October 4, 2020 | 4 Minute read
Wondering how to determine your office price? You may think that once you’ve found the home that your family wants, the hard work is done… but not so fast. Before you submit an offer blindly, you’ll want to do your research to make sure you’re submitting a good offer — not only to increase the chances of your offer being accepted but also to make sure that you’re not spending money that you don’t have to.
It’s no secret that price is one of the most important factors of your offer. But how do you decide what to offer? There are several factors that can help you decide the right number. Here are four questions to ask yourself to help determine your offer price on a home.
One of the best places to start when determining your offer is to research recent home sales in the area where you’re looking. Comparables, called “comps” for short, are a collection of recent and nearby similar home sales, and your listing agent will be able to help you access this information. When looking at comps, keep the following things in mind:
Looking at the comps in the area can help you determine a range of acceptable sale prices that your offer should fall within. From there, you can narrow down the range and determine an offer you’re comfortable submitting.
Another factor that can help lead you to your offer is how long the home has been on the market. Typically, the length of time that the home has been on the market should directly correlate to the offer that you submit.
In other words, the longer the home has been on the market, the more willing the seller will be to entertain a lower offer, or at least enter into negotiations on a price. On the other hand, if the home is new to the market, the seller is more likely to not even consider offers that are lower than their asking price.
Keep in mind though that no matter how long a home has been on the market, there are some sellers who simply aren’t in a rush to sell. In this case, submitting a lowball offer can backfire. If you plan to try to submit an offer below the asking price, you should work with your agent to help decide just how low you should go.
Another factor to keep in mind when submitting an offer is the current condition of the home. It comes as no surprise, but the condition of the home plays a substantial role in determining your offer price. A home that is updated and “move-in ready” will demand a higher price. Conversely, a home that is a “fixer-upper,” or in need of major renovations, can be a great opportunity for you to save some money on the purchase of a home.
It’s important to keep in mind how much work you are willing to put into the home to make it livable. The last thing you want to do is get in over your head and purchase a home that you’re not prepared to update. Pay attention to the structural components of the home, which impact the value of the home more than cosmetic components. Issues you’ll want to look for include:
While all of these are red flags that can indicate serious issues, they aren’t always easy to identify by simply viewing the home. For this reason, your agent can request disclosures from the seller’s agent to check for any inspections or reports that could indicate potential issues that aren’t easily visible. Of course, these reports aren’t a guarantee of disclosure for all issues in the home; rather, they will only document the issues that are known to the seller.
Ideally, your budget will allow some wiggle room to offer more money if your initial offer is rejected. However, if you don’t have the room in your budget to offer more money, there are other aspects to your offer that can still make your offer appealing to the seller.
Other than the price, you can also sweeten your offer by being flexible on other factors in the sale, such as:
The thought behind this is to entice the seller to accept through other aspects of the sale, even if you’re offering a lower price. For instance, if your seller is motivated to close quickly, a shorter closing schedule or waiving contingencies could actually be more favorable than a higher offer price.