Once you find that perfect house that you want to buy the next big decision is how much do you want to pay for it? You will know what the asking price is but it is not likely that you are prepared to settle on paying this. Now it is time for negotiations but how do you get these started?
How Much To Offer On A House Below Asking Price
Every homeowner that puts their house up for sale is going to determine how much they want for it. They reach this decision based on different circumstances such as,
- Some have to get a specific amount of money from the sale so they can buy a new house.
- Others may be in financial distress and need as much money as they can get.
- There are some homeowners who have strong personal attachments to their home and put a great monetary value on them based on this.
- Finally, there are some who just listen to their realtor and will listen to their advice as to how much to list the house for.
You as the potential buyer will not likely be aware of any of these issues that have helped the home seller set the price. Your concern is how much can and should you offer to buy the house for.
The Starting Point
As the potential buyer, you need to place an offer. But, keep in mind that this offer may not be your final offer. Quite often negotiations on the price go back and forth. This is a good thing because it sets the scene for the buyer and seller to agree. However, if you insult the seller with an unrealistic offer they may not be willing to enter into further negotiations. Here are some things to keep in mind when making your offer.
- Do some research to see what homes in the area are up for sale that is similar to the one you are interested in. Pay attention to the asking price. Also, check out ones that have recently sold and what the sale price was.
- You can ask your realtor if they know any details about why the sellers are selling. You may get an idea of how badly they want to sell. Or, if they are in financial distress. These factors will help you determine what may be a reasonable offer on your part.
- Pay attention to any recent upgrade they may have recently done. If they have done some, they are going to keep the costs of these in mind when they look at your offer.
In general, it is suggested that the starting offer should be between 5% to 8% below the asking price. However, know what your limits are. If you want to be able to negotiate further then leave yourself some bargaining room.
How Much To Offer On A House That Is Overpriced
You need to feel comfortable about putting an offer on an over priced home. Which means you need to be assured that the asking price is too high. Otherwise you are not going to feel confident in standing firm on your offer. You could end up paying more for the home than its true value. According to the market at the time.
- You can do your market research. So you have facts to back up your opinion of it being over priced.
- Also, you want to work with a savvy realtor — one that is going to be able to bring these facts to the attention of the seller’s real estate agent. Who then, in turn, should point this out to the seller.
- Determine how long the house has been on the market. Most often houses that have been on the market for a while is as a result of the house being overpriced. The sellers are probably becoming aware of this which will make them more receptive to a realistic offer.
How Much To Offer On A House That Priced Below Market Price
In the real estate world, there is some controversy over perceptions of how an offer should be placed on a home that one wants to buy. There are some experts that say the rule of thumb is to offer 5% to 8% of the asking price no matter what it is.
Then other experts say this can be risky depending on the circumstances of the sale. There are some people who want to sell their home as quickly as possible and will put it on the market below market price to help with this. What it can mean is they are asking the minimum amount that they will accept.
So how do you as the potential buyer of that house make an offer that is still open for negotiation if your initial offer is not accepted? There are some important points to keep in mind.
- Determine if it is a buyer’s market or seller’s market.
If it is a seller’s market then obviously the below market price home being sold is because of personal circumstances. You may want to be cautious here is not making an offer too far under the asking price. Not because the home seller won’t be interested but because they are not in a financial position to be able to accept the offer.
- You need to decide yourself what you feel is a fair price to pay for the house you are interested in.
If you feel that the price being asked for is one that is reasonable for our circumstances, then you may not want to low ball your offer and risk losing the home if it is the one that you want.
Making An Offer On A House How Low Is Too Low
The only way that a home buyer can determine if an offer to purchase is too low is to look at the current circumstances such as;
- Is it a buyer’s market or a seller’s market?
- What have similar homes sold for recently in the area?
- Check out the average price on homes for sale in the area?
- What time of year is it?
- How long has the home been on the market?
What are the circumstances surrounding the purpose of selling the home? For example, can you as a buyer determine if the home seller is in a rush to sell?
The information gleaned from these questions will help you determine if the offer you are thinking of making is too low.
How Much To Offer On A House That Needs Work
Some home buyers are prepared to buy a home that needs work. Home sellers that are selling a home like this are usually aware that they are not going to get top asking price for their home. If you as the potential buyer are prepared to buy a fixer-upper, then there are some things that you need to consider.
- Determine how much it is going to cost you for the upgrades.
- Check out to see how much homes are selling for in the area that is in good condition
- You can also look to see how long the house has been on the market.
These factors will give you some guidelines as to what you should make as your initial offer.