What Should A Buyer Offer For A Home & What Should A Seller Accept?
It is so hard for buyers to work out what they should offer a seller for their home. There is a plethora of information on the internet to review. Buyer demand, seller home supply, mortgage interest up or down, short sales, REO’s, etc. It is overwhelming. That said, there are a few things that are a must for consideration if you are to succeed. A low ball offer to buy is of no value if you are not successful. All these general hurdles are applicable to the seller as well as a buyer in establishing a price to list the home for sale.
a) What are the values of comparable homes? This is where the experienced realtor for the buyer or seller will glean the correct information to ascertain a value. It must be remembered, not all homes are equal even if they are in the same neighborhood and have the same number of beds & baths etc. Condition is a major key here, especially if there is a glut of foreclosures that have sold. The condition of these homes can be sub-par when compared to a normal home for sale. A seller may feel their home is higher priced because they took out a 2nd mortgage some time ago based on a re-finance appraisal. The outstanding pay off amount has no bearing on the home’s value today. This is the time for buyer who believes that the price should be say $50k lower based on past values of when the market was at its lowest in 2009 needs to realize it will not work.
b) If you are a buyer, what mortgage amount can you borrow and how much can you pony up for the down payment. It is imperative that any offer price for the home is within an area of affordability for a buyer. This is notwithstanding the additional costs of property taxes, HOA fees, repair & updating costs.
c) What competition will you face as a buyer or seller. Sellers should consult with the realtor professional regarding the volume of available homes in your vicinity and don’t forget their condition. A glut may mean a lower listing price to attract possible buyers. For buyers, believe it or not, sometimes there are multiple offers on homes with agreed sale price being above list price. A good home will be a sought after item when compared to un-kept foreclosure homes requiring much work. Hence a higher price may be warranted due to the competition of other buyers. If there are multiple offers the buyers may all be requested to place forward their best & final offer for the seller to review. The amount of time a home has been on the market when compared to other homes, is an indicator for a buyer, but in the present market many homes may have multiple listings before being sold, so is not so uncommon now.
d) With a slower market, buyers can take their time going through the buying process, but what is their level of motivation to buy, just as what is the volume of motivation for the seller to sell. Irrespective of all the marketing avenues of the internet and in newsprint, the tool with the most impressive power is the property listing price. If you are desperate to sell, then the way to motivate buyers is to have an assertive low price, taking account of your local market. This way it has a chance of standing out in the crowd. Buyers motivation should not lead to an over bid in the offer to buy, unless of course you are a cash buyer. If you need a mortgage to buy, paying over market value may mean the mortgage is not supported by the lender unless the buyer ponies up the additional $ between the appraisal price and the contract price. If this is a home you really must have then it may be the only way to buy it, if there is other buyer competition.