A Quick Guide to How Much Should You Offer When Buying a Home

So you have found the dream home that you want to buy? The next step is to put in an offer and start to negotiate with the seller. A purchase offer is a contract that you sign and give to the home seller, often with “earnest money” which is a deposit to prove to the home seller that you are serious about making the home purchase. Choosing the right amount to offer on the home is very important. You don’t want to offer too much on the home and pay more than you need to, but you also don’t want to offer the seller too little – because you might end up losing the home to another buyer.

One thing to keep in mind, is that having the right realtor can save you a lot of money like described in this article from Agent Harvest. The right realtor can guide the buyer into offering the most fair and competitive offer, as they will consider all of the factors involved in order to come up with a realistic number that is likely to be accepted.

So how much should you offer when you are buying a home? Here are some crucial factors that you should keep in mind:

Why is the Seller Selling?

It will help you to know why the seller is selling their home, so that you can figure out their motivation and decide your price based on that. For example, if they are selling because they have to move somewhere else because of a job – they might have a deadline and a lot of motivation to get the house sold. This might mean that they are willing to accept a slightly lower price when things get down to the wire.

How Much Home Can You Afford?

Before making your offer on a home, it is important to take a look at your personal finances and figure out how much of a mortgage you can afford to take out. Looking at your income, the down payment you have saved and the monthly mortgage payment, you will need to work out a figure that suits your needs. It is no use putting in an offer on a home that is outside of your budget and will put a strain on your finances and cause you added stress.

Perform an Analysis of Recent Comparable Sales

Look at the other sales in your neighbourhood recently of comparable houses, so that you can get an idea of what the average price is for a similar home. Don’t forget to take into consideration the boundaries of school districts and whether or not a home is on a busy road. If you aren’t sure how to go about this comparison, your real estate agent can help you to define the right geographical area to consider.

Also, if the home that you are looking at buying is priced similarly to homes that were taken off the market because they didn’t sell, the property might be overpriced. Also, if there are currently a lot of similar properties on the market, the prices should be lower.

Be Realistic

You might be tempted to go in with a very lowball offer when buying a home, but that will usually only work when the home is being foreclosed or it is very overpriced and has been sitting on the market for a long time. When you go in very low with your offer, you run the risk of upsetting the seller. The best thing to do is to offer just an amount that is only a small percentage less than the asking price.  

Get Creative with the Offer

Perhaps the owner is stuck on a certain price for the home and you just can’t get them to negotiate. In this situation, rather than trying to get them to lower the price you could always consider asking for extras such as repairs, the furniture, appliances, or that the owner pay some of the real estate closing costs. This can sweeten the deal on your end and can help you both reach a happy compromise.

These are just a few of the factors to consider when you are deciding how much to offer when buying a home. When you find the right price, both you and the seller will be happy and you can look forward to enjoying your new home.

Pamela Wayne and her partner are currently in the process of buying their first home. They are working with a great real estate agent and they are excited about finding the perfect property. 

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