How do we decide how much to offer for a home?
The initial offering price is the beginning of the negotiation process. The goal of the first offer is to get the Sellers to believe that working from that offer, they can get a sale price and terms that they can accept . The most common mistake Buyers make is offering very low price to start with to “see what happens”.
What usually happens is that the Seller is offended and believes that the Buyer will not make a “reasonable” offer and therefore refuses to negotiate. What the buyer must realize is that most Sellers do not have to sell the home and in fact 50% of all homes offered for sale are not sold.
Some of the factors influencing offer price are:
- Comparative Market Analysis A comparison of currently available homes, recently sold homes and home offer for sale that did not sell will give us our base price. This is how the Seller’s representative should have arrived at the asking price and will tell us is the asking price is inline with the current market.
- Buyer Motivation This first thing the Buyer must decide is how much they what the home. Ask yourself; is the home worth the full price to you? If not, decide at what price you will walk away from the property. Once negotiations have started, walking away can be harder than you think.
- Terms and Conditions The terms and conditions that the Buyer and Seller need to make the sale will affect the price. While some conditions, such as financing, are accepted as standard, others are not. Everything you ask the Seller for will have a price.
- Time on the MarketA home that has been for sale for more than 90 in a normal market indicates one of three things.
- There is a lack of buyer interest due to some factor such as price or the condition of the property.
- There are more homes available than interested buyers.
- The Sellers are not really serious or are looking for “their deal”
In the first two case, the Sellers will probably accept a lower price. In the third case, they most likely won’t sell at all.