are sellers who are not really in a rush to sell. Hence, offering way far from the actual price may backfire; thus, it’s better to consult with your buying agent.
3. What’s the condition of the home?
The condition of the property is one of the most important factors in determining how much you should offer.
A turn-key home, or home ready to move in, will typically receive higher bid amounts than a rehab/fixer home requiring a lot of repairs. While fixers and rehabilitation properties may be great opportunities to save money on buying a house, you need to consider as well the amount of work you’re willing to put in a home to make it worth living.
You’ll want to pay attention to systemic/functional problems when evaluating a home’s condition. You’ll want to test for structural issues including:
- A sagging or damaged roof
- Cracks in the foundation
- Rusty plumbing
- Water stains on walls
- Warped or uneven floors
- Damage from pest infestations
Since some of these issues may be difficult to identify simply by viewing the property, the buying agent may request documentation from the seller’s agent to search for inspections and records any possible issue that may not be visible to the eye.
Please note that disclosure packages may not itemized every issues, will not, instead they will only include issues that are visible to the seller.
4. How flexible are you on price?
If you don’t have wiggle room for your budget, you can play around with the other aspects to make sure your offer to the seller is still compelling.
Aside from price, you can soften the deal by being flexible on other factors like:
- Contingencies
- Closing schedule
- Rent backs
- Closing costs
- Repairs
The goal is to attract the seller in other areas if you want to make a bid at a lower price.
Final Thoughts
The goal is to draft an offer, which is a win for you and the seller. Landing at the right price for the home you want to buy can be a little tricky, but it doesn’t have to be difficult. Just think of asking the right questions, considering your alternatives, and partnering with your buyer. A good REALTOR® can aide you make the right offer for the property you’re interested in buying. For free valuation, contact us at 401-396-2888. We’re always glad to help!
